Pioneer Reports Second Quarter 2008 Results

Business Wire, August 4, 2008

DALLAS -- Pioneer Natural Resources Company (NYSE:PXD) today announced financial and operating results for the quarter ended June 30, 2008.

* Reported second quarter net income of $159 million, or $1.32 per diluted share

* Increased average daily oil and gas sales to 113,987 barrels oil equivalent per day (BOEPD); 19% above sales for the second quarter of 2007 (excluding 2007 sales from divested Canada assets)

* Posted strong production growth in Spraberry, Raton, Edwards, Tunisia and Alaska

* Increased 2008 production growth target to 18% to 20% from 14% versus 2007 in response to strong production growth to date, improved drilling efficiencies (more wells per rig) and operational success

* Raised 2008 capital budget by $300 million to fund a portion of the incremental production growth and to cover rising costs for tubulars, fuel and pumping services

* Advanced enhanced recovery initiatives and shale interval testing in Spraberry

* Confirmed contribution from two additional zones in Pierre Shale

* Drilled three new discovery wells in Tunisia

* Commenced production at Oooguruk on the North Slope of Alaska

* Closed the Pioneer Southwest Energy Partners L.P. IPO generating net proceeds of $163 million

Scott Sheffield, Chairman and CEO, stated, "We are extremely pleased with the strong and consistent production growth our core operating areas continue to deliver. This strong performance and our investment discipline will result in the Company generating free cash flow beginning this year. Pioneer is at a significant inflection point, as we expect our 2009 discretionary cash flow to increase by approximately 50% and our earnings to double from 2008 levels based on current commodity prices and costs."

2008 Production Growth Target

Based on Pioneer's successful year-to-date production growth results and its remaining planned drilling activity, the Company has increased its 2008 production growth forecast to 18% to 20% from 14% compared to 2007. Pioneer has increased its 2008 capital budget from $1.0 billion to $1.3 billion (which excludes acquisitions, asset retirement obligations, capitalized interest and geological and geophysical G&A), and with the related increase in its 2008 production growth forecast, the Company expects to generate free cash flow for the year. The capital budget was increased to reflect drilling efficiencies (more wells per rig), operational success and today's higher cost environment, primarily for tubulars, fuel and pumping services. More specifically, drilling efficiencies in the Spraberry and Edwards fields are allowing wells to be drilled at a faster-than-expected pace which will result in the Company drilling and completing more wells during 2008. Additional development capital related to drilling success in the Edwards Trend and progressing front-end engineering planning for the Cosmopolitan project in Alaska is also being added to the 2008 budget.

Financial Review

Pioneer's second quarter net income was $159 million, or $1.32 per diluted share. Cash flow from operating activities for the second quarter was $333 million.

Second quarter oil sales averaged 30,229 barrels per day (BPD), natural gas liquids sales averaged 20,509 BPD and gas sales averaged 379 million cubic feet per day (MMCFPD).

The reported second quarter average price for oil was $89.73 per barrel and included $9.46 per barrel related to deferred revenue from volumetric production payments (VPPs) for which production was not recorded. The reported price for natural gas liquids was $56.30 per barrel. The reported price for gas was $8.73 per thousand cubic feet (MCF), including $.39 per MCF related to deferred revenue from VPPs for which production was not recorded.

Second quarter production costs averaged $13.93 per BOE. Production costs were primarily impacted by higher production taxes related to the increase in commodity prices.

Exploration and abandonment costs were $30 million for the quarter and included $1 million of acreage costs and $29 million of geologic and geophysical expenses, including seismic costs related to ongoing activities in the Edwards Trend and Tunisia and personnel costs.

In May, Pioneer completed the initial public offering of common units in Pioneer Southwest Energy Partners L.P. (PSE) and received net proceeds of $163 million. Pioneer retains an ownership interest in PSE of approximately 68%.

Operations

In the Spraberry field, production increased 21% in the first half of 2008 compared to the first half of 2007. Pioneer is increasing its forecast for full-year 2008 Spraberry production growth from approximately 15% to more than 18%. Production growth is exceeding expectations due to the strong incremental contribution from the Wolfcamp formation, operational efficiencies and a faster drilling pace related to improved drilling efficiency which has increased the number of wells being drilled per rig. The 2008 Spraberry drilling program is being expanded by 40 wells to 390 wells. Pioneer is currently running 17 rigs in the field and has drilled approximately 225 wells year-to-date.