EXHIBIT 99.1
NEWS RELEASE
Investor Relations Contacts:
Susan Spratlen or Chris Paulsen (972) 444-9001
Pioneer Reports Second Quarter 2004 Results
Dallas, Texas, August 2, 2004 -- Pioneer Natural Resources Company ("Pioneer")
(NYSE:PXD) today announced financial and operating results for the quarter ended
June 30, 2004.
Pioneer reported net income of $69.7 million, or $0.58 per diluted share, for
the second quarter of 2004 and $129.9 million, or $1.08 per diluted share, for
the six months ended June 30, 2004. For the same periods last year, Pioneer
reported net income of $77.2 million, or $0.65 per diluted share, and $161.4
million, or $1.36 per diluted share, respectively. For comparative purposes, the
2004 results include noncash deferred income tax expense of $47.1 million and
$79.9 million for the three and six month periods, respectively, while the
corresponding 2003 results included nominal amounts of noncash deferred income
tax benefits. The significant year-to-year change in deferred income taxes is
principally attributable to the Company's reversal of its deferred tax valuation
allowance in the U.S. during the third quarter of 2003.
Income before income taxes and cumulative effect of change in accounting
principles increased by $41.6 million, or 52%, and $70.5 million, or 47%, during
the three and six months ended June 30, 2004, respectively, as compared to the
same periods in 2003.
Cash flow from operations for the second quarter was a record $264.7 million
compared to $189.9 million for the same period in 2003. The Company reduced
long-term debt by $65.3 million during the second quarter of 2004 to $1.39
billion and repurchased 320,000 shares of outstanding common stock bringing
year-to-date repurchases to 503,300 shares.
Second quarter oil and gas sales averaged 187,391 barrels per day (BPD) on a
barrel oil equivalent (BOE) basis and represented another record quarter for
Pioneer. Second quarter oil sales averaged 44,880 BPD and natural gas liquids
sales averaged 22,219 BPD. Gas sales in the second quarter averaged 722 million
cubic feet per day (MMcfpd). Realized prices for oil and natural gas liquids for
the quarter were $27.94 and $22.92 per barrel, respectively. Realized Argentine
oil prices decreased during the second quarter due to the implementation of a
new formula for domestic oil prices to bring them in approximate parity with oil
exports that are subject to a 20% export tax. The realized price for gas was
$4.36 per thousand cubic feet (Mcf), while North American gas prices averaged
$5.12 per Mcf. Argentine gas prices increased 14% during the second quarter as
compared to the prior year quarter, as a result of the federal decree outlining
future gas price increases during the next two years becoming effective in May.
Second quarter production costs averaged $5.60 per BOE. Second quarter
production costs included two months of fixed lease operating expenses
associated with the phased start-up of the Devils Tower project in May. As
additional Devils Tower wells are completed during the remainder of 2004 and
into 2005, the fixed costs per BOE of this project are expected to decline.
Exploration and abandonment costs of $39.7 million for the quarter include $17.2
million of dry hole and abandonment costs that were primarily attributable to a
dry hole in Equatorial Guinea and the abandonment of a well that was drilled in
2002 along the southern portion of the Olowi block oil accumulation in Gabon
which is not included in the current development plan. Also included were $20.7
million of geologic and geophysical expenses including seismic costs in
Argentina and Alaska and $1.8 million of delay rentals and unproved acreage
abandonments.
Income tax expense for the quarter resulted in a consolidated effective tax rate
of approximately 43%. The effective tax rate is higher than the U.S. federal and
state statutory rates (approximately 36.5%) primarily due to the aforementioned
international exploration and abandonment expenses that created deferred tax
benefits that cannot be recognized until sufficient future taxable income in
those countries is assured.
For the same quarter last year, Pioneer reported oil sales of 32,079 BPD,
natural gas liquids sales of 22,656 BPD and gas sales of 626 MMcfpd. Realized
prices for the 2003 second quarter were $24.25 per barrel for oil, $17.92 per
barrel for natural gas liquids and $4.15 per Mcf for gas, while North American
gas prices averaged $4.86 per Mcf.
Update on Proposed Merger with Evergreen Resources, Inc. ("Evergreen")
Integration preparation is well underway with a number of Pioneer's key
employees preparing to join Evergreen's team in Denver. Evergreen is acquiring
two additional coil tubing rigs and two additional fracture stimulation units
that will be instrumental in Pioneer's plan to accelerate drilling in the Raton
Basin to approximately 300 wells per year. Pioneer anticipates that $8 million
to $10 million of general and administrative costs will be saved by combining
the companies' operations.
