Pioneer has acquired the remaining interest in 32 blocks in the Falcon area, including the Falcon field, the Harrier field and related satellite prospects from Mariner Energy for a net cash payment of approximately $113 million including normal closing adjustments. Pioneer has also assumed certain contractual obligations from Mariner. The transaction was approved by Mariner's board of directors and was closed on Friday, March 28, 2003, with payment into escrow. The transfer from escrow is contingent upon receipt of a no objection notice from the creditors committee of Enron Corp, which owns an interest in Mariner.
Pioneer also announced that it has approved the development of the Harrier discovery as a single-well subsea tie-back to the Falcon field facilities. Pioneer now owns a 100% working interest in the Harrier field which has estimated gas reserves of 55 to 80 billion cubic feet. An additional parallel pipeline connecting the Falcon field to the Falcon Nest platform on the Gulf of Mexico shelf will be added to the Falcon facilities doubling the capacity to 400 million cubic feet of gas per day. Pioneer expects first gas from the Harrier field within nine months with combined daily gas production from Falcon and Harrier expected to reach 275 million cubic feet per day. The Company plans to drill two additional prospects in the Falcon area during 2003 that, if successful, could also be tied back to the Falcon field to utilize the excess pipeline capacity. In addition, Pioneer has a multi-year inventory of prospects on the 32 blocks it holds in the area.
The Falcon field is located 100 miles east of Corpus Christi in 3,400 feet of water in East Breaks 579/623. The field and surrounding satellite discoveries are being produced via subsea wells tied back to a host platform located on the shelf approximately 30 miles away. The platform, Falcon Nest, and other facilities are owned and operated by El Paso Energy Partners, L.P. Pioneer has drilled three satellite wells in the Falcon area during 2003, the Harrier discovery and two other wells that were unsuccessful. Falcon is the second of five significant projects Pioneer plans to bring on stream through early 2004.
Scott D. Sheffield, Chairman and CEO, stated, "With Falcon on stream, our worldwide daily production is 50% higher than it was just one year ago, and U.S. gas production is up 135% over the same period. By approving the Harrier satellite project for immediate development, we add significant value and gas production growth in 2004. The capital invested in the additional pipeline to the Falcon Nest platform also provides added capacity to more aggressively pursue other prospects in the area with the potential to further impact 2004 production and value."
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