Pioneer Provides Update on Argentina Activities

Pioneer announced that it has closed an acquisition of a 100% working interest in the Anticlinal Campamento block in the Neuquen Basin of Argentina from Alberta Energy Company, Argentina for $12.2 million. This 80,000-acre block extends Pioneer's position west from its current core operations in the Al Norte de la Dorsal (AND) area. The Anticlinal Campamento block includes a mature oil field with nominal production and a recently developed gas field producing 7 million cubic feet per day (MMCFPD) into local markets. Total proved reserves are estimated at 31.7 billion cubic feet of gas and 170,000 barrels of oil, yielding a purchase price of $2.24 per barrel oil equivalent. Pioneer expects to add significant reserves and production on the property through development of current producing areas and new exploration drilling.

Pioneer was also the successful bidder for the Cerro Vagon block in a recent Neuquen Province land auction. Pioneer acquired 100% of the 169,195-acre block in exchange for a commitment to acquire 440 square kilometers of 3-D seismic data and drill five exploratory wells over the next four years. The Cerro Vagon block is located adjacent to Pioneer's Al Sur de la Dorsal (ASD) core area in the Neuquen Basin. Pioneer has made a number of new discoveries in the last 18 months in adjacent blocks based on new 3-D seismic and expects to continue this trend at Cerro Vagon.

Earlier this year, Pioneer closed a multi-property transaction with two Argentine companies, IATE S.A. and Yacimientos del Sur S.A., for $2.5 million. The transaction included a 100% interest in two exploration blocks covering 51,500 acres in the Dos Hermanas concession of Neuquen Province also adjacent to the core area. Pioneer has committed to drill two exploratory wells on the blocks. Pioneer also acquired the remaining 25% interest in the La Calera block in central Neuquen and now operates and owns 100% of La Calera which comprises 55,328 acres immediately adjacent to the Loma La Lata gas field, the largest in Argentina. Pioneer is currently evaluating a large deep gas exploration prospect on the block as well as potential reactivation of an existing oil field.

Development in the AND block continues in the Bajo Barda Gonzales field where Pioneer has drilled 33 oil wells since its discovery in June 2000. Most recently, the BBG37H horizontal well encountered the upper Lotena sand with 1,340 feet of horizontal displacement. The well has been on production for 20 days at a stable rate of 1,100 barrels of oil per day (BOPD) and 0.9 MMCFPD of gas. Pioneer has identified more than ten additional well locations in this field.

In the Loma Negra Norte field, nine successful wells have been drilled to date. A permanent production battery and pipeline to connect the field to the AND central facilities are under construction. Five to ten additional wells are planned to further extend the field which is now producing 1,520 BOPD and 2 MMCFPD.

In the Lago Fuego block in Tierra del Fuego, Pioneer recompleted two existing wells that are capable of producing approximately 7 MMCFPD and 200 barrels of natural gas liquids (NGL) per day on a combined basis. Commercial production has commenced following the installation of a dehydration plant and construction of an 8-mile, 8-inch pipeline to the city of Ushuaia. Additional drilling plans will be developed to assess the size of this field after performance data is gathered.

Pioneer has awarded the contract for construction of an NGL extraction facility at its Loma Negra gas complex near its AND core area. The plant is designed to process 75 MMCFPD inlet gas and is expected to extract up to 3,150 barrels of NGL per day. The NGL produced will be sold to local and export markets and will allow the Company to capture additional value from its Neuquen gas production, increasing the value of twenty percent of the gas stream by a factor of three. The plant is expected to be in service by mid-2002.

Pioneer has also approved the construction of a new 35-mile, 16-inch pipeline from the Loma Negra complex to the TGS NEUBA trunkline in central Neuquen. This pipeline will provide incremental capacity to transport up to 175 MMCFPD of gas to the Buenos Aires market. Construction is expected to begin in August and be completed in the fourth quarter of this year.