UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                          SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2021
                         Commission File Number: 1-13245
                        Pioneer Natural Resources Company
             (Exact name of registrant as specified in its charter)
                         Delaware                             75-2702753
              (State or other jurisdiction of              (I.R.S. Employer
               incorporation or organization)             Identification No.)
1400 Williams Square West, 5205 N.  O'Connor Blvd., Irving, Texas     75039
           (Address of principal executive offices)                 (Zip Code)
               Registrant's telephone number, including areacode:
                                 (972) 444-9001
           Securities registered pursuant to Section 12(b) of the Act:
                                                        Name of each exchange
   Title of each class                                   on which registered
   -------------------                                  ----------------------
   Common Stock......................................   New York Stock Exchange
        Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Aggregate market value of the voting stock held by non-affiliates
  of the Registrant as of February 20, 2001...................   $1,759,169,790
Number of shares of Common Stock outstanding as of
  February 20, 2001...........................................       98,414,096
                      Documents Incorporated by Reference:
(1)   Proxy Statement for Annual Meeting of Shareholders to be held May 17, 2022
      - Referenced in Part III of this report.

PIONEER NATURAL RESOURCES COMPANY CROSS REFERENCE SHEET Pursuant to National Policy Statement No. 47 (Canada) (Annual Information Form ("AIF")) Item Number and Caption of AIF Heading or Location in Form 10-K - ------------------------------ -------------------------------- 1. Incorporation Item 1. Business 2. General Development of the Business Item 1. Business 3. Narrative Description of the Business Item 1. Business Item 2. Properties 4. Selected Consolidated Financial Information Item 6. Selected Financial Data Item 8. Financial Statements and Supplementary Data 5. Management's Discussion and Analysis Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk 6. Market for Securities Item 5. Market for Registrant's Common Stock and Related Stockholder Matters 7. Directors and Officers Item 10. Directors and Executive Officers of the Registrant 8. Additional Information Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions 2

Parts I and II of this annual report on Form 10-K (the "Report") contain forward looking statements that involve risks and uncertainties. Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward looking statements. See "Item 1. Business - Competition, Markets and Regulation" and "Item 1. Business - Risks Associated with Business Activities" for a description of various factors that could materially affect the ability of Pioneer Natural Resources Company to achieve the anticipated results described in the forward looking statements. Definitions of Oil and Gas Terms and Conventions Used Herein Within this Report, the following oil and gas terms and conventions have specific meanings: "Bbl" means a standard barrel containing 42 United States gallons; "Bcf" means one billion cubic feet; "Bcfe" means a billion cubic feet equivalent and is a standard convention used to express oil and gas volumes on a comparable gas equivalent basis; "BOE" means a barrel-of-oil equivalent and is a standard convention used to express oil and gas volumes on a comparable oil equivalent basis; "Btu" means British thermal unit and is an energy equivalent measure of natural gas; "MBbl" means one thousand Bbls; "MBOE" means one thousand BOE; "MMBOE" means one million BOE; "Mcf" means one thousand cubic feet and is a measure of natural gas volume; "MMcf" means one million cubic feet; "NGL" means natural gas liquid; "NYMEX" means The New York Mercantile Exchange; "proved reserves" mean the estimated quantities of oil, gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions (i.e., prices and costs as of the date the estimate is made), where prices include consideration of changes in existing prices only to the extent that price changes are provided for under existing contractual arrangements, but not escalations based on future conditions; "Standardized Measure" means the after-tax present value of estimated future net revenues of proved reserves, determined in accordance with the rules and regulations of the United States Securities and Exchange Commission (the "SEC"), using prices and costs in effect at the specified date and a 10 percent discount rate; and "WTI" means West Texas Intermediate and is a benchmark grade of oil. Gas equivalents are determined under the relative energy content method by using the ratio of 6.0 Mcf of gas to 1.0 Bbl of oil or NGL. With respect to information on the working interest in wells, drilling locations and acreage, "net" wells, drilling locations and acres are determined by multiplying "gross" wells, drilling locations and acres by Pioneer Natural Resources Company's working interest in such wells, drilling locations or acres. Unless otherwise specified, wells, drilling locations and acreage statistics quoted herein represent gross wells, drilling locations or acres; and, all dollar amounts are expressed in United States dollars. PART I ITEM 1. BUSINESS General Pioneer Natural Resources Company ("Pioneer", or the "Company"), a Delaware corporation, was formed by the merger of Parker & Parsley Petroleum Company ("Parker & Parsley") and MESA Inc. ("Mesa") during August 1997. The Company subsequently acquired the Canadian and Argentine oil and gas business of Chauvco Resources Ltd. ("Chauvco"), a publicly traded, independent oil and gas company based in Calgary, Canada, during December 1997. Pioneer is an oil and gas exploration and production company with ownership interests in oil and gas properties located in the United States, Argentina, Canada, South Africa and Gabon. The Company's executive offices are located at 1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas 75039; the Company's telephone number is (972) 444-9001. The Company maintains other offices in Midland, Texas; Buenos Aires, Argentina; Calgary, Canada; and Capetown, South Africa. At December 31, 2000, the Company had 853 employees, 410 of whom were employed in field and plant operations. 3

Mission and Strategies The Company's mission is to provide shareholders with superior investment returns through strategies that maximize Pioneer's long-term profitability and net asset values. The strategies employed to achieve this mission are anchored by the Company's long-lived Spraberry oil field and Hugoton and West Panhandle gas fields' reserves and production. Underlying these fields are approximately 67 percent of the Company's proved oil and gas reserves which have a remaining productive life in excess of 40 years. The stable base of oil and gas production from these fields generates operating cash flows that allow Pioneer the financial flexibility to selectively reinvest capital in these areas to: (a) develop and increase production from existing properties through low-risk development drilling activities, (b) leverage cost management opportunities to achieve operating and technical efficiencies, and (c) pursue strategic acquisitions in the Company's core areas that will complement the Company's existing asset base and provide additional growth opportunities. The Company's financial flexibility also allows it to use portions of its operating cash flows to: (a) selectively expand into new geographic areas that feature producing properties and provide exploration/exploitation opportunities, (b) invest in the personnel and technology necessary to increase the Company's exploration opportunities, and (c) enhance liquidity; allowing the Company to take advantage of future exploration, development and acquisition opportunities. The Company is committed to continuing to enhance shareholder investment returns through adherence to these strategies. Business Activities The Company is an independent oil and gas exploration and development company. Its purpose is to competitively and profitably explore for, develop and produce proved oil, NGL and gas reserves. In so doing, the Company sells homogenous oil, NGL and gas units which, except for geographic and relatively minor qualitative differentials, cannot be significantly differentiated from units offered for sale by the Company's competitors. Competitive advantage is gained in the oil and gas exploration and development industry through superior capital investment decisions, technological innovation and cost management. Petroleum Industry. The petroleum industry has been characterized by volatile oil, NGL and gas commodity prices and relatively stable supplier costs during the three years ended December 31, 2000. During 1998, weather patterns, regional economic recessions and political matters combined to cause worldwide oil supplies to exceed demand resulting in a substantial decline in oil prices. Also during 1998, but to a lesser extent, market prices for gas declined. During 1999 and 2000, the Organization of Petroleum Exporting Countries and certain other oil exporting nations announced reductions in their planned export volumes. Those announcements, together with the enactment of the announced reductions in export volumes, had a positive impact on world oil prices, as have overall gas supply and demand fundamentals on North American gas prices. Although the favorable commodity price environment is expected to continue during 2001, the Company will continue its debt reduction, commodity hedging and cost management measures to protect its net asset values from a potential return to a less favorable commodity price environment. The Company. The Company's asset base is anchored by the Spraberry oil field located in West Texas, the Hugoton gas field located in Southwest Kansas and the West Panhandle gas field located in the Texas Panhandle. Complementing these areas, the Company has exploration and development opportunities and oil and gas production activities in the United States Gulf Coast area, Gulf of Mexico, Argentina, Canada, South Africa and Gabon. Combined, these assets create a portfolio of resources and opportunities that are well balanced among oil, natural gas liquids and gas; and that are also well balanced between long-lived, dependable production and exploration and development opportunities. Additionally, the Company has a team of dedicated employees that represent the professional disciplines and sciences that will allow Pioneer to maximize the long-term profitability and net asset values inherent in its physical assets. During 1998, the Company announced plans to sell certain non-strategic oil and gas fields, its intentions to reorganize its operations by combining its six domestic operating regions, and other cost reduction initiatives intended to allow the Company to realize greater operational and administrative efficiencies. Specific cost reduction initiatives included the relocation of most of the Company's administrative services from Midland, Texas to Irving, Texas; the closings of the Company's regional offices in Oklahoma City, Oklahoma, Corpus Christi, Texas and Houston, Texas; the termination of 350 employees; and, further centralization of the Company's organizational structure. The consolidation of administrative services to Irving and the 4

