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 2004 Results,
Reaches Record Production
Dallas, Texas, February 8, 2005 -- Pioneer Natural Resources Company (NYSE:PXD)
today announced financial and operating results for the quarter and year ended
December 31, 2004.
For the fourth quarter of 2004, Pioneer reported net income of $102.0 million,
or $.69 per diluted share, an increase of $.21 or 44% per share above the prior
year quarter net income of $.48 per diluted share. Cash flow from operations for
the fourth quarter was $347.1 million, an increase of 60% compared to $217.0
million for the same period in 2003. The increase in net income and cash flow
primarily resulted from a 17% increase in quarter-on-quarter oil and gas
production and stronger prices for oil and gas.
Tim Dove, President and COO, stated, "We had a solid quarter as each of our
divisions posted strong results, and with the addition of our new Rockies
division, we've set a new production record. We expect to continue to add
production from our core properties as we step up our development drilling
program in 2005 leading to full-year expected production of 70 to 74 million
barrels oil equivalent."
Scott Sheffield, Chairman and CEO, continued, "We built significant operational
and financial strength during 2004 and have further enhanced our financial
flexibility with the $593 million of proceeds we received in January by selling
just 20 million barrels of oil equivalent reserves through two volumetric
production payments. Adding our expected 2005 cash flow and proceeds from
planned Canadian divestitures, we expect to have over $1 billion of cash
available during 2005 in excess of our current capital budget. By reaching our
debt reduction targets early, we now have the flexibility to aggressively
repurchase shares under our new $300 million authorization and have purchased
approximately 600,000 shares since the end of January.
"Our 2005 drilling programs in each of our core onshore areas are well underway.
In the deepwater Gulf of Mexico, completion operations have resumed at Devils
Tower and production is expected to be back on-line this week at Canyon Express.
We have an active exploration program planned for the first half of this year
and the financial flexibility to fund the development of its success."
For the twelve months ended December 31, 2004, net income was $312.9 million, or
$2.46 per diluted share, compared to $410.6 million, or $3.46 per diluted share
for the prior year which included the benefit of the Company's reversal of
deferred tax valuation allowances in the U.S. Cash flow from operations for 2004
was a record $1.1 billion compared to $763.7 million in 2003. Long-term debt was
$2.39 billion at year end, down $364 million from the prior year end, pro forma
for the merger with Evergreen. Pioneer repurchased 1.7 million shares during the
fourth quarter and 2.8 million shares for the full year.
As previously announced, the Company has changed its method for reporting field
fuel, no longer recording it as revenue or expense and not including it in gas
sales volumes. Under the new method, fourth quarter oil and gas sales averaged a
record 191,451 barrels oil equivalent per day (BOEPD). Fourth quarter oil sales
averaged 49,385 barrels per day (BPD) and natural gas liquids sales averaged
21,733 BPD. Gas sales in the fourth quarter averaged 722 million cubic feet per
day (MMcfpd). This change in methodology reduced the reported quantity of gas
sold for the fourth quarter of 2004 by 38 MMcfpd or 6,398 BOEPD. Fourth quarter
oil and gas revenues and field operating expenses were each $21.1 million lower
under this method.
Under the new method, 2004 annual oil and gas sales averaged 183,412 BOEPD.
Annual oil sales averaged 46,984 BPD, natural gas liquids sales averaged 22,201
BPD and gas sales averaged 685 MMcfpd. This change in methodology reduced the
reported quantity of gas sold for 2004 by 26 MMcfpd or 4,374 BOEPD. Annual oil
and gas revenues and field operating expenses were each $54.3 million lower
under this method.
Because the change reduces both revenue and field operating expenses by the same
amount, it does not impact net income, cash flow, EBITDAX (earnings before
interest, taxes, depreciation, depletion, amortization, impairment and
exploration and abandonment costs) or net asset value. Prior period sales and
prices have been adjusted to reflect this change.
Fourth quarter realized prices for oil and natural gas liquids were $35.80 and
$30.74 per barrel, respectively. The realized price for gas was $4.45 per
thousand cubic feet (Mcf), while North American realized gas prices averaged
$5.24 per Mcf. Annual realized prices for oil and natural gas liquids were
$31.38 and $25.65 per barrel, respectively. The annual realized price for gas
was $4.33 per Mcf, while North American realized gas prices averaged $5.11 per
Mcf.
