Pioneer to acquire deepwater gulf, W. Texas field stakes

April 10, 2002
Pioneer Natural Resources Co., Dallas, reported Tuesday that it will spend $193 million to acquire working interests in natural gas properties in the Gulf of Mexico and West Texas.

By OGJ editors
HOUSTON, Apr. 10 -- Pioneer Natural Resources Co., Dallas, reported Tuesday that it will spend $193 million to acquire working interests in natural gas properties in the Gulf of Mexico and West Texas.

Pioneer said it will purchase an additional 25% working interest in Falcon field and associated acreage in the deepwater gulf from Mariner Energy Inc., Houston. Recently, Pioneer also has acquired a 5% working interest in the field from another minority owner. The purchase of the additional 30% interest in the field totaled $55 million.

Separately, Pioneer inked a definitive agreement to acquire the assets and remaining 23% of the interests that it doesn't already own in West Panhandle field from Colorado Interstate Gas Co. and CIG Production Co. LP, both subsidiaries of Houston-based El Paso Corp. In addition, Pioneer also will acquire the related West Panhandle field gathering system for a total of $138 million.

Pioneer reported it would offer 10 million newly issued shares of common stock to finance the purchases.

Falcon acquisition
Following the purchase, Pioneer will hold 75% working interest in Falcon field. Within 30 days of the purchase, Pioneer will assume operatorship of the field, which lies in 3,400 ft of water on East Breaks Blocks 579, 580, and 623 about 100 miles east of Corpus Christi, Tex.

Mariner, previously the operator of Falcon, will retain a 25% working interest in the field. Incremental initial production of 50 MMcfd of gas from Falcon is slated for first quarter 2003, with peak rates expected to reach 175 MMcfed. Development plans for Falcon were announced late last year (OGJ Online, Oct. 24, 2001).

Falcon will be Pioneer's first operated deepwater gulf project. In addition to the working interest in Falcon acquired from Mariner, Pioneer will purchase an additional 25% working interest from Mariner in 11 blocks that surround the Falcon discovery. These blocks were acquired by both companies in August 2001.

Pioneer also will acquire a 100% working interest in 10 deepwater Gulf of Mexico blocks that surround Falcon from El Paso Production GOM Inc., a unit of El Paso Corp.

West Panhandle purchase
Following the West Panhandle transactions, Pioneer will hold a 100% working interest in the field and gathering system. Pioneer expects incremental production of about 20 MMcfd from the transaction.

Pioneer said it would continue its horizontal drilling program in the filed, where it has identified about 330 drilling locations.

"Owning and operating 100% of [West Panhandle] field will allow us to drill wells more economically and implement significant cost efficiencies," said Scott D. Sheffield, Pioneer chairman and CEO.