Volume 3, issue #21 - 31-08-1998

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Pioneer in E & P agreement with South Africa

June 19, 1998 Pioneer Natural Resources Company announced the approval of a petroleum exploration and production agreement with the Republic of South Africa and the successful testing of Pioneer's first exploration well in the venture.
A March 27, 1998 participation agreement entered into between SOEKOR E & P, the South African national oil company, and the South African subsidiary of Pioneer was approved in Pretoria by Dr. Penuell Maduna, South Africa's Minister of Minerals and Energy.
The agreement permits Pioneer to join with SOEKOR in exploration and production activities over areas covering approximately 3.5 mm acres in Block 9, located offshore the south coast of South Africa in the Bredasdorp Basin. Block 9, which has a total area in excess of 5 mm acres, has water depths generally less than 650 feet. It has commercial oil production from the Oribi Field (up to 25,000 bpd from 2 wells) and gas production from the F-A Field (about 190 mm cfpd).
Pioneer will earn a 49 % working interest andbe the operator for 2 sub-blocks totalling 3 mm acres that include the southern and western portions of Block 9. In addition, by joining SOEKOR in the drilling of one well in each of 8 discreet sub-blocks that have a combined area of about 500,000 acres, Pioneer will also earn working interests that vary from 20 % to 40 % in those sub-blocks.
The first SOEKOR-operated well under this agreement ("E-BD3"), encountered a gross pay interval of approximately 92 feet at a depth of 8,547 feet. A 75-foot thickness of this interval tested at a rate of 5,980 barrels of 40 degree API gravity oil per day and 3.6 mm cfpd of gas through a 3/4 inch choke. The well was completed and suspended pending field development. The drilling of this well has earned Pioneer a 35 % working interest in the E-BD accumulation, including the E-BD1 discovery well, which tested oil at a rate of 8,525 bpd . In addition, Pioneer has earned 25 % of the nearby E-CE accumulation, which tested oil at rates of up to 6,021 bpd from the best of 3successful wells.
SOEKOR is currently evaluating a second exploration test well ("E-DC1 "), in which Pioneer holds a 40 % working interest. This well is located about 35 miles south and east of E-BD3 in a separate sub-block. During the 1998 drilling program, Pioneer expects to participate in a total of 5 to 6 wells to be drilled by SOEKOR within several sub-blocks. In addition, during 1999, Pioneer plans to drill one or more exploration tests within the areas it operates.
Pioneer and SOEKOR have completed negotiations on a single petroleum agreement that will include former Blocks 10, 11A, 12A, 13A/B and 14A/B and cover approximately 10 mm acres east and west of Block 9. Trap types, source rocks, reservoirs and seals in this area are very similar to those responsible for oil and gas production in Block 9. Signing and Ministerial approval of this agreement are expected by early August.
Scott Sheffield stated, "One of the motivations behind Pioneer's formation less than a year ago was to gain the resources to access high-quality exploration and production opportunities on a world-wide basis. With this agreement, we have secured such an opportunity under favourable terms, and in a country that is actively seeking foreign investment.."