Pioneer Southwest Energy Partners L.P. Reports Third Quarter 2011 Financial And Operating Results

Pioneer Southwest Energy Partners L.P. (“Pioneer Southwest” or “the Partnership”) (NYSE:PSE) today announced financial and operating results for the quarter ended September 30, 2011.

Pioneer Southwest reported third quarter net income of $89 million, or $2.69 per common unit. Net income included unrealized mark-to-market derivative gains of $62 million, or $1.88 per common unit. Without the effect of this item, adjusted income for the third quarter was $27 million, or $0.81 per common unit. Cash flow from operations for the third quarter was $32 million.

Oil and gas sales for the third quarter averaged 7,429 barrels oil equivalent per day (BOEPD), an increase of 11% compared to the second quarter of 2011, reflecting the success of the Partnership’s two-rig drilling program and the addition of incremental oil transport trucks during the third quarter to cover a shortfall that arose during the second quarter. Third quarter oil sales averaged 4,598 barrels per day (BPD), natural gas liquid (NGL) sales averaged 1,707 BPD and gas sales averaged 7 million cubic feet per day.

The third quarter average reported price for oil was $108.46 per barrel. The average reported price for NGLs was $45.27 per barrel, and the average reported price for gas was $3.57 per thousand cubic feet.

The Partnership has a large inventory of remaining oil drilling locations in the Spraberry field, with approximately 100 40-acre locations and 1,200 20-acre locations. During 2011, the Partnership expects to drill approximately 40 wells at a net cost of $65 million to $75 million, including facilities capital. All wells are being completed in the Lower Wolfcamp and organic rich shale/silt intervals. In addition, the Partnership is completing the majority of its wells in the deeper Strawn interval and is continuing to evaluate the Atoka interval in certain areas of the field. Approximately 60% and 40% of the Partnership’s acreage position has Strawn and Atoka potential, respectively. During the first nine months of 2011, the Partnership added 33 new wells to production and exited the third quarter of 2011 with eight wells awaiting completion. The 2011 drilling program is expected to generate full-year production growth of more than 5% as compared to 2010.