Pioneer & Woodside to Jointly Drill for Gas on GOM Shelf

Pioneer Natural Resources Company and Woodside Energy (USA) Inc., a subsidiary of Woodside Energy Ltd. of Australia have agreed to a joint exploration program for a two-year campaign over the shallow-water Texas Shelf region of the Gulf of Mexico.

Under the agreement, Woodside has taken a 50% interest in 47 offshore exploration blocks operated by Pioneer. The agreement covers eight prospects and 19 leads and includes five wells in 2003 and three in 2004. The agreement represents a total cost to Woodside of US$55 million. Most of the wells will target gas plays below 15,000 feet (4500 meters).

The eight wells to be drilled by the parties in 2003 and 2004 are on prospects generated and leased by Pioneer since 1997. In addition, the companies will evaluate for potential inclusion in the drilling program shallower gas prospects on other blocks covered by the leases.

Woodside's Director of New Ventures, Dr. Agu Kantsler, said the Pioneer agreement is a key building block in Woodside's growth strategy. It provides the company with a cost-effective opportunity to participate in and evaluate the Gulf of Mexico shelf gas play.

"The Gulf of Mexico is one of Woodside's four focus areas in our search for international exploration and production opportunities to complement our Australian interests," Dr. Kantsler said. "Through this transaction, we continue our staged approach to building a balanced portfolio of shallow and deepwater opportunities in the Gulf of Mexico to manage risk and reward."

Pioneer's Executive Vice President of Exploration, Chris Cheatwood, said drilling of the first of five wells is expected to begin before the end of March. "By combining both companies' technical expertise and capital, we can better manage our risk and properly test a broader portfolio of prospects," he said.

Dr. Kantsler said the Pioneer acreage targets emerging deep gas, an under-explored play that has attracted significant interest in the past few years, primarily because discoveries can be brought into production within six months to two years due to their proximity to existing infrastructure. "This opportunity offers the potential for Woodside to achieve gas production and revenue from the Gulf shelf within the next two years," Dr. Kantsler said.