Pioneer Natural Resources Co. announced last week that its Pioneer Natural Resources USA subsidiary has closed the sale of certain deepwater Gulf of Mexico assets to Marubeni Offshore Production (USA) Inc., a subsidiary of Marubeni Corp., for cash proceeds of $1.3 billion before normal closing adjustments, which are currently estimated to be approximately $140 million. Dallas-based Pioneer said it expects to record an after-tax gain associated with the sale of approximately $425-475 million.
Announced in February, the deal includes Pioneer's interests in three producing projects (Falcon Corridor, Devils Tower and Canyon Express), two potential development projects (Ozona Deep and Thunder Hawk) and 87 exploration blocks (see NGI, Feb. 27). Pioneer said one exploration block was removed from the sale to Marubeni due to a third-party exercise of a preferential right to purchase the block.
Pioneer said it is retaining its 55% operated interest in Green Canyon Blocks 299 and 300 where it drilled the Clipper discovery announced in October 2005 (see NGI, Oct. 17, 2005; Sept. 5, 2005). Pioneer plans to develop this field and has a rig contracted to drill appraisal wells in the third quarter.
The company said a portion of the proceeds will be used to initiate the repurchase of the remaining $359 million of shares authorized under its previously announced $1 billion share repurchase program. Proceeds will also be used to reduce short-term debt and fund a portion of Pioneer's 2006 capital budget, which is focused primarily on North American onshore development activities and lower-risk resource plays.
During December 2005, Pioneer's net daily production from the properties being divested averaged approximately 38,000 boe.
The divestment was part of Pioneer CEO Scott D. Sheffield's plan for the company, which was unveiled last fall. Through the plan, 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. Following the sale, Sheffield said, approximately 92% of Pioneer's production and 98% of its proved reserves are now located in onshore oil and gas basins in North America.
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