Pioneer Natural Resources board approved a 28% increase in its2001 capital budget compared to 2000 spending and announced a newhedging program weighted toward first quarter prices. Its spendingwill be weighted heavily toward natural gas development.

“[W]e expect to grow production by at least 25% over the next 24months. We also have a strong development program focused onincreasing production this year and exposing the company tosignificant upside by investing 25% of our budget in high-impactexploration projects,” said CEO Scott D. Sheffield.

The $430 million capital budget will be funded with a portion ofPioneer’s discretionary cash flow, which is expected to exceedprior estimates. The excess cash flow will be available for debtreduction, development of additional exploration successes, corearea acquisitions and stock repurchases.

In addition, the company announced that it has entered intosignificant new hedge contracts for natural gas and oil weightedtoward the first quarter. “Our first quarter 2001 commodity hedgingwill help Pioneer realize minimum targets of $25 per barrel for oiland $5 per Mcf for natural gas for the year to fund our exciting2001 program, even if prices decline significantly from currentlevels,” Sheffield said.

Pioneer has entered into swaps for 110 MMcf/d for Januarythrough March at an average price of $8.76/Mcf. As previouslydisclosed, it has existing 2001 swaps for 49 MMcf/d at an averageprice of $2.50/Mcf. Existing 2001 collars cover 54 MMcf/d at anaverage ceiling price of $2.90 and an average floor price of $2.25.The company has hedged 45% of its 2001 North American gasproduction.

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