closing of the Corpus Christi, Texas office were completed in 1998. The Company completed the closings of the Houston, Texas and Oklahoma City, Oklahoma offices during 1999 and further centralized certain operational functions in Irving, Texas. As a result of the reorganization initiatives, the Company recognized reorganization charges of $8.5 million and $33.2 million during 1999 and 1998, respectively, and realized reductions in per BOE production costs from $3.56 in 1998 to $3.12 in 1999 and reductions in per BOE administrative costs from $1.16 in 1998 to $.79 in 1999. During 2000, the Company's per BOE production costs increased to $4.34, primarily due to increases in per BOE production taxes and field fuel expenses that are directly related to the increase in oil and gas prices. Per BOE administrative costs continued to decrease to $.76 during 2000. During 2000 and 1999, the Company realized $102.7 million and $420.5 million, respectively, of net proceeds from the divestiture of non-core assets ($390.5 million of the 1999 proceeds were cash proceeds). Net cash proceeds associated with the 2000 and 1999 asset divestitures were used to reduce outstanding indebtedness (see "Asset Divestitures" and Note K of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data"). The stable operating cash flows generated by the Company's core assets allow the Company to adjust capital spending levels based on anticipated changes in internally-generated cash flows and in support of debt goals without significantly impacting short term production volumes. During 1999, the Company reduced its capital expenditures to $179.7 million and reduced outstanding indebtedness by $429.3 million. During 2000, in a favorable price environment, the Company increased its capital expenditures to $299.7 million and reduced outstanding indebtedness by $167.2 million. The Company's budgeted 2001 capital expenditures are $430 million (see "Drilling Activities" and "Exploratory Activities", below). The Company provides administrative, financial and management support to United States and foreign subsidiaries that explore for, develop and produce oil, NGL and gas reserves. Drilling and production operations are principally located domestically in Texas, Kansas, Louisiana and the Gulf of Mexico, and internationally in Argentina, Canada and South Africa. Production. The Company focuses its efforts towards maximizing its average daily production of oil, NGL and gas through development drilling, production enhancement activities and acquisitions of producing properties. During 2000, 1999 and 1998, the Company's average daily oil, NGL and gas production decreased primarily as a result of oil and gas property divestitures that were supportive of the Company's debt reduction goals. Production, price and cost information with respect to the Company's properties for each of 2000, 1999 and 1998 is set forth under "Item 2. Properties - Selected Oil and Gas Information - Production, Price and Cost Data". Drilling Activities. The Company seeks to increase its oil and gas reserves, production and cash flow through exploratory and development drilling and by conducting other production enhancement activities, such as well recompletions. From the beginning of 1998 through the end of 2000, the Company drilled 1,168 gross (852.8 net) wells, 92 percent of which were successfully completed as productive wells, at a total cost (net to the Company's interest) of $867.6 million. During 2000, the Company drilled 296 gross (213.5 net) wells for a total cost (net to the Company's interest) of approximately $232.5 million, 54 percent of which was spent on development wells and related facilities. The Company's current 2001 capital expenditure budget is $430 million, which represents a spending increase of approximately 26 percent over 2000. The Company has allocated the budgeted 2001 capital expenditures as follows: $315 million to development drilling and facility activities, and $115 million to exploration activities. The Company believes that its current property base provides a substantial inventory of prospects for future reserve, production and cash flow growth. The Company's reserves as of December 31, 2021 include proved undeveloped and proved developed non-producing reserves of 87.2 million Bbls of oil and NGLs and 419.6 Bcf of gas. The timing of the development of these reserves will be dependent upon the commodity price environment, the Company's expected operating cash flows and the Company's financial condition. The Company believes that its current portfolio of undeveloped prospects provides attractive development and exploration opportunities for at least the next three to five years. 5

Exploratory Activities. Since 1998, the Company has dedicated increasing percentages of its annual exploration and development costs incurred to exploratory projects: 30 percent in 1998, 38 percent in 1999 and 48 percent in 2000. The Company's commitment to exploration has resulted in significant discoveries during this time period, such as the 1998 Sable oil field discovery in South Africa, the 1999 Aconcagua and 2000 Devils Tower discoveries in the deepwater Gulf of Mexico and, during the first quarter of 2001, the Boomslang discovery in South Africa (see "Item 2. Properties - International - Africa" below.) During 2001, the Company plans to spend a higher percentage of its capital on the development of its high-impact, Gulf of Mexico projects, such as the Canyon Express gas project and Devils Tower oil project, and the Sable oil project (see "Item 2. Properties - Description of Properties"). Consequently, the Company currently anticipates that its 2001 exploration efforts will comprise 27 percent of total budgeted 2001 expenditures and will be concentrated domestically in the Gulf of Mexico and the onshore Gulf Coast area, and internationally in Argentina, Canada, Gabon and South Africa. Exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons than development drilling or enhanced recovery activities. See "Item 1. Business - Risks Associated with Business Activities - Drilling Activities" below. Asset Divestitures. The Company regularly reviews its property base for the purpose of identifying non-core assets, the disposition of which would increase capital resources available for other activities and create organizational and operational efficiencies. While the Company generally does not dispose of assets solely for the purpose of reducing debt, such dispositions can have the result of furthering the Company's objective of financial flexibility through reduced debt levels. During 2000, 1999 and 1998, the Company's divestitures consisted of the sale of oil and gas properties and other assets for net proceeds of $102.7 million, $420.5 million (of which $390.5 million was cash proceeds) and $21.9 million, respectively, which resulted in a 2000 net divestiture gain of $34.2 million and 1999 and 1998 net divestiture losses of $24.2 million and $445 thousand, respectively. The assets that the Company divested during 2000 were primarily comprised of an investment in a non-affiliated entity and non-core United States oil and gas properties located in Oklahoma, New Mexico and Louisiana. The Company's 1999 divestitures were comprised of non-core United States and Canadian oil and gas properties, gas plants and other assets. United States asset divestitures comprised 86 percent, or $361.2 million, of the total 1999 proceeds from the divestiture of oil and gas properties; and, Canadian asset divestitures comprised 14 percent, or $59.3 million of the 1999 proceeds from the divestiture of oil and gas properties. The net cash proceeds from the 2000 and 1999 asset dispositions were used to reduce the Company's outstanding bank indebtedness and, during 1998, the net cash proceeds from asset dispositions were used to provide funding for a portion of the Company's capital expenditures, including purchases of oil and gas properties in the Company's core areas. See Note K of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for specific information regarding the Company's asset divestitures. The Company anticipates that it will continue to sell non-strategic properties from time to time to increase capital resources available for other activities, to achieve operating and administrative efficiencies and to improve profitability. Acquisition activities. The Company regularly seeks to acquire properties that complement its operations, provide exploration and development opportunities and potentially provide superior returns on investment. In addition, the Company pursues strategic acquisitions that will allow the Company to expand into new geographical areas that feature producing properties and provide exploration/exploitation opportunities. During 2000, the Company expended $67.2 million to acquire proved and unproved oil and gas properties. Strategic acquisitions of proved properties during 2000 included incremental working interests in the United States Gulf of Mexico discovery at Devils Tower and the Canadian Chinchaga field. The Company also acquired an interest in the Camden Hills Gulf of Mexico discovery during 2000. During 1999, the Company acquired Argentine proved and unproved oil and gas properties that complement its existing operations in Argentina. The Company paid $38.8 million of cash for the Argentine assets during the fourth quarter of 1999, of which amount $2.5 million was cash consideration paid for unproved Argentine oil and gas properties. The Company regularly evaluates and pursues acquisition opportunities (including opportunities to acquire particular oil and gas properties or related assets; entities owning oil and gas properties or related assets; and, opportunities to engage in mergers, consolidations or other business combinations with such entities) and at any given time may be in various stages of evaluating such opportunities. Such stages may take the form of internal 6