Fourth quarter production costs averaged $5.72 per barrel of oil equivalent
(BOE). Exploration and abandonment costs were $28.5 million for the quarter and
included $4.5 million of dry hole and abandonments, $16.5 million of geologic
and geophysical expenses including seismic costs and $7.5 million of delay
rentals and unproved acreage abandonments. Annual 2004 production costs averaged
$5.15 per BOE. Exploration and abandonment costs were $181.7 million for 2004
and included $82.8 million of dry hole and abandonments, $82.3 million of
geologic and geophysical expenses including seismic costs and $16.6 million of
delay rentals and unproved acreage abandonments.
For the same quarter last year, Pioneer reported total oil and gas sales of
163,888 BOEPD, including oil sales of 43,574 BPD, natural gas liquids sales of
22,889 BPD and gas sales of 585 MMcfpd (excluding field fuel volumes). Realized
prices for the 2003 fourth quarter were $26.60 per barrel for oil, $19.46 per
barrel for natural gas liquids and $3.58 per Mcf for gas, while North American
gas prices averaged $4.14 per Mcf.
Full year 2003 total oil and gas sales averaged 151,001 BOEPD, including oil
sales of 35,304 BPD, natural gas liquids sales of 22,562 BPD and gas sales of
559 MMcfpd (excluding field fuel volumes). Realized prices for 2003 were $25.59
per barrel for oil, $19.50 per barrel for natural gas liquids and $3.84 per Mcf
for gas, while North American gas prices averaged $4.51 per Mcf.
Operations Update
Pioneer is accelerating its 2005 low-risk onshore development program, running
12 onshore rigs in the U.S. and seven rigs in Argentina. Pioneer reported record
fourth quarter Argentine gas production as gas demand was strong during the
summer season and gas prices continued to improve as anticipated. In Canada,
Pioneer is completing its winter development program in British Columbia running
two rigs and expects to commence drilling in the Company's coalbed methane play
in southern Alberta during the second quarter. Production from Tunisia increased
during the fourth quarter as first oil was achieved from the Hawa-2 well in the
Adam producing concession in the BEK block, and the Company expects oil
production from the Adam-3 well to begin during the first quarter of 2005.
In the deepwater Gulf of Mexico, repairs to the Devils Tower spar were completed
ahead of schedule. The rig was placed in service on January 21, 2005 and is in
the process of completing the fifth of eight Devils Tower development wells.
Production from the Canyon Express gas system was halted on December 3, 2004 due
to a leak in the subsea line that delivers methanol used in field operations.
The leak is believed to have been caused by a Hurricane Ivan-related incident
which weakened the methanol line. The line has been successfully repaired and
production from the system is expected to resume this week. Pioneer expects that
Canyon Express production will gradually ramp up over the next few weeks as
debris is flushed from the line.
First quarter exploration activity is expected to include an appraisal well to
the 2004 Thunder Hawk discovery and an exploration well on a Falcon Corridor
satellite prospect in the deepwater Gulf of Mexico. In Alaska, as many as three
wells are expected to test new exploration targets, and Pioneer plans to shoot
seismic over newly acquired acreage. One well is planned in West Africa, and
lower-risk exploration and geologic and geophysical work will also continue in
Argentina, Canada and Tunisia.
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.
First quarter 2005 production is expected to average 175,000 to 190,000 BOEPD
excluding field fuel. This range is lower than the fourth quarter average
reflecting the VPP volumes sold, more days of downtime and a gradual ramp up for
the Canyon Express system, the timing of oil cargo shipments in Tunisia and
South Africa which were high during the fourth quarter, and the typical seasonal
decline in gas demand during Argentina's summer season.
First quarter production costs (including production and ad valorem taxes) are
expected to average $6.00 to $6.50 per BOE based on current NYMEX strip prices
for oil and gas. The increase over the prior quarter is a result of the
retention of operating costs related to the VPP volumes sold, an increase in ad
valorem taxes and additional workovers planned during the Canadian winter
drilling season. Production costs are expected to decline in the second quarter
of 2005 as lower-cost volumes resume from the deepwater Gulf of Mexico and
workovers return to more normal levels. Depreciation, depletion and amortization
expense is expected to average $8.75 to $9.25 per BOE.