"I am very pleased with our progress in the integration of the Pioneer/Evergreen
merger and look forward to a successful closing in September. Upon completion of
the merger, we will have an even stronger base of North American assets, a
longer reserve life, a robust inventory of lower-risk development opportunities
and sufficient excess cash flow to invest in our high-impact commercialization
projects and exploration prospects around the world," stated Scott D. Sheffield,
Chairman and CEO.
The waiting period under the Hart-Scott-Rodino filing expired July 22, 2004. The
Form S-4 pertaining to the merger has been filed with the Securities and
Exchange Commission, and Pioneer and Evergreen are awaiting final clearance to
prepare and mail materials to solicit stockholder approval. The companies will
issue news releases as soon as the dates for the special meetings of
stockholders have been established.
Operations Update
The deepwater Gulf of Mexico Devils Tower field began producing in May, and is
currently producing from two wells. Six additional wells are awaiting completion
during the next several months, including two during the third quarter.
Goldfinger and Triton (25% working interest or "WI"), satellite discoveries to
the Devils Tower field, are expected to be jointly tied back to the Devils Tower
spar with first production expected in 2005. In mid-June, Pioneer achieved first
production from its Tomahawk and Raptor fields (100% WI) in the western
deepwater Gulf of Mexico, both subsea tiebacks to the Falcon field facilities.
Completion of the fields in just ten months established a new record for
deepwater development. In June, Pioneer participated in a discovery on the
Thunder Hawk (12.5% WI) prospect at Mississippi Canyon Block 734. The sidetrack
well encountered in excess of 300 feet of net oil pay in two high-quality
reservoir zones, and the partners are currently evaluating appraisal and
development options, with an additional well to further delineate the field
likely to commence in late 2004. In the second quarter, Pioneer was awarded
leases on 19 Gulf of Mexico blocks covering approximately 102,000 acres, of
which 14 are located in the deepwater.
Pioneer is participating in a joint exploration program in the National
Petroleum Reserve-Alaska (NPR-A). Pioneer was the apparent high co-bidder (20%
WI) on 63 tracts covering approximately 717,000 acres in the NPR-A Northwest
Planning Area and also acquired a 20% WI in 167,000 acres in the adjacent NPR-A
Northeast Planning Area and in federal offshore blocks.
Onshore development continues with 11 onshore rigs running in the U.S. and five
rigs running in Argentina. During the first six months of the year, Pioneer
successfully completed 117 wells in the U.S., 31 wells in Argentina and 26 wells
in Canada.
In Argentina, Pioneer completed the expansion of its Loma Negra gas plant in
Neuquen and a 20-mile pipeline to deliver gas from the new reserves being
developed in the Portezuelos and Anticlinal Campamento fields located west of
the plant. Gas is being produced in Argentina at record levels, and the
increased plant capacity will maximize the recovery of gas liquids.
In Tunisia, a new discovery, Dalia-1 (28% WI), encountered several oil and gas
bearing zones. The well was placed on production July 17 and is currently
producing at an initial rate of approximately 1,600 BPD from one zone. Upon
completion of the initial production phase, the well is expected to produce from
multiple zones at significantly higher rates. In the adjacent Hawa field, a
development well, Hawa-2 (28% WI), commenced drilling July 21.
In West Africa, Pioneer acquired a 40% WI in the Production Sharing Contract for
Block H offshore Equatorial Guinea. The Company has identified multiple
prospects on the 400,000 acres covered by the blocks. The first exploration
well, Bravo-1, was unsuccessful, and a second well is planned for 2005. In
Gabon, Pioneer received governmental approval of its Exclusive Exploitation
Agreement and is working toward finalizing the plans for field development.
Financial Outlook
The following statements are estimates based on current expectations. These
forward-looking statements are subject to a number of risks and uncertainties
which may cause the Company's actual results to differ materially from the
following statements. The last paragraph of this release addresses certain of
the risks and uncertainties to which the Company is subject.