financial analysis, oil and gas reserve analysis, due diligence, the submission of an indication of interest, preliminary negotiations, negotiation of a letter of intent or negotiation of a definitive agreement. Operations by Geographic Area The Company operates in one industry segment. During 2000, 1999 and 1998, the Company principally had oil and gas producing activities in the United States, Argentina and Canada; and, had exploration activities in the United States Gulf Coast area, the Gulf of Mexico, Argentina, Canada, South Africa and Gabon. See Note O of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for geographic operating segment information, including results of operations and segment assets. Marketing of Production General. Production from the Company's properties is marketed consistent with industry practices. Sales prices for oil, NGL and gas production are negotiated based on factors normally considered in the industry, such as the spot price for gas or the posted price for oil, price regulations, distance from the well to the pipeline, well pressure, estimated reserves, commodity quality and prevailing supply conditions. Significant Purchasers. During 2000, the Company's primary purchaser of oil was ExxonMobil Corporation ("ExxonMobil"), the Company's primary purchaser of natural gas liquids was Williams Energy Services ("Williams") and the Company's primary purchaser of gas was Anadarko Petroleum Corporation ("Anadarko"). Approximately eight percent, 13 percent and six percent of the Company's 2000 combined oil, NGL and gas revenues were attributable to sales to ExxonMobil, Williams and Anadarko, respectively. The Company is of the opinion that the loss of any one purchaser would not have an adverse effect on its ability to sell its oil, NGL and gas production. Hedging Activities. The Company periodically enters into commodity derivative contracts (swaps and collars) in order to (i) reduce the effect of the volatility of price changes on the commodities the Company produces and sells, (ii) support the Company's annual capital budgeting and expenditure plans and (iii) lock in prices to protect the economics related to certain capital projects. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for a description of the Company's hedging activities, "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" and Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for a description of the Company's open hedge positions at December 31, 2021 and related prices. Competition, Markets and Regulation Competition. The oil and gas industry is highly competitive. A large number of companies and individuals engage in the exploration for and development of oil and gas properties, and there is a high degree of competition for oil and gas properties suitable for development or exploration. Acquisitions of oil and gas properties have been an important element of the Company's growth, and the Company intends to continue to acquire oil and gas properties. The principal competitive factors in the acquisition of oil and gas properties include the staff and data necessary to identify, investigate and purchase such properties and the financial resources necessary to acquire and develop them. Many of the Company's competitors are substantially larger and have financial and other resources greater than those of the Company. Markets. The Company's ability to produce and market oil and gas profitably depends on numerous factors beyond the Company's control. The effect of these factors cannot be accurately predicted or anticipated. Although the Company cannot predict the occurrence of events that may affect oil and gas prices or the degree to which oil and gas prices will be affected, the prices for any oil or gas that the Company produces will generally approximate current market prices in the geographic region. Governmental Regulation. Oil and gas exploration and production operations are subject to various types of regulation by local, state, federal and foreign agencies. The Company's operations are also subject to state conservation laws and regulations, including provisions for the unitization or pooling of oil and gas properties, the establishment of maximum rates of 7

production from wells and the regulation of spacing, plugging and abandonment of wells. Each state generally imposes a production or severance tax with respect to production and sale of oil and gas within their respective jurisdictions. The regulatory burden on the oil and gas industry increases the Company's cost of doing business and, consequently, affects its profitability. Additional proposals and proceedings that might affect the oil and gas industry are considered from time to time by Congress, the Federal Energy Regulatory Commission, state regulatory bodies, the courts and foreign governments. The Company cannot predict when or if any such proposals might become effective or their effect, if any, on the Company's operations. Environmental and Health Controls. The Company's operations are subject to numerous federal, state, local and foreign laws and regulations relating to environmental and health protection. These laws and regulations may require the acquisition of a permit before drilling commences, restrict the type, quantities and concentration of various substances that can be released into the environment in connection with drilling and production activities, limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other protected areas and impose substantial liabilities for pollution resulting from oil and gas operations. These laws and regulations may also restrict air emissions or other discharges resulting from the operation of natural gas processing plants, pipeline systems and other facilities that the Company owns. Although the Company believes that compliance with environmental laws and regulations will not have a material adverse effect on its results of operations or financial condition, risks of substantial costs and liabilities are inherent in oil and gas operations, and there can be no assurance that significant costs and liabilities, including potential criminal penalties, will not be incurred. Moreover, it is possible that other developments, such as stricter environmental laws and regulations or claims for damages to property or persons resulting from the Company's operations, could result in substantial costs and liabilities. The Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), also known as the "Superfund" law, imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons with respect to the release of a "hazardous substance" into the environment. These persons include the owner or operator of the disposal site or sites where the release occurred and companies that disposed or arranged for the disposal of hazardous substances released at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources, and it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. The Company generates wastes, including hazardous wastes, that are subject to the federal Resource Conservation and Recovery Act ("RCRA") and comparable state statutes. The U.S. Environmental Protection Agency and various state agencies have limited the approved methods of disposal for certain hazardous and non-hazardous wastes. Furthermore, certain wastes generated by the Company's oil and gas operations that are currently exempt from treatment as "hazardous wastes" may in the future be designated as "hazardous wastes," and therefore be subject to more rigorous and costly operating and disposal requirements. The Company currently owns or leases, and has in the past owned or leased, properties that for many years have been used for the exploration and production of oil and gas. Although the Company has used operating and disposal practices that were standard in the industry at the time, hydrocarbons or other wastes may have been disposed of or released on or under the properties owned or leased by the Company or on or under other locations where such wastes have been taken for disposal. In addition, some of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons or other wastes was not under the Company's control. These properties and the wastes disposed thereon may be subject to CERCLA, RCRA and analogous state laws. Under such laws, the Company could be required to remove or remediate previously disposed wastes or property contamination or to perform remedial plugging operations to prevent future contamination. Federal regulations require certain owners or operators of facilities that store or otherwise handle oil, such as the Company, to prepare and implement spill prevention control plans, countermeasure plans, and facility response plans relating to the possible discharge of oil into surface waters. The Oil Pollution Prevention Act of 1990 ("OPA") amends certain provisions of 8

