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Pioneer Sells TX, Canada Properties for $105 M

Pioneer Sells TX, Canada Properties for $105 M

Pioneer Natural Resources Co. of Dallas agreed to sell oil and gas properties in Texas and Canada for about $105 million, which will be used to retire Pioneer bank debt.

Pioneer signed a definitive agreement to sell South Texas gas properties to CNG Producing Co. for $62.3 million. Closing is expected Aug. 31 with a July 1 effective date. Pioneer also agreed to sell West Texas field for $8.2 million with closing anticipated June 30.

In Canada, Pioneer began divesting 68 non-core properties earlier this year. About half of the properties are now under eight purchase and sale agreements with combined proceeds of about $35 million. The agreements have effective dates within the second quarter and are expected to close by the end of June. Five letters of intent also have been signed for additional proceeds of $35 million with closings anticipated early in the third quarter. While the properties to be divested represent about 49% of Pioneer's Canadian production, they represent only 24% of Canadian proved reserves. Pioneer is retaining eight core properties in Canada, more than 90% of which are operated by the company. Production from these properties is 82% gas with an approximate operating cost of $2.00/Boe.

"These divestitures are another significant step in the execution of Pioneer's strategy to streamline operations and reduce bank debt," said CEO Scott D. Sheffield. "Combined with the previously announced divestiture to Prize Energy Corp., Pioneer has signed definitive agreements for the sale of approximately $350 million of domestic and Canadian non-core properties. We anticipate that additional domestic non-core property divestitures currently under negotiation and the remaining $35 million of Canadian transactions will bring total proceeds from asset sales to more than $400 million by the end of the third quarter."

As of March 31, Pioneer's debt stood at about $2.2 billion, a spokeswoman said. "Through the course of asset divestitures this year, we plan to reduce that amount by $400 million." Further debt reduction could come next year with more sales of non-core assets and the application of excess cash flow to debt payment, she said.

Pioneer struck a deal in May with Tulsa, OK-based Prize Energy for the sale of $245 million in oil and gas properties in onshore Texas and Oklahoma (see Daily GPI May 18, 1999). The agreement followed the failure of a previous deal with Costilla Energy for the same assets. Costilla was unable to close the deal.

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