January 29, 2004 --- Vol. 10, No. 11January 2004

Pioneer farms in on ConocoPhillips Kalubik acreage

Pioneer Natural Resources and Armstrong Alaska have effectively doubled their acreage at Oooguruk on Alaska’s North Slope.

Pioneer said today that the companies concluded an agreement with ConocoPhillips Alaska under which ConocoPhillips will farm out its 100 percent interest in approximately 23,000 acres of Alaska state oil and gas leases to Pioneer and Armstrong. The leases, in the shallow waters of the Beaufort Sea, are approximately five miles northwest of the ConocoPhillips operated Kuparuk River unit and immediately adjacent to approximately 25,000 acres under lease by Pioneer (70 percent) and Armstrong (30 percent).

Last winter Pioneer and Armstrong drilled three wells in the Northwest Kuparuk prospect within what later became the Oooguruk unit that “established the existence of potentially commercial quantities of oil in Jurassic-aged sands,” Pioneer said.

“The field may extend beneath the acreage covered under the farm-in agreement,” the company said.

The agreement gives Pioneer and Armstrong the right to purchase 3-D seismic and obtain access to other proprietary data that will be used for a study of the commercial potential of the area, which Pioneer said it expects to complete in 2004. ConocoPhillips retains the right to participate in any project ultimately sanctioned by Pioneer and Armstrong.

In July the state approved formation of the Oooguruk unit over the Pioneer and Armstrong leases where the companies drilled last winter. The Division of Oil and Gas said oil-bearing Jurassic sands southwest of the unit had been tested in several Colville Delta exploration wells: the Texaco Colville Delta No. 1 (1,075 barrels per day of 25 degree API oil); the Texaco Colville Delta No. 2 (409 bpd of 24-40 degree oil); the Texaco Colville Delta No. 3 (374 bpd of 27.7 degree oil); and the ARCO Kalubik No. 1 (410 bpd of 21 degree oil).

These four Colville River area exploration wells are on the leases farmed out by ConocoPhillips.

“This farm-in was a critical step for Pioneer to move forward in evaluating potential development,” Scott Sheffield, Pioneer’s chairman, president and CEO, said in the company’s statement. “We look forward to continuing to work with ConocoPhillips with the joint goal of expanding oil production from the area.”

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