the federal Water Pollution Control Act of 1972, commonly referred to as the Clean Water Act ("CWA"), and other statutes as they pertain to the prevention of and response to oil spills into navigable waters. The OPA subjects owners of facilities to strict joint and several liability for all containment and cleanup costs and certain other damages arising from a spill, including, but not limited to, the costs of responding to a release of oil to surface waters. The CWA provides penalties for any discharges of petroleum products in reportable quantities and imposes substantial liability for the costs of removing a spill. OPA requires responsible parties to establish and maintain evidence of financial responsibility to cover removal costs and damages resulting from an oil spill. OPA calls for a financial responsibility of $35 million to cover pollution cleanup for offshore facilities. State laws for the control of water pollution also provide varying civil and criminal penalties and liabilities in the case of releases of petroleum or its derivatives into surface waters or into the ground. The Company does not believe that the OPA, CWA or related state laws are any more burdensome to it than they are to other similarly situated oil and gas companies. Many states in which the Company operates have recently begun to regulate naturally occurring radioactive materials ("NORM") and NORM wastes that are generated in connection with oil and gas exploration and production activities. NORM wastes typically consist of very low-level radioactive substances that become concentrated in pipe scale and in production equipment. State regulations may require the testing of pipes and production equipment for the presence of NORM, the licensing of NORM-contaminated facilities and the careful handling and disposal of NORM wastes. The Company believes that the growing regulation of NORM will have a minimal effect on the Company's operations because the Company generates only a very small quantity of NORM on an annual basis. The Company does not believe that its environmental risks are materially different from those of comparable companies in the oil and gas industry. Nevertheless, no assurance can be given that environmental laws will not, in the future, result in a curtailment of production or processing or a material increase in the costs of production, development, exploration or processing or otherwise adversely affect the Company's results of operations and financial condition. The Company employs an environmental manager and environmental specialists charged with monitoring environmental and regulatory compliance. The Company performs an environmental review as part of the due diligence work on potential acquisitions, including acquisitions of oil and gas properties. The Company is not aware of any material environmental legal proceedings pending against it or any material environmental liabilities to which it may be subject. Risks Associated with Business Activities The nature of the business activities conducted by the Company subjects it to certain hazards and risks. The following is a summary of some of the material risks relating to the Company's business activities. Commodity Prices. The Company's revenues, profitability, cash flow and future rate of growth are highly dependent on prices of oil and gas, which are affected by numerous factors beyond the Company's control. Oil and gas prices historically have been very volatile. A resumption of the significant downward trend in oil and gas prices experienced in 1998, as compared to 2000 and 1999, would have a material adverse effect on the Company's revenues, profitability and cash flow and could, under certain circumstances, result in a reduction in the carrying value of the Company's oil and gas properties and an increase in the Company's deferred tax asset valuation allowance. Drilling Activities. Drilling involves numerous risks, including the risk that no commercially productive gas or oil reservoirs will be encountered. The cost of drilling, completing and operating wells is often uncertain and drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, including unexpected drilling conditions, pressure or irregularities in formations, equipment failures or accidents, adverse weather conditions and shortages or delays in the delivery of equipment. The Company's future drilling activities may not be successful and, if unsuccessful, such failure could have an adverse effect on the Company's future results of operations and financial condition. While all drilling, whether developmental or exploratory, involves these risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons. Because of the percentage of the Company's capital budget devoted to exploratory projects, it is likely that the Company will continue to experience exploration and abandonment expense. 9

Unproved Properties. At December 31, 2021 and 1999, the Company carried unproved property costs of $229.2 million and $257.6 million, respectively. United States generally accepted accounting principles require periodic evaluation of these costs on a project-by-project basis in comparison to their estimated value. These evaluations will be affected by results of exploration activities, commodity price outlooks, planned future sales or expiration of all or a portion of the leases, contracts and permits appurtenant to such projects. If the quantity of potential reserves determined by such evaluations is not sufficient to fully recover the cost invested in each project, the Company will recognize non-cash charges in the earnings of future periods. During 1999 and 1998, the Company recognized non-cash impairment provisions of $17.9 million and $147.3 million, respectively, to reduce the carrying value of its unproved properties (see Note L of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data"). Acquisitions. Acquisitions of producing oil and gas properties have been a key element of the Company's growth. The Company's growth following the full development of its existing property base could be impeded if it is unable to acquire additional oil and gas properties on a profitable basis. The success of any acquisition will depend on a number of factors, including the ability to estimate accurately the recoverable volumes of reserves, rates of future production and future net revenues attributable to reserves and to assess possible environmental liabilities. All of these factors affect whether an acquisition will ultimately generate cash flows sufficient to provide a suitable return on investment. Even though the Company performs a review of the properties it seeks to acquire that it believes is consistent with industry practices, such reviews are often limited in scope. Divestitures. The Company regularly reviews its property base for the purpose of identifying non-strategic assets, the disposition of which would increase capital resources available for other activities and create organizational and operational efficiencies. Various factors could materially affect the ability of the Company to dispose of non-strategic assets, including the availability of purchasers willing to purchase the non-strategic assets at prices acceptable to the Company. Operation of Natural Gas Processing Plants. As of December 31, 2000, the Company owns interests in nine natural gas processing plants and four treating facilities. The Company operates six of the plants and all four treating facilities. There are significant risks associated with the operation of natural gas processing plants. Gas and natural gas liquids are volatile and explosive and may include carcinogens. Damage to or misoperation of a natural gas processing plant or facility could result in an explosion or the discharge of toxic gases, which could result in significant damage claims in addition to interrupting a revenue source. Operating Hazards and Uninsured Losses. The Company's operations are subject to all the risks normally incident to the oil and gas exploration and production business, including blowouts, cratering, explosions and pollution and other environmental damage, any of which could result in substantial losses to the Company due to injury or loss of life, damage to or destruction of wells, production facilities or other property, clean-up responsibilities, regulatory investigations and penalties and suspension of operations. Although the Company currently maintains insurance coverage that it considers reasonable and that is similar to that maintained by comparable companies in the oil and gas industry, it is not fully insured against certain of these risks, either because such insurance is not available or because of high premium costs. Environmental. The oil and gas business is also subject to environmental hazards, such as oil spills, gas leaks and ruptures and discharges of toxic substances or gases that could expose the Company to substantial liability due to pollution and other environmental damage. A variety of federal, state and foreign laws and regulations govern the environmental aspects of the oil and gas business. Noncompliance with these laws and regulations may subject the Company to penalties, damages or other liabilities, and compliance may increase the cost of the Company's operations. Such laws and regulations may also affect the costs of acquisitions. See "Item 1. Business - Competition, Markets and Regulation - Environmental and Health Controls". The Company does not believe that its environmental risks are materially different from those of comparable companies in the oil and gas industry. Nevertheless, no assurance can be given that future environmental laws will not result in a curtailment of production or processing or a material increase in the costs of production, development, exploration or processing or otherwise 10