Third quarter 2004 production is expected to average 185,000 to 200,000 BOE per
day, reflecting the incremental production expected from Devils Tower, Tomahawk
and Raptor, the variability of oil cargo shipments in Tunisia and South Africa,
and the seasonal increase in gas demand during Argentina's winter season. Third
quarter lease operating expenses (including production and ad valorem taxes) are
expected to average $5.40 to $5.90 per BOE based on current NYMEX strip prices
for oil and gas. Depreciation, depletion and amortization expense is expected to
average $8.75 to $9.25 per BOE as a greater proportion of the Company's
production is being produced from higher-cost basis deepwater Gulf of Mexico and
South Africa properties. Total exploration and abandonment expense is expected
to be $25 million to $45 million. General and administrative expense is expected
to be $17 million to $19 million. Interest expense is expected to be $21 million
to $24 million and accretion of discount on asset retirement obligations is
expected to be approximately $2 million. The Company's effective income tax rate
is expected to range from 36% to 39% based on current capital spending plans,
including cash income taxes of $4 million to $8 million that are principally
related to Argentine and Tunisian income taxes and nominal alternative minimum
tax in the U.S. Other than in Argentina and Tunisia, the Company continues to
benefit from the carryforward of net operating losses and other positive tax
attributes.
The third quarter forecast excludes any potential effects of the proposed merger
with Evergreen. Pioneer expects to update its forecasts for the quarter upon
completion of the merger. The Company's financial results and oil and gas hedges
are outlined on the attached schedules.
Earnings Conference Call
This morning at 10:00 a.m. Eastern, Pioneer will discuss its second quarter
financial and operating results with an accompanying presentation. The call will
be webcast on Pioneer's website, www.pioneernrc.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. Alternately, you
may dial (800) 474-8920 (confirmation code: 151546) to listen to the call via
the telephone and view the accompanying visual presentation at the website
above. A telephone replay will be available by dialing (888) 203-1112:
confirmation code: 151546.
Pioneer is a large independent oil and gas exploration and production company
with operations in the United States, Argentina, Canada, Equatorial Guinea,
Gabon, South Africa and Tunisia. Pioneer's headquarters are in Dallas. For more
information, visit Pioneer's website at www.pioneernrc.com.
The proposed merger will be submitted to each of Pioneer's and Evergreen's
stockholders for their consideration, and Pioneer will file with the SEC a
registration statement containing the joint proxy statement-prospectus to be
used by Pioneer to solicit approval of its stockholders to issue additional
stock in the merger and to be used by Evergreen to solicit the approval of its
stockholders for the proposed merger. Pioneer will also file other documents
concerning the proposed merger. You are urged to read the registration statement
and the joint proxy statement-prospectus regarding the proposed merger when they
become available and any other relevant documents filed with the SEC, as well as
any amendments or supplements to those documents, because they will contain
important information. You will be able to obtain a free copy of the joint proxy
statement-prospectus including the registration statement, as well as other
filings containing information about Pioneer at the SEC's Internet Site
(http://www.sec.gov). Copies of the joint proxy statement-prospectus can also be
obtained without charge, by directing a request to: Pioneer Natural Resources
Company, Susan Spratlen, 5205 N. O'Connor Blvd., Suite 900, Irving, Texas 75039,
or via telephone at 972-969-3583.
Pioneer and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Pioneer in
connection with the proposed merger. Evergreen and its directors and executive
officers may be deemed to be participants in the solicitation of proxies from
the stockholders of Evergreen in connection with the proposed merger. Additional
information regarding the interests of those participants may be obtained by
reading the joint proxy statement-prospectus regarding the proposed merger when
it becomes available.
This filing contains forward-looking statements that are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995,
particularly those statements regarding the effects of the proposed merger and
those preceded by, followed by or that otherwise include the words "believes,"
"expects," "anticipates," "intends," "estimates," or similar expressions.
Forward-looking statements relating to expectations about future results or
events are based upon information available to Pioneer and Evergreen as of
today's date, and neither Pioneer nor Evergreen assumes any obligations to
update any of these statements. The forward-looking statements are not
guarantees of the future performance of Pioneer, Evergreen or the combined
company, and actual results may vary materially from the results and
expectations discussed. For instance, although Pioneer and Evergreen have signed
an agreement for a subsidiary of Pioneer to merger with Evergreen, there is no
assurance that they will complete the proposed merger. The merger agreement will
terminate if the companies do not receive necessary approval of each of
Pioneer's and Evergreen's stockholders or government approvals or fail to
satisfy conditions to closing. Additional risks and uncertainties related to the
proposed merger include, but are not limited to, conditions in the financial
markets relevant to the proposed merger, the successful integration of Evergreen
into Pioneer's business, and each company's ability to compete in the highly
competitive oil and gas exploration and production industry. The revenues,
earnings and business prospects of Pioneer and the combined company and their
ability to achieve planned business objectives will be subject to a number of
risks and uncertainties. These risks and uncertainties include, among other
things, volatility of oil and gas prices, product supply and demand,
competition, government regulation or action, foreign currency valuation
changes, foreign government tax and regulation changes, litigation, the costs
and results of drilling and operations, Pioneer's ability to replace reserves,
implement its business plans, 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 identified from time to time in Pioneer's
SEC reports and public announcements.
