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Pioneer Sells Deepwater Gulf Assets to Marubeni for $1.3B

Following through on plans announced last fall, Pioneer Natural Resources said Thursday that it will sell the bulk of its deepwater Gulf of Mexico assets to Marubeni Offshore Production (USA) Inc. for $1.3 billion, but it will retain its stake in the Clipper deepwater discovery that it made last October.

The sale includes Pioneer's interest in three producing projects (the Falcon Corridor, Devils Tower and Canyon Express), two potential development projects (Ozona Deep and Thunder Hawk) and 88 exploration blocks. The sale includes about 35,000-40,000 boe/d of gas and oil production and 50 million boe of proved and probable reserves (40% proved). Also included are pipelines and subsea infrastructure associated with the Canyon Express project.

Pioneer is retaining its 55% operated interest in Green Canyon Blocks 299 and 300 where it drilled the Clipper discovery (see Daily GPI, Oct. 14, 2005; Sept. 2, 2005). Pioneer has a rig contracted to drill appraisal wells on the discovery in the second quarter and is currently evaluating possible development scenarios.

"With the completion of our divestitures and our commitment to complete the $1 billion share repurchase program, we are successfully delivering on the strategic initiatives we announced last September," said Pioneer CEO Scott D. Sheffield. "Approximately 92% of our production and 98% of our proved reserves will now be located in onshore oil and gas basins in North America. These core assets, coupled with several emerging resource plays, provide a strong platform for the company to begin delivering consistent, profitable growth over the next five years."

Last fall, Sheffield said the company intended to reduce its risk profile with an increased focus on onshore North America and the planned divestiture of short-lived and nonstrategic deepwater assets as well as assets in Argentina. He also said the high commodity pricing environment offered a unique opportunity to deliver near-term value to shareholders by repurchasing shares at attractive prices and increasing dividends.

The company announced the sale of its Argentina assets to Apache for $675 million in January. Production from the Argentina assets was 32,500 boe/d in 2005. The properties included net proved reserves of 101 million boe.

Pioneer reported a 4% drop in average daily U.S. gas sales last year to 497.1 MMcf/d compared to 2004 levels. Its U.S. gas liquids sales fell 11.6% to 17,402 bbl/d but its U.S. oil sales rose 5% to 25,943 bbl/d.

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