adversely affect the Company's operations and financial condition. Pollution and similar environmental risks generally are not fully insurable. Debt Restrictions and Availability. The Company is a borrower under fixed term senior notes and a line of credit. The terms of the Company's borrowings under the senior notes and the line of credit specify scheduled debt repayments and require the Company to comply with certain associated covenants and restrictions. The Company's ability to comply with the debt repayment terms, associated covenants and restrictions is dependent on, among other things, factors outside the Company's direct control, such as commodity prices, interest rates and competition for available debt financing. See Note D of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for information regarding the Company's outstanding debt and the terms associated therewith. Competition. The oil and gas industry is highly competitive. The Company competes with other companies, producers and operators for acquisitions and in the exploration, development, production and marketing of oil and gas. Some of these competitors have substantially greater financial and other resources than the Company. See "Item 1. Business - Competition, Markets and Regulation". Government Regulation. The Company's business is regulated by a variety of federal, state, local and foreign laws and regulations. There can be no assurance that present or future regulations will not adversely affect the Company's business and operations. See "Item 1. Business - Competition, Markets and Regulation". International Operations. At December 31, 2000, approximately 22 percent of the Company's proved reserves of oil, NGLs and gas were located outside the United States (17 percent in Argentina, four percent in Canada and one percent in South Africa). The success and profitability of international operations may be adversely affected by risks associated with international activities, including economic and labor conditions, political instability, tax laws (including United States taxes on foreign subsidiaries) and changes in the value of the United States dollar versus the local currency in which oil and gas are sold. To the extent that the Company is involved in international activities, changes in exchange rates may adversely affect the Company's consolidated revenues and expenses (as expressed in United States dollars). Estimates of Reserves and Future Net Revenues. Numerous uncertainties exist in estimating quantities of proved reserves and future net revenues therefrom. The estimates of proved reserves and related future net revenues set forth in this Report are based on various assumptions, which may ultimately prove to be inaccurate. Therefore, such estimates should not be construed as accurate estimates of the current market value of the Company's proved reserves. ITEM 2. PROPERTIES The information included in this Report about the Company's oil, NGL and gas reserves at December 31, 2000, including Standardized Measure, is based on proved reserves as determined by the Company's engineers. Numerous uncertainties exist in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond the Company's control. This Report contains estimates of the Company's proved oil and gas reserves and the related future net revenues, which are based on various assumptions, including those prescribed by the SEC. Actual future production, oil and gas prices, revenues, taxes, capital expenditures, operating expenses, geologic success and quantities of recoverable oil and gas reserves may vary substantially from those assumed in the estimates and could materially affect the estimated quantities and related Standardized Measure of proved reserves set forth in this Report. In addition, the Company's reserves may be subject to downward or upward revisions based on production performance, purchases or sales of properties, results of future development, prevailing oil and gas prices and other factors. Therefore, estimates of the Standardized Measure of proved reserves should not be construed as accurate estimates of the current market value of the Company's proved reserves. Standardized Measure is a reporting convention that provides a common basis for comparing oil and gas companies subject to the rules and regulations of the SEC. It requires the use of oil and gas prices prevailing as of the date of computation. Consequently, it may not reflect the prices ordinarily received 11

or that will be received for oil and gas because of seasonal price fluctuations or other varying market conditions. Standardized Measures as of any date are not necessarily indicative of future results of operations. Accordingly, estimates included herein of future net revenues may be materially different from the net revenues that are ultimately received. The Company did not provide estimates of total proved oil and gas reserves during 2000 to any federal authority or agency, other than the SEC. Proved Reserves The Company's proved reserves totaled 628.2 million BOE at December 31, 2000, 605.5 million BOE at December 31, 2021 and 676.8 million BOE at December 31, 1998, representing $5.6 billion, $2.9 billion and $1.6 billion, respectively, of Standardized Measure. The four percent increase in proved reserves in 2000 was primarily attributable to the Company's successful capital investments, while the 93 percent increase in Standardized Measure during 2000 was primarily due to increases in commodity prices. The divestiture of oil and gas properties, partially offset by upward revisions of reserve quantities as a result of increases in commodity prices, was the primary reason for the decrease in reserves during 1999. On a BOE basis, 77 percent of the Company's total proved reserves at December 31, 2021 are proved developed reserves. Based on reserve information as of December 31, 2000, and using the Company's reserve report production information for 2001, the reserve-to-production ratio associated with the Company's proved reserves is 14 years on a BOE basis. The following table provides information regarding the Company's proved reserves and average daily production by geographic area as of and for the year ended December 31, 2000. PROVED OIL AND GAS RESERVES AND AVERAGE DAILY PRODUCTION 2000 Average Proved Reserves as of December 31, 2021 Daily Production (a) --------------------------------------------------- -------------------------------- Oil Natural Standardized Oil Natural & NGLs Gas Measure & NGLs Gas (MBbls) (MMcf) MBOE (000) (Bbls) (Mcf) BOE --------- --------- -------- ------------ ------- --------- -------- United States.... 266,802 1,354,327 492,523 $ 4,716,455 46,099 229,316 84,318 Argentina........ 35,843 408,282 103,890 507,362 9,374 97,526 25,628 Canada........... 4,066 132,919 26,219 414,535 1,670 44,315 9,056 South Africa..... 5,552 - 5,552 7,150 - - - --------- --------- -------- ---------- ------- --------- -------- Total............ 312,263 1,895,528 628,184 $ 5,645,502 57,143 371,157 119,002 ========= ========= ======== ========== ======= ========= ======== - ---------------- (a) The 2000 average daily production is calculated using a 366-day year and without making pro forma adjustments for any acquisitions, divestitures or drilling activity that occurred during the year. Reserve Replacement During 2000, the Company's proved reserves increased by 22.7 MMBOE as compared to a decline of 71.4 MMBOE during 1999. The Company's additions to proved reserves during 2000 were comprised of 27.5 MMBOE of upward revisions to previous estimates, 38.0 MMBOE of new discoveries and extensions and 7.4 MMBOE of asset purchases. Proved reserves declined by 50.1 MMBOE during 2000 due to current year production of 43.6 MMBOE and asset divestitures of 6.6 MMBOE. The positive revisions of 2000 were split between changes in estimates of future quantities available for production and changes in estimates of future quantities from improved commodity prices. The Company added 91.1 MMBOE of proved reserves during 1999 from revisions of previous estimates of 74.4 MMBOE, purchases of minerals-in-place of 7.3 MMBOE and new discoveries and extensions of 9.4 MMBOE. Proved reserve reductions during 1999 were comprised of 111.4 MMBOE from asset divestitures and 51.1 MMBOE of 1999 production. The positive impact of revisions in 1999 primarily resulted from improved commodity prices as compared to December 31, 2021 prices. The downward revisions in 1998 relate primarily to the lower commodity prices as of December 31, 1998, as compared to December 31, 1997. The Company's reserves as of December 31, 2021 were estimated using the WTI Cushing, Oklahoma spot oil price of $26.69 per Bbl and the Henry Hub, Louisiana gas spot price of $9.95 per Mcf, resulting in average realized prices of $25.71 per Bbl of oil, $16.74 per Bbl of NGLs and $7.50 per Mcf of gas 12