Total exploration and abandonment expense is expected to be $80 million to $110
million. As indicated in the operations update above, several exploration wells
and significant seismic investments are planned during the quarter, front-end
loading the exploration program for the year. General and administrative expense
is expected to be $24 million to $26 million. Interest expense is expected to be
$33 million to $36 million, and accretion of discount on asset retirement
obligations is expected to be approximately $2 million to $3 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 $5
million to $10 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 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 fourth 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. Or you may choose
to dial (800) 231-9012 (confirmation code: 261674) 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:
261674).
Pioneer is a large independent oil and gas exploration and production company
with operations in the United States, Argentina, Canada, Equatorial Guinea,
South Africa and Tunisia. Pioneer's headquarters are in Dallas. For more
information, visit Pioneer's website at www.pioneernrc.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 that 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, government regulation or action,
international operations and associated international political and economic
instability, 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 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,
2004 2003
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,257 $ 19,299
Accounts receivable, net 210,279 111,480
Inventories 40,332 17,509
Prepaid expenses 10,822 11,083
Deferred income taxes 33,980 40,514
Other current assets, net 9,529 5,230
---------- ----------
Total current assets 312,199 205,115
---------- ----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 8,124,616 5,163,383
Accumulated depletion, depreciation and amortization (2,243,549) (1,676,136)
---------- ----------
Total property, plant and equipment 5,881,067 3,487,247
---------- ----------
Deferred income taxes 2,963 192,344
Goodwill 315,880 -
Other assets, net 135,132 66,866
---------- ----------
$ 6,647,241 $ 3,951,572
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 216,051 $ 186,418
Interest payable 45,735 37,034
Income taxes payable 13,520 5,928
Other current liabilities 269,153 200,372
---------- ----------
Total current liabilities 544,459 429,752
---------- ----------
Long-term debt 2,385,950 1,555,461
Deferred income taxes 526,189 12,121
Other liabilities 358,863 194,466
Stockholders' equity 2,831,780 1,759,772
---------- ----------
$ 6,647,241 $ 3,951,572
========== ==========
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,
----------------------- -------------------------
2004 2003 2004 2003
--------- --------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited)
Revenues and other income:
Oil and gas $ 519,481 $ 340,153 $1,832,663 $1,273,871
Interest and other 9,517 7,971 14,074 12,292
Gain (loss) on disposition of assets, net 69 (320) 39 1,256
-------- -------- --------- ---------
529,067 347,804 1,846,776 1,287,419
-------- -------- --------- ---------
Costs and expenses:
Oil and gas production 100,690 69,270 345,504 254,750
Depletion, depreciation and amortization 155,634 116,698 574,874 390,840
Impairment of oil and gas properties 4,859 - 39,684 -
Exploration and abandonments 28,535 25,330 181,689 132,760
General and administrative 25,520 16,213 80,528 60,545
Accretion of discount on asset retirement
obligations 2,198 1,384 8,210 5,040
Interest 35,582 21,862 103,387 91,388
Other 22,705 9,115 33,687 21,320
-------- -------- --------- ---------
375,723 259,872 1,367,563 956,643
-------- -------- --------- ---------
Income before income taxes and cumulative
effect of change in accounting principle 153,344 87,932 479,213 330,776
Income tax benefit (provision) (51,296) (30,558) (166,359) 64,403
-------- -------- --------- ---------
Income before cumulative effect of
change in accounting principle 102,048 57,374 312,854 395,179
Cumulative effect of change in accounting
principle, net of tax - - - 15,413
-------- -------- --------- ---------
