Pioneer Natural Resources is one of the top ten U.S. independent exploration and production companies. Pioneer’s core properties stand out as some of the best in the industry. Since 1997, Pioneer has been busy building an exceptional exploration program while continuing its track record of development success. Recent discoveries in the deepwater Gulf of Mexico and South Africa are expected to add significant new production in 2002 and 2003. The 2001 exploration program will test 26 prospects generated over the past three years, a milestone for exploratory drillbit activity. Pioneer’s long-lived assets provide a stable production base. Its extensive inventory of development drilling locations together with its active rig program in the U.S., Argentina and Canada provide lower-risk opportunity to continually add new production

With total proved reserves equivalent to 3.8 trillion cubic feet of natural gas or 628 million barrels of oil and with a reserves-to-production ratio of 14 years, Pioneer’s production is among the industry’s most stable. Contributing to this stability, Pioneer's three domestic core properties - the Hugoton and West Panhandle gas fields and the Spraberry oil and natural gas field - represent 67% of the Company's total reserve base.

During 2000, Pioneer added 437 billion cubic feet of natural gas equivalent reserves, replacing 167% of its production for an all-in finding and development cost of $.78 per mcf equivalent with total capital expenditures of $340 million. Pioneer drilled 296 wells with 90% success worldwide, including 83 exploration and extension wells with 73% success.

For 2001, Pioneer has budgeted $430 million of capital expenditures, a 26% increase over 2000, but significantly less than expected discretionary cash flow. Approximately 73% of the budget is directed toward development activities with the remaining 27% allocated to exploration. Pioneer plans to drill approximately 460 development wells and 26 exploratory wells in its 2001 program. Approximately 65% of the budget is directed to activities in the U.S.

Corporate strategy centers on adding net asset value for shareholders. With a broad array of drilling and other investment opportunities available, capital allocation is paramount in maximizing net asset value. Management considers several factors in allocating capital but most heavily weights a project’s return on investment by comparing the risked present worth of a project (10% discount using conservative fixed natural gas and oil prices) to the estimated investment required for the project. Currently, to meet the Company’s hurdle rate for inclusion in the capital program, projects must return 1.5 times the required investment.

Recent drilling success leads to four key development projects expected to increase production 25% to 30%.

The Canyon Express project is a joint development of three deepwater Gulf of Mexico discoveries, including Pioneer’s Aconcagua and Camden Hills fields. The project is being developed with a capacity to deliver 500 million cubic feet of natural gas per day by the summer of 2002. Pioneer owns an 18% interest in the Canyon Express project and expects that production from the project will increase its North American natural gas production by 30%.

Pioneer’s first well offshore South Africa confirmed the presence of commercial oil reserves resulting in plans to develop the Sable oil field. First production is expected in late 2002 or early 2003 at daily rates of 25 to 30 thousand barrels per day. With Pioneer’s 35% working interest, worldwide oil production is expected to increase more than 20%. Pioneer has also discovered oil and natural gas at its Boomslang prospect offshore South Africa and plans a second well on the prospect later in 2001.

The Devils Tower discovery was Pioneer’s second in the deepwater Gulf of Mexico. The oil field has been successfully appraised and development plans call for first production in late 2002 or early 2003 with additional drilling planned this year. Pioneer’s 25% working interest in field production is expected to increase the Company’s current worldwide oil production by approximately 20%.

In the East Texas Bossier natural gas play Pioneer holds interest in over 130,000 acres and plans to drill or participate in over 35 wells during 2001. The play’s strong initial natural gas flow rates are expected to provide significant new production growth in 2001 and for many years to come.