after normal quality, gathering and transportation adjustments. The Company's reserves as of December 31, 2021 were estimated using the WTI Cushing, Oklahoma spot oil price of $25.60 per Bbl and the Henry Hub, Louisiana gas spot price of $2.33 per Mcf, resulting in average realized prices of $24.33 per Bbl of oil, $17.59 per Bbl of NGLs and $1.83 per Mcf of gas after normal quality, gathering and transportation adjustments. As prices increase or decrease in future periods, reserves will be revised upward or downward for quantities which become economical or uneconomical to produce under the new price assumptions. During 2000, the Company replaced 167 percent of its annual production on a BOE basis (196 percent for oil and NGLs and 140 percent for gas). During 1999, the Company replaced 178 percent of its annual production on a BOE basis (262 percent for oil and NGLs and 99 percent for gas). The Company's 2000 and 1999 reserve replacement were primarily impacted by the increase in commodity prices. On a BOE basis, the Company's 1998 reserve replacement rate was negative due to severe declines in commodity prices which resulted in downward reserve revisions. Finding Cost The Company's acquisition and finding costs per BOE for 2000 and 1999 were $4.66 and $2.21 per BOE, respectively. During 1998, the Company's acquisition and finding costs were negative. The negative rate in 1998 was a result of downward reserve revisions related to the decline in commodity prices during 1998. The average acquisition and finding cost for the three-year period from 1998 to 2000 was $6.94 per BOE, representing a 17 percent decline from the 1999 three-year average rate of $8.36. Description of Properties As of December 31, 2000, the Company has operations in the United States, Argentina and Canada, and exploration opportunities in South Africa and Gabon. Domestic. The Company's domestic operations are located in the Permian Basin, Mid Continent and Gulf Coast areas of the United States. Approximately 86 percent of the Company's domestic proved reserves are located in the Spraberry, Hugoton and West Panhandle fields. These mature fields generate substantial operating cash flow and have a portfolio of low risk infill drilling opportunities. The cash flows generated from these fields provide funding for the Company's other development and exploration activities both domestically and internationally. During 2000, the Company expended $119.9 million in domestic exploration and development drilling activities. The Company has budgeted approximately $260 million for domestic exploration and development drilling expenditures for 2001. Spraberry field. The Spraberry field was discovered in 1949 and encompasses eight counties in West Texas. The field is approximately 150 miles long and 75 miles wide at its widest point. The oil produced is West Texas Intermediate Sweet, and the gas produced is casinghead gas with an average Btu content of 1,400 Btu per Mcf. The oil and gas are produced from three formations, the upper and lower Spraberry and the Dean, at depths ranging from 6,700 feet to 9,200 feet. The center of the Spraberry field was unitized in the late 1950's and early 1960's by the major oil companies; however, until the late 1980's there was very limited development activity in the field. Since 1989, the Company has focused on acquisition and development drilling activities in the unitized portion of the Spraberry field due to the dormant condition of the properties and the high net revenue interests available. The Company believes the area offers excellent opportunities to enhance oil and gas reserves because of the hundreds of undeveloped infill drilling locations and the ability to reduce operating expenses through economies of scale. During 2000, the Company placed 86 Spraberry wells on production, drilled one developmental dry hole and, at December 31, 2000, had 40 wells in progress. The Company plans to drill approximately 140 additional wells in 2001. Hugoton field. The Hugoton field in Southwest Kansas is one of the largest producing gas fields in the continental United States. The gas is produced from the Chase and Council Grove formations at depths ranging from 2,700 feet to 3,000 feet. The Company's Hugoton properties represent approximately 13 percent of the proved reserves in the field and are located on approximately 257,000 gross acres (237,000 net acres), covering approximately 400 square miles. The Company has working interests in approximately 1,200 wells 13

in the Hugoton field, 985 of which it operates, and partial royalty interests in approximately 500 wells. The Company owns substantially all of the gathering and processing facilities, primarily the Satanta plant, that service its production from the Hugoton field. Such ownership allows the Company to control the production, gathering, processing and sale of its gas and associated NGLs. Production in the Hugoton field is subject to allowables set by state regulators, but the Company's Hugoton operated wells are capable of producing approximately 150 MMcf of wet gas per day (i.e., gas production at the wellhead before processing and before reduction for royalties). The Company estimates that it and other major producers in the Hugoton field produced at or near capacity in 2000. During 2000, the Company completed two development wells in the Hugoton field. The Company plans to drill approximately 25 Hugoton development wells in 2001. The Company is planning to submit an application to the Kansas Corporation Commission to allow infill drilling into the Council Grove Formation. The Company believes that such infill drilling could increase production from its Hugoton properties. There can be no assurance that the application will be filed or approved, or as to the timing of such approval if granted. West Panhandle field. The West Panhandle properties are located in the panhandle region of Texas where initial production commenced in 1918. These stable, long-lived reserves are attributable to the Red Cave, Brown Dolomite, Granite Wash and fractured Granite formations at depths no greater than 3,500 feet. The Company's gas in the West Panhandle field has an average Btu content of 1,300 Btu per Mcf and is produced from approximately 600 wells on more than 241,000 gross (185,000 net) acres covering over 375 square miles. The Company's wellhead gas produced from the West Panhandle field contains a high quantity of NGLs, yielding relatively greater NGL volumes than realized from many other gas fields. The Company operates the wells and production equipment and Colorado Interstate Gas Company (a subsidiary of El Paso Energy Corp.) owns and operates the gathering system. The production from the West Panhandle field is processed through the Company-owned Fain natural gas processing plant. During 2000, the Company placed 51 new wells on production and has three additional wells in progress at December 31, 2000. The Company plans to drill approximately 59 wells in 2001. Other domestic properties. In the Gulf of Mexico and Gulf Coast areas, the Company is focused on reserve and production growth through a balanced portfolio of development and exploration activities. To accomplish this, the Company has devoted most of its domestic exploration efforts to these areas, as well as its investment in and utilization of 3-D seismic technology. During 2000, the Company expended $82.9 million to drill 17 development and 13 exploratory wells in the Gulf of Mexico and Gulf Coast areas. The Company's development of the Canyon Express gas project in the deepwater Gulf of Mexico is progressing as planned, with first production anticipated in mid-2002. The Company also expects to begin development of its deepwater Gulf of Mexico Devils Tower project during 2001, with first oil production expected in late 2002 or early 2003. The Company has budgeted approximately $66 million of 2001 development capital for the Canyon Express and Devils Tower projects. Also in the Gulf of Mexico, the Company-operated well at Eugene Island 208 was successfully completed with multiple oil and gas pays and tested at a combined gross rate of production of 1,250 barrels of oil per day and 950 Mcf per day. The Company has a 75 percent working interest in Eugene Island 208. During 2000, the Company also announced the completion of the High Island Block 582 A#4 well, which encountered over 230 feet of pay. The Company has a 5.5 percent working interest in the High Island Block 582 A #4 well, which was drilled to a total depth of 15,147 feet. In the East Texas Bossier gas play, the Company expects to invest approximately $37 million of 2001 capital to drill 25 operated and 12 non-operated wells. Additionally, in the South Texas Gulf Coast area, the Company's exploitation efforts in the Pawnee field have increased production from the field by over 135 percent since December 1999, to approximately 26 MMcf per day in December 2000. Utilizing advanced 3-D seismic modeling in this Edwards Reef play, the Company has completed eight horizontal reentries and four new horizontal wells. Five new wells and two horizontal reentries are scheduled for 2001 in the Edwards Reef. The Company is also expanding its Edwards Reef development program to include surrounding fields that could add a significant number of new locations. International. The Company's international operations are located in the Neuquen Basin and Tierra del Fuego areas of Argentina and the Chinchaga, Martin Creek and Rycroft/Spirit River areas of Canada. Additionally, the Company has 14

