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Pioneer Expects Gain of $75-80M on Canadian Sale

Dallas-based Pioneer Natural Resources Co. said Wednesday that it expects to recognize an aftertax gain of $75-80 million on the sale of its three Canadian oil and natural gas properties to Ketch Resources Ltd.

Pioneer announced that it sold the Martin Creek, Conroy Black and Lookout Butte properties for $199 million to Ketch earlier this year (see Daily GPI, April 29), all part of a plan to shed its noncore assets by the end of 2005. As of the effective date of March 1, the properties' net proved reserves were estimated to be 9 MMboe, with current net production averaging 3,000 boe/d.

The after-tax gain is based on Pioneer's intent to create a "repatriation plan" that qualifies for provisions under the American Jobs Creation Act of 2004. Pioneer will report the results of operations of the Canadian properties sold, including the gain on disposition, as discontinued operations in its 2Q2005 results.

Pioneer retained its core areas in Canada, the Chinchaga gas and the Horseshoe Canyon coalbed methane (CBM) gas fields. At Chinchaga, the company drilled 56 wells during its winter drilling campaign and has an inventory of locations remaining to drill in the future. Beginning this month, Pioneer plans to drill at least 80 wells to assess the potential of its extensive Horseshoe Canyon CBM acreage position.

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