Pioneer to Sell Interest in Offshore Gabon Block
Pioneer Natural Resources agreed to sell its interest in the Olowi block offshore Gabon to an undisclosed party for expected net proceeds of approximately $49 million. Pioneer retained the potential to receive additional payments for oil produced from any deeper reservoirs discovered on the block. The transaction is expected to close by the end of the third quarter and is subject to receiving government agreement as to certain provisions of the production sharing contract covering the block.
As a result of this agreement, Pioneer will reverse its previously recorded tax benefit of $27 million associated with the decision to exit Gabon made during the fourth quarter of 2004. The reversal will be recorded as deferred tax expense during the second quarter of 2005. The gain on sale of approximately $49 million will be recorded upon closing, expected during the third quarter of 2005.
"Since we made the decision last fall not to develop the Olowi
field, oil prices covering the potential production period for the
field have risen significantly. As a result, we reevaluated the Olowi
project and reconsidered our options for capturing its potential
value. We sought and received bids from potential partners interested
in jointly developing the field and from parties interested in an
outright purchase of our entire interest. Ultimately, we determined
that the best option was to sell our interest and realize the value of
the Olowi field while keeping our resources directed toward our other
higher-impact projects," stated Scott D. Sheffield, Pioneer's Chairman
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