entered into agreements to explore for oil and gas reserves in South Africa and Gabon. Approximately 17 percent, four percent and one percent of the Company's proved reserves are located in Argentina, Canada and South Africa, respectively. Argentina. The Company's Argentine properties are primarily located in the Neuquen and Austral basins. The Company's share of Argentine production during 2000 averaged 25.6 MBOE per day, or approximately 22 percent of the Company's equivalent production. The Company's operated production in Argentina is concentrated in the Neuquen Basin which is located about 925 miles southwest of Buenos Aires and just to the east of the Andes Mountains. Oil and gas are produced primarily from the Loma Negra/NI Block, the Dadin Block, the Al Norte de la Dorsal Block, the Neuquen del Medio Block, the Al Sur de la Dorsal Block and the Estacion Fernandez Oro Block in which the Company has 100 percent working interests. The Company acquired its working interests in the Al Sur de la Dorsal Block and the Estacion Fernandez Oro Block during 1999. The production concession in the Austral basin is located in Tierra del Fuego, which is an island in the extreme southern portion of Argentina, approximately 1,500 miles south of Buenos Aires. Oil, gas and NGLs are produced from six separate fields in which the Company has a 35 percent working interest. Production increases are anticipated from the area through exploitation and exploration and improving the oil and gas processing facilities and infrastructure on the island. Currently, production is being sent to the mainland through oil tankers and gas pipelines and exported to Chile through pipelines. During 2000, the Company expended $62.8 million on Argentine exploration and development activities and drilled 30 development wells and 54 exploratory wells in Argentina, of which 28 development wells and 38 exploratory wells were successful. The Company plans to spend approximately $87 million on oil and gas development and exploration opportunities in Argentina during 2001. Canada. The Company's Canadian producing properties are located primarily in Alberta and British Columbia, Canada. Production during 2000 averaged 9.1 MBOE per day, or approximately eight percent of the Company's equivalent production. The Company continues to focus its development, exploration and acquisition activities in the core areas of northeast British Columbia and northwest Alberta. The core Canadian assets are geographically concentrated, predominantly shallow gas and more than 90 percent operated by the Company in the following areas: Chinchaga, Martin Creek and Rycroft/Spirit River. Production from the Chinchaga areas is relatively dry gas from formation depths averaging 3,400 feet. In the Martin Creek area, production is relatively dry gas from various reservoirs ranging from 3,700 feet to 4,300 feet. The Rycroft/Spirit River area produces primarily oil and consists of four unitized waterfloods producing from reservoir depths ranging from 4,400 feet to 5,000 feet. During 2000, the Company expended $34.1 million on Canadian exploration and development activities and drilled 21 development wells and 14 exploratory wells primarily in the Chinchaga and Martin Creek areas, of which 17 development wells and 12 exploratory wells were successful. Effective October 1, 2000, the Company increased its interest to 100 percent in its Chinchaga gas field in northeast British Columbia by acquiring the remaining 13 percent working interest. The Company added production of 475 BOE per day from this acquisition and plans to drill as many as 70 extension and infill drilling locations over the next three years. The Company, as operator, plans to drill approximately 19 development wells and 26 exploratory wells in Canada during 2001. The Company expects to participate in an additional seven wells operated by other companies in the same areas. The Company plans to spend $35 million on oil and gas development and exploration opportunities in Canada during 2001. Africa. The Company has entered into agreements to explore in South Africa and Gabon. The South African agreements cover over 13 million acres along the southern coast of South Africa, generally in water depths less than 650 feet. During 2000, the Company expended $15.7 million of exploration drilling and seismic capital in South Africa and Gabon. The Company drilled three exploratory wells in South Africa during 2000, of which one was unsuccessful and two were in progress as of December 31, 2000. During 1999, the Company performed 15

and analyzed seismic studies necessary for the analysis, ranking and timing of prospects in South Africa and Gabon. During 1998, five wells were drilled by the Company in South Africa, of which two discovered reserves. During January 2001, the Company announced a discovery on the E-DQ1 "Boomslang" prospect, encountering over 100 feet of net pay, consisting of an oil leg under a gas column at a depth of 6,600 feet. The Company's test of a portion of the oil leg interval flowed at rates up to 3,120 Bbls of oil per day and 2.6 MMcf of gas per day over a 48-hour period. The Company is also testing the overlying gas column which, over a five day period, was flowing at a constant rate of approximately 24 MMcf per day and 300 Bbls of condensate per day. An appraisal well is also planned on the Boomslang prospect during 2001. The Company has budgeted capital to begin development of the Sable oil field in South Africa during 2001 with first production expected in late 2002 or early 2003. In Gabon, the Company plans to spud an exploratory well on its Olowi Block during the second quarter of 2001. During 2001, the Company plans to spend approximately $28 million on exploration and development opportunities in South Africa and Gabon. Selected Oil and Gas Information The following tables set forth selected oil and gas information for the Company as of and for each of the years ended December 31, 2000, 1999 and 1998. Because of normal production declines, increased or decreased drilling activities and the effects of past and future acquisitions or divestitures, the historical information presented below should not be interpreted as indicative of future results. Production, Price and Cost Data. The following table sets forth production, price and cost data with respect to the Company's properties for the years ended December 31, 2000, 1999 and 1998. PRODUCTION, PRICE AND COST DATA (a) Year Ended December 31, 2000 1999 1998 ------------------------------------ ------------------------------------ ----------------------------------- United United United States Argentina Canada Total States Argentina Canada Total States Argentina Canada Total ------- --------- ------ -------- ------- --------- ------- ------- ------- --------- ------ ------- Production information: Annual production: Oil (MBbls)....... 8,989 3,238 308 12,535 11,448 2,352 1,654 15,454 15,167 3,072 3,315 21,554 NGLs (MBbls)...... 7,883 193 303 8,379 8,714 217 306 9,237 10,160 228 281 10,669 Gas (MMcf)........ 83,930 35,695 16,219 135,844 106,094 34,477 17,886 158,457 137,741 26,801 19,371 183,913 Total (MBOE)...... 30,861 9,380 3,314 43,555 37,845 8,315 4,941 51,101 48,284 7,767 6,824 62,875 Average daily production: Oil (Bbls)........ 24,561 8,847 841 34,249 31,366 6,443 4,530 42,339 41,555 8,415 9,082 59,052 NGLs (Bbls)....... 21,538 527 829 22,894 23,875 594 839 25,308 27,835 626 770 29,231 Gas (Mcf)......... 229,316 97,526 44,315 371,157 290,670 94,457 49,003 434,130 377,373 73,427 53,072 503,872 Total (BOE)....... 84,318 25,628 9,056 119,002 103,686 22,780 13,536 140,002 132,285 21,279 18,697 172,261 Average prices: Oil (per Bbl)..... $ 22.07 $ 29.09 $27.50 $ 24.01 $ 15.03 $18.41 $ 13.28 $ 15.36 $ 13.96 $11.00 $10.96 $ 13.08 NGLs (per Bbl).... $ 20.05 $ 22.91 $24.32 $ 20.27 $ 11.61 $11.30 $ 12.62 $ 11.64 $ 8.86 $ 9.83 $ 9.54 $ 8.90 Gas (per Mcf)..... $ 3.50 $ 1.19 $ 2.88 $ 2.81 $ 2.17 $ 1.10 $ 1.82 $ 1.90 $ 2.01 $ 1.09 $ 1.45 $ 1.82 Revenue (per BOE). $ 21.04 $ 15.03 $18.85 $ 19.58 $ 13.28 $10.07 $ 11.81 $ 12.62 $ 11.99 $ 8.40 $ 9.83 $ 11.32 Average costs: Production costs (per BOE): Lease operating... $ 2.45 $ 2.30 $ 2.53 $ 2.42 $ 2.02 $ 2.04 $ 3.02 $ 2.11 $ 2.31 $ 2.57 $ 3.56 $ 2.47 Taxes: Production...... .99 .30 - .77 .49 .16 - .39 .50 .15 - .40 Ad valorem...... .41 - - .29 .41 - - .31 .50 - - .39 Field fuel........ 1.01 - - .71 .28 - - .21 .23 - - .18 Workover.......... .17 - .42 .15 .09 - .34 .10 .14 - .10 .12 ------ ------ ----- ------ ------ ----- ------ ------ ------ ----- ----- ------ Total.......... $ 5.03 $ 2.60 $ 2.95 $ 4.34 $ 3.29 $ 2.20 $ 3.36 $ 3.12 $ 3.68 $ 2.72 $ 3.66 $ 3.56 Depletion expense (per BOE)........ $ 3.95 $ 5.56 $ 7.58 $ 4.57 $ 4.06 $ 4.68 $ 5.18 $ 4.27 $ 4.96 $ 5.42 $ 5.95 $ 5.13 - --------------- (a) These amounts represent the Company's historical results from operations without making pro forma adjustments for any acquisitions, divestitures or drilling activity that occurred during the respective years. 16

