Pioneer Natural Resources Co. announced Monday its 100% owned and operated Falcon field in the western deepwater Gulf of Mexico began producing from two wells at approximately 185 MMcf/d and 650 b/d of condensate on March 15. The Falcon field start-up was the second of five major projects the company expects to bring online by early 2004.

“Our daily North America gas production, including our 100% working interest in Falcon, has reached 560 MMcf/d, a record for Pioneer, said Scott D. Sheffield, chairman and CEO. “With three additional projects to bring on over the next ten months, we expect that our worldwide daily production will be up approximately 80% from where we started in the second quarter of last year before Canyon Express was added, and our U.S. gas production is expected to be up approximately 180% over the same period.” With the Falcon wells online the company’s U.S. gas production is up 135% over the same period a year ago. Pioneer’s gas U.S. gas production in 2002 averaged slightly more than 232 MMcf/d.

Pioneer announced that, as part of a broader transaction, it has acquired its partner’s 25% working interest in the Falcon field and related projects and now owns 100%. The field is Pioneer’s first operated deepwater project, and first production was achieved two weeks ahead of schedule with less capital investment than was budgeted.

Pioneer has acquired the remaining interest in 32 blocks in the Falcon area, including the Falcon field, the Harrier field and related satellite prospects from Mariner Energy (“Mariner”) for a net cash payment of approximately $113 million including normal closing adjustments. Pioneer has also assumed certain contractual obligations from Mariner. The transaction was approved by Mariner’s board of directors and was closed on Friday, March 28, 2003, with payment into escrow. The transfer from escrow is contingent upon receipt of a no objection notice from the creditors committee of Enron Corp, which owns an interest in Mariner.

Dallas-based Pioneer also announced that it has approved the development of the Harrier discovery as a single-well subsea tie-back to the Falcon field facilities. Pioneer now owns a 100% working interest in the Harrier field which has estimated gas reserves of 55 to 80 Bcf. An additional parallel pipeline connecting the Falcon field to El Paso Energy Partners’ Falcon Nest platform on the Gulf of Mexico shelf will be added to the Falcon facilities, doubling the capacity to 400 MMcf/d.

Pioneer expects first gas from the Harrier field within nine months, with combined daily gas production from Falcon and Harrier expected to reach 275 MMcf/. The Company plans to drill two additional prospects in the Falcon area during 2003 that, if successful, could also be tied back to the Falcon field to utilize the excess pipeline capacity. In addition, Pioneer has a multi-year inventory of prospects on the 32 blocks it holds in the area.

The Falcon field is located 100 miles east of Corpus Christi in 3,400 feet of water in East Breaks 579/623. The field and surrounding satellite discoveries are being produced via subsea wells tied back to a host platform located on the shelf approximately 30 miles away. Pioneer has drilled three satellite wells in the Falcon area during 2003, the Harrier discovery and two other wells that were unsuccessful.

Canyon Express, operated by TotalFinaElf E&P USA, which at 7,210 feet holds the world record water depth for production, was the first of Pioneer’s five major projects to start up, with initial production reported in the third quarter of 2002. Following on its Falcon field initiative, Pioneer expects Sable, an oil development offshore South Africa, to begin producing during the second quarter of 2003. Harrier, the fourth major project and Devils Tower, a deepwater Gulf of Mexico oil and gas development, are expected to follow in early 2004.

Pioneer has a 23.5% interest in the Canyon Express gas gathering system in the Gulf , linking wells in the Aconcagua, Camden Hills and Kings Peak gas fields to the Canyon Station platform located in Main Pass 261 and was expecting to net 95 MMcf/d of the project’s estimated 500 MMcf/d production in first quarter 2003.

Pioneer also has a shallow water project in the Gulf , onshore Texas drilling programs and is exploring the Kuparuk River field in Alaska. Unseasonably warm weather curtailed the drilling season in Canada, leaving some prospects to be evaluated next winter. Pioneer nevertheless expects an increase of 16 MMcf/d in its Canadian production as a result of the winter activities. It Canadian production in 2002 averaged just above 48 MMcf/d.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.