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2004 2003
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 15,212 $ 19,299
Accounts receivable, net 166,539 111,480
Inventories 21,784 17,509
Prepaid expenses 6,236 11,083
Deferred income taxes 29,241 40,514
Other current assets, net 8,648 5,230
---------- ----------
Total current assets 247,660 205,115
---------- ----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 5,385,019 5,163,383
Accumulated depletion, depreciation and amortization (1,946,172) (1,676,136)
---------- ----------
Total property, plant and equipment 3,438,847 3,487,247
---------- ----------
Deferred income taxes 182,142 192,344
Other assets, net 75,812 66,866
---------- ----------
$ 3,944,461 $ 3,951,572
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 170,269 $ 186,418
Interest payable 37,321 37,034
Income taxes payable 10,383 5,928
Other current liabilities 241,199 200,372
---------- ----------
Total current liabilities 459,172 429,752
---------- ----------
Long-term debt 1,391,363 1,555,461
Deferred income taxes 11,329 12,121
Other liabilities 297,684 194,466
Stockholders' equity 1,784,913 1,759,772
---------- ----------
$ 3,944,461 $ 3,951,572
========== ==========
PIONEER NATURAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues and other income:
Oil and gas $ 446,993 $ 344,240 $ 893,519 $ 629,239
Interest and other 1,610 1,260 3,345 3,973
Gain (loss) on disposition of assets, net (232) 104 (245) 1,530
-------- -------- -------- --------
448,371 345,604 896,619 634,742
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 95,565 73,843 184,776 141,710
Depletion, depreciation and amortization 142,750 100,559 279,249 170,608
Exploration and abandonments 39,683 47,047 120,189 82,914
General and administrative 17,194 13,644 35,523 29,125
Accretion of discount on asset retirement
obligations 2,016 1,235 3,982 2,329
Interest 21,402 23,823 42,978 46,314
Other 8,300 5,638 8,496 10,816
-------- -------- -------- --------
326,910 265,789 675,193 483,816
-------- -------- -------- --------
Income before income taxes and cumulative
effect of change in accounting principle 121,461 79,815 221,426 150,926
Income tax provision (51,759) (2,630) (91,536) (4,934)
-------- -------- -------- --------
Income before cumulative effect of change
in accounting principle 69,702 77,185 129,890 145,992
Cumulative effect of change in accounting
principle, net of tax - - - 15,413
-------- -------- -------- --------
Net income $ 69,702 $ 77,185 $ 129,890 $ 161,405
======== ======== ======== ========
Net income per share:
Basic:
Income before cumulative effect of change
in accounting principle $ .59 $ .66 $ 1.09 $ 1.25
Cumulative effect of change in accounting
principle, net of tax - - - .13
-------- -------- -------- --------
Net income $ .59 $ .66 $ 1.09 $ 1.38
======== ======== ======== ========
Diluted:
Income before cumulative effect of change
in accounting principle $ .58 $ .65 $ 1.08 $ 1.23
Cumulative effect of change in accounting
principle, net of tax - - - .13
-------- -------- -------- --------
Net income $ .58 $ .65 $ 1.08 $ 1.36
======== ======== ======== ========
Weighted average shares outstanding:
Basic 118,855 117,005 118,787 116,875
======== ======== ======== ========
Diluted 120,402 118,969 120,333 118,823
======== ======== ======== ========
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Cash flows from operating activities:
