Pioneer Closes $1.7 Billion Wolfcamp Deal With Sinochem

Closed the sale of 40% interest in the jointly owned acreage.

Pioneer Natural Resources Co. (NYSE: PXD) has closed its previously announced transaction with Sinochem Petroleum USA LLC, a US subsidiary of the Sinochem Group, to sell 40% of Pioneer’s interest in 207,000 net acres leased by the company in the horizontal Wolfcamp shale play in the southern portion of the Spraberry trend area field for US $1.7 billion.

At closing, Sinochem paid US $631 million in cash to Pioneer, of which US $522 million was the up-front portion of the transaction price and US $109 million was Sinochem’s 40% share of net expenditures in the joint interest area from the Dec. 1, 2012 effective date of the transaction to the closing date. Sinochem will pay the remaining US $1.2 billion of the transaction price by carrying 75% of Pioneer’s share of future drilling and facilities costs until the drilling carry is fully utilized. Production from the joint interest area is approaching 10,000 barrels oil equivalent per day, and Sinochem will commence receiving its share effective immediately.

Sinochem is acquiring 82,800 net acres of Pioneer’s leasehold. Pioneer retains 60% of its interest in the Wolfcamp and deeper horizons, with Sinochem receiving 40% of Pioneer’s interest. Pioneer will continue as operator and will conduct all leasing, drilling, operations and marketing activities in the joint interest area. The joint interest area covers defined portions of Upton, Reagan, Irion, Crockett and Tom Green counties in Texas. Pioneer retains its current working interests in all horizons shallower than the Wolfcamp horizon.

Pioneer Natural Resources Co. is as an independent energy company in the US. The company is headquartered in Irving, Texas.