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NEWS BULLETIN

January 04, 2011 --- Vol. 17, No. 1January 2011

Pioneer abandons Cosmopolitan

Pioneer Natural Resources Co. said this morning that it will not pursue development of the Cosmopolitan unit in Alaska’s Cook Inlet.

Pioneer acquired an interest in Cosmopolitan in 2005 where a previous owner had an oil discovery “for which economic viability was not determined,” Pioneer said. Pioneer completed and interpreted a 3-D seismic shoot and drilled a well to appraise the resource potential at Cosmopolitan, with results it said were encouraging.

Pioneer then completed a workover and fracture stimulation of the well, but said “flow test results and engineering studies indicated that the resource potential was not as large as originally estimated.”

Pioneer said it determined in the fourth quarter of 2010 that it would not fund further appraisal drilling based on limited impact from Cosmopolitan to the company’s future Alaska and overall growth profile.

The Cosmopolitan decision was one of two unusual items Pioneer said would be included in its fourth-quarter 2010 earnings, scheduled to be released after the market closes Feb. 7. The other item was a favorable cash settlement of $140 million related to an insurance claim for reclamation and abandonment of Pioneer’s Gulf of Mexico East Cameron 322 facility, destroyed by Hurricane Rita in 2005.

A noncash exploration and abandonment charge of approximately $101 million for Cosmopolitan will be offset by the East Cameron 322 cash settlement, resulting in a net gain included in Pioneer’s fourth-quarter earnings of some $33 million before tax ($21 million after tax), Pioneer said.

December North Slope production up 1.6%

December crude oil production from Alaska’s North Slope averaged 641,518 barrels per day, up 1.58 percent from a November average of 631,537 bpd, a gain of 9,981 bpd.

The BP Exploration (Alaska)-operated Prudhoe Bay field averaged 334,929 bpd in December, up 2.54 percent, and 8,299 bpd, from a November average of 326,630 bpd.

Production from the ConocoPhillips Alaska-operated Kuparuk River field averaged 129,323 bpd in December, up 1.78 percent and 2,263 bpd, from a November average of 127,060 bpd.

The BP-operated Northstar field had the largest percentage increase, with December up 22.26 percent from November. The field averaged 18,870 bpd in December, compared to 15,434 bpd in November. The BP-operated Lisburne field averaged 32,045 bpd in December, up 0.65 percent from a November average of 31,837 bpd.

The BP-operated Endicott field had the steepest percentage drop, averaging 12,831 bpd in December, down 6.1 percent from a November average of 13,665 bpd. The ConocoPhillips-operated Alpine field had the steepest per-barrel drop, averaging 86,646 bpd in December drop, down 3.68 percent and 3,306 bpd from a November average of 89,952 bpd. BP’s Milne Point field averaged 26,874 bpd in December, down 0.32 percent from a November average of 26,959 bpd.

See stories in Jan. 9 issue of Petroleum News, available to subscribers online at www.PetroleumNews.com by 11 a.m. Friday, Jan. 7

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