Net income $ 102,048 $ 57,374 $ 312,854 $ 410,592
======== ======== ========= =========
Basic earnings per share:
Income before cumulative effect
of change in accounting principle $ .71 $ .49 $ 2.50 $ 3.37
Cumulative effect of change in accounting
principle, net of tax - - - .13
-------- -------- --------- ---------
Net income $ .71 $ .49 $ 2.50 $ 3.50
======== ======== ========= =========
Diluted earnings per share:
Income before cumulative effect
of change in accounting principle $ .69 $ .48 $ 2.46 $ 3.33
Cumulative effect of change in accounting
principle, net of tax - - - .13
-------- -------- --------- ---------
Net income $ .69 $ .48 $ 2.46 $ 3.46
======== ======== ========= =========
Weighted average shares outstanding:
Basic 144,249 117,763 125,156 117,185
======== ======== ========= =========
Diluted 148,840 119,199 127,488 118,513
======== ======== ========= =========
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended Year ended
December 31, December 31,
------------------------ -------------------------
2004 2003 2004 2003
---------- ---------- ----------- ----------
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 102,048 $ 57,374 $ 312,854 $ 410,592
Depletion, depreciation and amortization 155,634 116,698 574,874 390,840
Impairment of oil and gas properties 4,859 - 39,684 -
Exploration expenses, including dry holes 20,497 14,486 146,833 97,690
Deferred income taxes 45,268 28,350 141,143 (75,588)
Loss (gain) on disposition of assets, net (69) 320 (39) (1,256)
Accretion of discount on asset retirement
obligations 2,198 1,384 8,210 5,040
Interest related amortization 249 (6,650) (12,208) (20,610)
Commodity hedge related amortization (11,258) (17,697) (45,102) (71,816)
Cumulative effect of change in accounting
principle, net of tax - - - (15,413)
Amortization of stock based compensation 4,709 1,108 12,503 5,429
Other noncash items 10,421 707 16,913 4,966
Changes in operating assets and liabilities, net
of effects from acquisitions:
Accounts receivable, net (28,286) (14,270) (73,376) (10,983)
Inventories (4,273) 1,161 (14,025) (7,734)
Prepaid expenses 3,008 2,806 974 (5,598)
Other current assets, net (875) 2,674 262 (602)
Accounts payable 27,952 29,652 179 58,603
Interest payable 19,973 (1,005) 5,533 (424)
Income taxes payable 377 2,012 3,372 5,928
Other current liabilities (5,358) (2,107) (14,037) (5,385)
--------- --------- ---------- ---------
Net cash provided by operating activities 347,074 217,003 1,104,547 763,679
Net cash used in investing activities (191,231) (167,151) (1,531,521) (662,300)
Net cash provided by (used in) financing activities (151,947) (43,079) 414,258 (91,720)
--------- --------- ---------- ---------
Net increase (decrease) in cash and cash equivalents 3,896 6,773 (12,716) 9,659
Effect of exchange rate changes on cash
and cash equivalents 412 (125) 674 1,150
Cash and cash equivalents, beginning
of period 2,949 12,651 19,299 8,490
--------- --------- ---------- ---------
Cash and cash equivalents, end of period $ 7,257 $ 19,299 $ 7,257 $ 19,299
========= ========= ========== =========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
(Unaudited)
Three months ended Year ended
December 31, December 31,
----------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Average Daily Production:
Oil (Bbls) - U.S. 27,733 25,704 26,637 24,525
Argentina 7,662 10,132 8,534 8,687
Canada 256 90 137 111
Africa 13,734 7,648 11,676 1,981
--------- --------- --------- ---------
Total 49,385 43,574 46,984 35,304
Natural gas liquids (Bbls) - U.S. 19,348 20,871 19,738 20,338
Argentina 1,537 1,115 1,546 1,318
Canada 848 903 917 906
--------- --------- --------- ---------
Total 21,733 22,889 22,201 22,562
Gas (Mcf) - U.S. 546,460 453,458 521,839 423,013
Argentina 128,247 91,791 121,654 94,128
Canada 47,291 39,299 41,867 41,669
--------- --------- --------- ---------
Total 721,998 584,548 685,360 558,810
Total Production:
Oil (MBbls) 4,543 4,009 17,196 12,886
Natural gas liquids (MBbls) 1,999 2,106 8,126 8,235
Gas (MMcf) 66,424 53,778 250,842 203,966
Total equivalent barrels (MBOE) 17,614 15,078 67,129 55,115
Average Reported Prices (a):
Oil (per Bbl) - U.S. $ 32.41 $ 25.78 $ 29.41 $ 25.25
Argentina $ 31.87 $ 26.37 $ 28.06 $ 25.62
Canada $ 52.84 $ 30.74 $ 44.83 $ 29.10
