Pioneer added 108.8 MMBOE of proved reserves during 2003, replacing 193% of production at a finding cost of $6.64 per barrel oil equivalent (BOE). The Company added 94.9 MMBOE from extensions, discoveries and revisions and acquired 13.9 MMBOE during 2003. Costs incurred during 2003 totaled $723 million, including $572 million for development and exploration activities and $151 million for acquisitions. Pioneer produced 56.5 MMBOE during 2003, and no reserves were sold during the year.
Year-end proved reserves and costs incurred are detailed in the attached supplemental schedule.
For the three years ending in 2003, Pioneer's finding cost averaged $6.76 per BOE. Over the three-year period, Pioneer added 302 MMBOE for total costs incurred of $2.0 billion. Three-year average reserve replacement was 216%. For the five years ending in 2003, Pioneer's finding cost averaged $5.54 per BOE. Over the five-year period, Pioneer added 466 MMBOE for total costs incurred of $2.6 billion. Five-year average reserve replacement was 199%.
For 2003, Pioneer had net upward revisions of its previous estimates of proved reserves of 58.0 MMBOE, of which only 3.4 MMBOE related to oil and gas price changes. The balance, or 54.6 MMBOE, related to net increases in estimated reserves for previously booked fields in the U.S. and Argentina of 58.0 MMBOE offset by slight net decreases in estimated reserves for fields in Canada and Africa of 3.4 MMBOE. The net upward revisions in Pioneer's U.S. and Argentine proved reserves are primarily a result of better than expected reservoir performance and the addition of reserves resulting from the Company's expanded development drilling program. The moderate downward revisions to Pioneer's proved reserves reflect recent well performance for fields in Canada and South Africa.
Because the decreases in Canada and South Africa relate to proved developed reserves, depreciation, depletion and amortization expense (DD&A) for the fourth quarter of 2003 averaged $7.56 per BOE, above the previously announced high-end guidance of $7.30 per BOE. As the Company continues to bring its deepwater Gulf of Mexico discoveries on production, Pioneer's DD&A rate is expected to increase, reflecting the greater proportionate share of production and higher capital cost of these high net margin projects. With new production from Harrier and incremental production from Sable anticipated during the first quarter, the estimated range for DD&A for the first quarter of 2004 is expected to increase to $7.75 to $8.25 per BOE.
Scott D. Sheffield, Chairman and CEO, stated, "We are very pleased with our 2003 reserve additions and finding and development costs. We entered the year in great shape, with an inventory of promising exploration prospects and legacy assets that offered the possibility for continued expansion, and we capitalized on those opportunities, delivering solid reserve growth at a competitive cost. We enter 2004 with what I believe are even better opportunities, with an exciting exploration portfolio, several unbooked discoveries that we will work to commercialize, and potential to expand existing core areas. With significant excess cash flow, we're eager to tackle our 2004 program and pursue new opportunities for value-added growth."
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