To the extent Sinochem elects to participate in any vertical wells that are drilled in the joint interest area after the effective date, Sinochem will receive its share of production and costs from the Wolfcamp and deeper horizons based on the anticipated reserve contribution from the Wolfcamp and deeper intervals relative to anticipated reserves from all completed intervals. Pioneer’s and Sinochem’s participation in vertical wells will be based on each party’s interest without any drilling carry being applied. Pioneer will retain 100% of its existing vertical production in the joint interest area.Pioneer has successfully drilled and completed 39 horizontal wells in the Wolfcamp Shale joint interest area through December 31, 2012. Of these 39 wells, 22 wells were on production and 4 additional wells were flowing back. Of the 22 wells on production, 20 wells were completed in the B interval and 2 wells were completed in the A interval. Pioneer’s net horizontal Wolfcamp Shale production in the joint interest area averaged approximately 2,000 barrels oil equivalent per day (BOEPD) in 2012, with a year-end exit rate of approximately 5,000 BOEPD. Scott Sheffield, Chairman and CEO, stated, “We are very excited to work with Sinochem, a global energy and chemicals leader, in the southern horizontal Wolfcamp Shale area, and are pleased that they share our confidence in accelerating the development of this large, oil-rich acreage position. This accelerated development will add significant production and reserves for Pioneer while enhancing shareholder value. It will also reduce our country’s dependence on foreign oil imports, create thousands of new U.S. jobs, further stimulate the Permian Basin economy and add significant tax revenues for use by local communities, schools, the state and the nation.” Consistent with the announced transaction with Sinochem, the responsibilities for certain Executive Vice Presidents (EVPs) who are members of Pioneer’s Management Committee will be rebalanced. These changes are effective immediately.
William F. Hannes, formerly EVP South Texas Operations, will become EVP of the newly formed Southern Wolfcamp Asset Team. This asset team will focus on executing the drilling program in the horizontal Wolfcamp Shale joint interest area.Danny L. Kellum, EVP Permian Operations, will focus his attention on Pioneer’s remaining Permian activities, with executive responsibility for the Permian Asset Team and Permian integrated services. This asset team will focus on executing the horizontal and vertical drilling programs over the remainder of Pioneer’s Permian acreage. Jay P. Still, EVP Domestic Operations, will add executive responsibility for Pioneer’s South Texas operations to his current responsibilities for the Company’s Mid-Continent, Rockies, Alaska and Barnett Shale assets. BofA Merrill Lynch served as financial advisor and Vinson & Elkins LLP served as legal advisor to Pioneer on the transaction. Further information regarding the horizontal Wolfcamp Shale transaction with Sinochem will be discussed during Pioneer’s quarterly conference call on Thursday, February 14, 2013, at 9:00 a.m. Central Time, when Pioneer will also discuss its fourth quarter and full-year 2012 financial results and 2013 Capital Budget, with an accompanying presentation. Instructions for listening to the call and viewing the presentation are shown below. Internet: www.pxd.comSelect “Investors,” then “Earnings & Webcasts,” to listen to the discussion, view the presentation and see other related material. Telephone: Dial (877) 718-5108, confirmation code: 7431932 five minutes before the call. View the presentation via Pioneer’s internet address above. A replay of the webcast will be archived on Pioneer’s website. A telephone replay will be available through March 11, 2013 by dialing (888) 203-1112, confirmation code: 7431932. Pioneer Natural Resources Company is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States. For more information, visit Pioneer’s website at www.pxd.com. Sinochem is a Chinese conglomerate whose core businesses span globally over energy, agriculture, chemicals, real estate and financial services. For more information, visit Sinochem’s website at www.Sinochem.com. Except for historical information contained herein, the statements, charts and graphs in this presentation 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 commodity prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements, including development agreements, with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services, resources and personnel required to complete the Company's operating activities, access to and availability of transportation, processing and refining facilities, Pioneer's ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to Pioneer's credit facility and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, including the possible impacts of climate change, the risks associated with the ownership and operation of an industrial sand mining business and 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. In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact on it. Pioneer undertakes no duty to publicly update these statements except as required by law.