Net income $ 69,702 $ 77,185 $ 129,890 $ 161,405
Depletion, depreciation and amortization 142,750 100,559 279,249 170,608
Exploration expenses, including dry holes 33,458 37,264 112,278 67,527
Deferred income taxes 47,144 (501) 79,864 (247)
(Gain) loss on disposition of assets, net 232 (104) 245 (1,530)
Accretion of discount on asset retirement
obligations 2,016 1,235 3,982 2,329
Interest related amortization (4,993) (4,614) (11,363) (9,179)
Commodity hedge related amortization (11,242) (18,205) (22,533) (35,987)
Cumulative effect of change in accounting
principle, net of tax - - - (15,413)
Amortization of stock-based compensation 2,887 1,343 4,866 2,712
Other noncash items 6,463 906 5,704 4,270
Changes in operating assets and liabilities:
Accounts receivable, net (24,803) 11,322 (58,540) (14,645)
Inventories (4,161) (3,857) (4,180) (4,217)
Prepaid expenses 3,930 (1,362) 4,847 (9,584)
Other current assets, net - (884) 757 (486)
Accounts payable 1,248 (2,711) (4,754) 5,670
Interest payable (607) (791) 86 (269)
Income taxes payable 1,397 724 4,455 2,176
Other current liabilities (717) (7,645) (6,519) (929)
--------- --------- --------- ---------
Net cash provided by operating activities 264,704 189,864 518,334 324,211
Net cash used in investing activities (192,233) (128,259) (364,534) (367,740)
Net cash provided by (used in) financing activities (66,108) (57,289) (157,534) 45,747
--------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents 6,363 4,316 (3,734) 2,218
Effect of exchange rate changes on cash
and cash equivalents (173) 982 (353) 1,448
Cash and cash equivalents, beginning
of period 9,022 6,858 19,299 8,490
--------- --------- --------- ---------
Cash and cash equivalents, end of period $ 15,212 $ 12,156 $ 15,212 $ 12,156
========= ========= ========= =========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
(Unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Average Daily Production:
Oil (Bbls) - U.S. 26,039 24,168 25,505 24,127
Argentina 8,531 7,786 8,579 7,730
Canada 95 125 97 130
Africa 10,215 - 12,125 -
--------- --------- --------- ---------
Total 44,880 32,079 46,306 31,987
Natural gas liquids (Bbls) - U.S. 19,809 20,190 20,373 20,107
Argentina 1,494 1,442 1,459 1,287
Canada 916 1,024 981 952
--------- --------- --------- ---------
Total 22,219 22,656 22,813 22,346
Gas (Mcf) - U.S. 558,131 477,607 554,306 408,983
Argentina 122,326 103,265 110,072 85,050
Canada 41,293 45,271 40,656 43,086
--------- --------- --------- ---------
Total 721,750 626,143 705,034 537,119
Total Production:
Oil (MBbls) 4,084 2,919 8,428 5,790
Natural gas liquids (MBbls) 2,022 2,062 4,152 4,045
Gas (MMcf) 65,679 56,979 128,316 97,219
Equivalent barrels (MBOE) 17,053 14,477 33,966 26,037
Average Reported Price (a):
Oil (per Bbl) - U.S. $ 27.63 $ 24.31 $ 27.16 $ 25.07
Argentina $ 20.13 $ 24.07 $ 24.05 $ 24.83
Canada $ 39.48 $ 25.09 $ 37.18 $ 28.57
Africa $ 35.13 $ - $ 32.98 $ -
Worldwide $ 27.94 $ 24.25 $ 28.13 $ 25.03
Natural gas liquids (per Bbl) - U.S. $ 22.29 $ 17.09 $ 21.90 $ 19.34
Argentina $ 27.22 $ 23.13 $ 28.17 $ 23.63
Canada $ 29.33 $ 26.90 $ 27.82 $ 27.18
Worldwide $ 22.92 $ 17.92 $ 22.55 $ 19.92
Gas (per Mcf) - U.S. $ 5.16 $ 4.84 $ 5.14 $ 4.79
Argentina $ .65 $ .57 $ .62 $ .56
Canada $ 4.55 $ 5.12 $ 4.39 $ 5.24
Worldwide $ 4.36 $ 4.15 $ 4.39 $ 4.15
<FN>
- ---------------
(a) Average prices include the results of hedging activities.