Africa $ 44.54 $ 29.59 $ 38.12 $ 29.52
Worldwide $ 35.80 $ 26.60 $ 31.38 $ 25.59
Natural gas liquids (per Bbl) - U.S. $ 30.27 $ 19.21 $ 25.07 $ 19.04
Argentina $ 33.49 $ 22.81 $ 29.91 $ 22.85
Canada $ 36.47 $ 20.94 $ 30.87 $ 24.80
Worldwide $ 30.74 $ 19.46 $ 25.65 $ 19.50
Gas (per Mcf) - U.S. $ 5.23 $ 4.10 $ 5.15 $ 4.47
Argentina $ .77 $ .56 $ .66 $ .56
Canada $ 5.33 $ 4.60 $ 4.64 $ 4.93
Worldwide $ 4.45 $ 3.58 $ 4.33 $ 3.84
<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 Year ended
December 31, December 31,
---------------------- ------------------------
2004 2003 2004 2003
--------- --------- ---------- ----------
Net income $ 102,048 $ 57,374 $ 312,854 $ 410,592
Depletion, depreciation and amortization 155,634 116,698 574,874 390,840
Impairment of oil and gas properties 4,859 - 39,684 -
Exploration and abandonments 28,535 25,330 181,689 132,760
Accretion of discount on asset retirement
obligations 2,198 1,384 8,210 5,040
Interest expense 35,582 21,862 103,387 91,388
Income tax provision (benefit) 51,296 30,558 166,359 (64,403)
Loss (gain) on disposition of assets, net (69) 320 (39) (1,256)
Commodity hedge related amortization (11,258) (17,697) (45,102) (71,816)
Cumulative effect of change in accounting
principle, net of tax - - - (15,413)
Amortization of stock-based compensation 4,709 1,108 12,503 5,429
Other noncash items 10,421 707 16,913 4,966
-------- -------- --------- ---------
EBITDAX (a) 383,955 237,644 1,371,332 888,127
Less: Cash interest expense (35,333) (28,512) (115,595) (111,998)
Current income taxes (6,028) (2,208) (25,216) (11,185)
-------- -------- --------- ---------
Discretionary cash flow (b) 342,594 206,924 1,230,521 764,944
Less: Cash exploration expense (8,038) (10,844) (34,856) (35,070)
Changes in operating assets and liabilities 12,518 20,923 (91,118) 33,805
-------- --------- ---------- ---------
Net cash provided by operating activities $ 347,074 $ 217,003 $1,104,547 $ 763,679
======== ======== ========= =========
<FN>
- -------------
(a) "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; impairment of oil and gas properties; 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 INFORMATION
As of February 7, 2005
Open Commodity Hedge Positions
------------------------------
2005
----------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year 2006 2007 2008
-------- -------- -------- -------- -------- -------- -------- --------
Average Daily Oil Production Hedged:
Swap Contracts:
Volume (Bbl) 27,000 27,000 27,000 27,000 27,000 10,000 13,000 17,000
NYMEX price (per Bbl) $ 27.97 $ 27.97 $ 27.97 $ 27.97 $ 27.97 $ 31.69 $ 30.89 $ 29.21
Collar Contracts:
Volume (Bbl) - - - - - 3,500 - -
NYMEX price (per Bbl):
Ceiling $ - $ - $ - $ - $ - $ 41.95 $ - $ -
Floor $ - $ - $ - $ - $ - $ 35.00 $ - $ -
Average Daily Gas Production Hedged:
Swap Contracts:
Volume (MMBtu) 290,000 280,000 280,000 250,000 274,904 70,000 25,000 5,000
NYMEX price (per MMBtu) (a) $ 5.30 $ 5.15 $ 5.15 $ 5.15 $ 5.20 $ 4.25 $ 3.95 $ 5.40
Collar Contracts:
Volume (MMBtu) - - - - - 5,000 - -
NYMEX price (per MMBtu):
Ceiling $ - $ - $ - $ - $ - $ 7.15 $ - $ -
Floor $ - $ - $ - $ - $ - $ 5.25 $ - $ -
<FN>
--------------
(a)Approximate, based on historical differentials to index prices.
</FN>
Amortization of Volumetric Production Payment Deferred Revenue
--------------------------------------------------------------
(in thousands)
2005
----------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year 2006 Thereafter Total
-------- -------- -------- -------- -------- -------- ---------- ---------
Oil revenue $ - $ - $ - $ - $ - $ 57,608 $ 259,606 $ 317,214
Gas revenue 11,107 17,132 17,320 17,320 62,879 53,725 158,634 275,238
------- ------- ------- ------- ------- ------- -------- --------
Total deferred revenue (a) $ 11,107 $ 17,132 $ 17,320 $ 17,320 $ 62,879 $111,333 $ 418,240 $ 592,452
======= ======= ======= ======= ======= ======= ======== ========
<FN>
--------------
(a) Deferred revenue will be amortized as increases to oil and gas revenues
during the indicated future periods. These amounts reflect the net impact
of deferred revenue amortization and associated commodity derivative
amortization from other comprehensive income to oil and gas revenues.
</FN>