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September 30, 2004 --- Vol. 10, No. 80September 2004

Pioneer drops Alaska shallow gas leases acquired in Evergreen merger

Independent Pioneer Natural Resources said today that it is releasing all existing shallow gas leases in Alaska’s “Matanuska-Susitna Valley acquired as part of its merger with Evergreen Resources,” which closed on Sept. 28.

Alaska Gov. Frank Murkowski said the relinquishment was a result of the merger, and of negotiations with the state, noting that the shallow gas leasing program, which has been abolished by the Legislature, was a program that his administration inherited.

The released leases cover approximately 235,500 acres and include farm-outs and a Mental Health Trust lease.

Dallas-based Pioneer said in a statement that it decided to relinquish the non-conventional leases and withdraw an Evergreen exploration license application for 30,000 acres as a part of its strategic planning and due diligence associated with the merger.

Pioneer also said it “believes regulatory certainty is critical to any development program” it undertakes, referring to the state of Alaska’s decision this past year to abolish its over-the-counter leasing program for shallow gas, and a changing regulatory regime for coalbed methane exploration and development.

Scott Sheffield, Pioneer’s chairman and chief executive officer said, “We strongly support the state’s new gas-only leasing program defined by HB531, and we encourage them to continue the Best Interest Finding process for the Mat-Su.”

Pioneer holds nearly 1 million gross acres on the North Slope and has working partnerships with ConocoPhillips, Anadarko Petroleum and others.

“We are very enthusiastic about the opportunities we’re pursuing in Alaska and look forward to a long a prosperous future there,” Sheffield said.

Pioneer retains 48,000 acres of conventional oil and gas leases in the Mat-Su area Pioneer unit.

Alaska Division of Oil and Gas Director Mark Myers noted that Matanuska-Susitna areas leased under the shallow gas program had “discontinuous coal seams and lack of proper kind of fracturing,” for coalbed methane production but said the geology in the areas of conventional oil and gas leases in the Pioneer unit “suggest it could be commercial.”

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