</FN>
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 Six months ended
June 30, June 30,
--------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ----------
Net income $ 69,702 $ 77,185 $ 129,890 $ 161,405
Depletion, depreciation and amortization 142,750 100,559 279,249 170,608
Exploration and abandonments 39,683 47,047 120,189 82,914
Accretion of discount on asset retirement
obligations 2,016 1,235 3,982 2,329
Interest expense 21,402 23,823 42,978 46,314
Income tax provision 51,759 2,630 91,536 4,934
(Gain) loss on disposition of assets, net 232 (104) 245 (1,530)
Commodity hedge related amortization (11,242) (18,205) (22,533) (35,987)
Cumulative effect of change in accounting
principle, net of tax - - - (15,413)
Amortization of stock-based compensation 2,887 1,343 4,866 2,712
Other noncash items 6,463 906 5,704 4,270
-------- -------- -------- --------
EBITDAX (a) 325,652 236,419 656,106 422,556
Less: Cash interest expense (26,395) (28,437) (54,341) (55,493)
Current income taxes (4,615) (3,131) (11,672) (5,181)
-------- -------- -------- --------
Discretionary cash flow (b) 294,642 204,851 590,093 361,882
Less: Cash exploration expense (6,225) (9,783) (7,911) (15,387)
Changes in operating assets and liabilities (23,713) (5,204) (63,848) (22,284)
-------- -------- -------- --------
Net cash provided by operating activities $ 264,704 $ 189,864 $ 518,334 $ 324,211
======== ======== ======== ========
<FN>
- -------------
(a) "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; exploration and abandonments; accretion of discount
on asset retirement obligations; interest expense; income taxes; gain or
loss on the disposition of assets; commodity hedge related amortization;
cumulative effect of change in accounting principle, net of tax;
amortization of stock- based compensation; 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.
</FN>
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL HEDGE INFORMATION
As of July 30, 2004
Open Commodity Hedge Positions
2004
--------------------------------
Third Fourth
Quarter Quarter Year 2005 2006 2007 2008
-------- -------- -------- -------- -------- -------- --------
Average Daily Oil Production:
Swap Contracts:
Volume (Bbl) 22,500 24,000 23,250 27,000 5,000 11,000 15,000
NYMEX price (Bbl) $ 29.26 $ 29.65 $ 29.46 $ 27.97 $ 26.19 $ 30.17 $ 28.56
Average Daily Gas Production:
Swap Contracts:
Volume (Mcf) 310,000 310,000 310,000 174,904 70,000 20,000 -
NYMEX price (MMBtu) (a) $ 4.40 $ 4.40 $ 4.40 $ 5.15 $ 4.25 $ 3.75 $ -
<FN>
- ---------------
(a) Approximate, based on historical differentials to index prices.
</FN>
Open Interest Rate Swap Hedge Positions (a)
Annual Interest (b)
Notional ---------------------------
Debt Fixed Rates LIBOR Margins
Amounts Received Paid
------------ ----------- -------------
7-1/2% senior notes due 2012 $ 10,000,000 7.50% 3.72%
9-5/8% senior notes due 2010 $ 60,000,000 9.63% 5.62%
<FN>
- ---------------
(a) The open interest rate swaps are fair value hedges of the Company's 7-1/2%
and 9-5/8% senior notes and mature when the hedged senior notes mature in
2012 and 2010, respectively.
(b) Under the terms of the interest rate swaps, the Company receives the fixed
rates on the notional amounts and pays the variable six-month London
Interbank Offered Rate ("LIBOR") plus the LIBOR margins shown above.
</FN>
Net Deferred Gains (Losses) on Terminated Hedges (in thousands)
2004
---------------------------
Third Fourth
Quarter Quarter Year 2005 Thereafter Total
------- ------- ------- ------- ---------- ---------
Net commodity hedge gains (a) $11,001 $10,954 $21,955 $ 1,249 $ - $ 23,204
Net debt hedge gains (losses) (b) 3,050 2,148 5,198 4,215 (9,600) (187)
------ ------ ------ ------ ------- --------
Total net deferred gains (losses) $14,051 $13,102 $27,153 $ 5,464 $ (9,600) $ 23,017
====== ====== ====== ====== ======= ========
<FN>
- ---------------
(a) Includes the following net deferred commodity hedge gains and losses for
which cash settlements have been deferred until the indicated future
periods: (i) $322 thousand and $317 thousand of net deferred commodity
hedge losses due during the third and fourth quarters of 2004,
respectively, and (ii) $209 thousand of net deferred commodity hedge gains
to be received during 2005. Deferred commodity hedge gains will be
amortized as increases to oil and gas revenues and deferred commodity hedge
losses will be amortized as decreases to oil and gas revenues during the
indicated future periods.
(b) Deferred debt hedge gains will be amortized as decreases to interest
expense and deferred debt hedge losses will be amortized as increases to
interest expense during the indicated future periods.
</FN>