Pioneer Starts Up Oooguruk Production in Alaska

Pioneer Natural Resources Company announced that production and sales from the Oooguruk Unit on the North Slope have commenced as scheduled. Pioneer and its partner, Eni sanctioned the Oooguruk development in early 2006 after drilling three exploration wells during the winter of 2003.

The Oooguruk offshore oil field is located in the North Slope of Alaska, some 250 kilometers southeast of Barrow. The field is located 5 miles offshore from Harrison Bay in the Beaufort Sea, at an average water depth of approximately 5 feet.

Eni owns a 30% working interest in the field, acquired through the purchase of Armstrong Oil&Gas' Alaskan assets in August 2005. Pioneer Natural Resources Company holds the remaining 70% and is the Operator.

Pioneer is the first independent to initiate new field operations on the North Slope and has set a new precedent for North Slope offshore development because from the exploration phase to first production, the Oooguruk field was brought online in less than five years, a record time for a new offshore field on the North Slope.

A gravel island was built and outfitted with facilities to accommodate development drilling and field operations. Pioneer anticipates peak gross production in 2010/2011 of 15,000 to 20,000 barrels of oil per day from approximately 40 development wells (approximately half of the wells will be producing wells and half will be injection wells). These wells are expected to be drilled over the next three years. The gross oil resource potential from these base development wells is as much as 90 million barrels, before expansion opportunities. Field life is expected to be 25 to 30 years.

In commissioning the system and evaluating initial production data, Pioneer expects to initially produce 2,000 to 3,000 gross BOPD from Oooguruk. Production is expected to be shut in for approximately 45 days this summer for scheduled maintenance on the onshore third-party processing facility. Thereafter, production will be reinitiated and is expected to rise as additional wells are brought on line.

Through its participation in the Oooguruk project, Eni achieves its first production in Alaska and enhances its role as a major player in the Arctic.