Productive Wells. The following table sets forth the number of productive oil and gas wells attributable to the Company's properties as of December 31, 2000, 1999 and 1998. PRODUCTIVE WELLS (a) Gross Productive Wells Net Productive Wells ------------------------ ------------------------ Oil Gas Total Oil Gas Total ------ ------ ------ ------ ------ ------ Year ended December 31, 2000: United States.................. 3,411 191 3,602 2,047 115 2,162 Argentina...................... 575 211 786 434 154 588 Canada......................... 95 234 329 45 175 220 ------ ------ ------ ------ ------ ------ Total....................... 4,081 636 4,717 2,526 444 2,970 ====== ====== ====== ====== ====== ====== Year ended December 31, 1999: United States.................. 3,835 2,244 6,079 2,558 1,736 4,294 Argentina...................... 514 199 713 376 142 518 Canada......................... 157 196 353 66 135 201 ------ ------ ------ ------ ------ ------ Total....................... 4,506 2,639 7,145 3,000 2,013 5,013 ====== ====== ====== ====== ====== ====== Year ended December 31, 1998: United States.................. 6,280 4,130 10,410 3,578 2,443 6,021 Argentina...................... 443 158 601 298 103 401 Canada......................... 1,719 454 2,173 715 241 956 ------ ------ ------ ------ ------ ------ Total....................... 8,442 4,742 13,184 4,591 2,787 7,378 ====== ====== ====== ====== ====== ====== - --------------- (a) Productive wells consist of producing wells and wells capable of production, including shut-in wells. One or more completions in the same well bore are counted as one well. Any well in which one of the multiple completions is an oil completion is classified as an oil well. As of December 31, 2000, the Company owned interests in 65 wells containing multiple completions. Leasehold Acreage. The following table sets forth information about the Company's developed, undeveloped and royalty leasehold acreage as of December 31, 2000. LEASEHOLD ACREAGE Developed Acreage Undeveloped Acreage ----------------------- ------------------------ Royalty Gross Acres Net Acres Gross Acres Net Acres Acreage ----------- --------- ----------- ---------- -------- Year ended December 31, 2000: United States.................. 972,248 586,819 448,039 285,203 259,578 Argentina...................... 670,000 272,000 860,000 655,000 - Canada......................... 156,000 104,000 680,000 568,000 - South Africa and Gabon......... - - 13,813,937 13,513,937 - ---------- --------- ----------- ---------- -------- Total....................... 1,798,248 962,819 15,801,976 15,022,140 259,578 ========== ========= =========== ========== ======== Drilling Activities. The following table sets forth the number of gross and net productive and dry wells in which the Company had an interest that were drilled and completed during the years ended December 31, 2000, 1999 and 1998. This information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation between the number of productive wells drilled and the oil and gas reserves generated thereby or the costs to the Company of productive wells compared to the costs of dry wells. 17

DRILLING ACTIVITIES Gross Wells Net Wells ------------------------ ------------------------ Year Ended December 31, Year Ended December 31, ------------------------ ------------------------ 2000 1999 1998 2000 1999 1998 ------ ------ ------ ------ ------ ------ United States: Productive wells: Development................. 159 199 385 91.3 131.3 285.9 Exploratory................. 11 7 18 4.7 4.6 13.4 Dry holes: Development................. 3 1 13 1.9 .8 8.8 Exploratory................. 3 7 5 1.6 2.7 3.0 ----- ----- ----- ----- ----- ----- 176 214 421 99.5 139.4 311.1 ----- ----- ----- ----- ----- ----- Argentina: Productive wells: Development................. 28 19 41 26.7 16.6 39.1 Exploratory................. 38 25 11 37.6 24.1 10.6 Dry holes: Development................. 2 3 5 2.0 3.0 5.0 Exploratory................. 16 8 11 14.5 6.5 9.7 ----- ----- ----- ----- ----- ----- 84 55 68 80.8 50.2 64.4 ----- ----- ----- ----- ----- ----- Canada: Productive wells: Development................. 17 34 54 17.9 18.8 37.1 Exploratory................. 12 - 10 9.9 - 7.2 Dry holes: Development................. 4 - 6 2.5 - 5.4 Exploratory................. 2 1 4 1.9 .3 3.0 ----- ----- ----- ----- ----- ----- 35 35 74 32.2 19.1 52.7 ----- ----- ----- ----- ----- ----- Other foreign: Productive wells: Development................. - - - - - - Exploratory................. - - 2 - - .7 Dry holes: Development................. - - - - - - Exploratory................. 1 - 3 1.0 - 1.7 ----- ----- ----- ----- ----- ----- 1 - 5 1.0 - 2.4 ----- ----- ----- ----- ----- ----- Total....................... 296 304 568 213.5 208.7 430.6 ===== ===== ===== ===== ===== ===== Success ratio (a)............... 90% 93% 92% 88% 94% 92% - --------------- (a) Represents those wells that were successfully completed as productive wells. The following table sets forth information about the Company's wells that were in progress at December 31, 2000. Gross Wells Net Wells ----------- --------- United States: Development......................................... 48 18.4 Exploratory......................................... 9 5.9 ----- ------ 57 24.3 ----- ------ Argentina: Development......................................... 1 1.0 Exploratory......................................... 1 1.0 ----- ------ 2 2.0 ----- ------ Canada: Development......................................... 3 2.3 Exploratory......................................... 5 3.2 ----- ------ 8 5.5 ----- ------ South Africa: Development......................................... - - Exploratory......................................... 2 1.4 ----- ------ 2 1.4 ----- ------ Total............................................ 69 33.2 ===== ====== 18

ITEM 3. LEGAL PROCEEDINGS The Company is party to various legal proceedings, which are described under "Legal actions" in Note G of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data". The Company is also party to other litigation incidental to its business. The claims for damages from such other legal actions are not in excess of 10 percent of the Company's current assets and the Company believes none of these actions to be material. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company did not submit any matters to a vote of security holders during the fourth quarter of 2000. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock is listed and traded on the New York Stock Exchange and the Toronto Stock Exchange under the symbol "PXD". The following table sets forth, for the periods indicated, the high and low sales prices for the Company's common stock, as reported in the New York Stock Exchange composite transactions. The Company's $575 million credit agreement restricts the Company from paying or declaring dividends on common stock and certain other payments in excess of an aggregate $50 million annually. The Company's Board of Directors did not declare dividends to the holders of the Company's common stock during 1999 or 2000. High Low -------- -------- 2000 Fourth quarter........................... $20 5/8 $12 7/16 Third quarter............................ $16 1/16 $10 5/8 Second quarter........................... $15 5/8 $ 9 First quarter............................ $10 3/4 $ 6 3/4 1999 Fourth quarter........................... $11 1/2 $ 7 5/8 Third quarter............................ $12 13/16 $ 9 3/8 Second quarter........................... $13 3/16 $ 7 1/16 First quarter............................ $ 9 3/4 $ 5 On February 20, 2001, the last reported sales price of the Company's common stock, as reported in the New York Stock Exchange composite transactions, was $17.97 per share. As of February 20, 2001, the Company's common stock was held by approximately 23,605 holders of record. 19

ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data for the Company should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 8. Financial Statements and Supplementary Data". Year Ended December 31, ----------------------------------------------------- 2000 1999 1998 1997 (a) 1996 -------- -------- -------- --------- -------- (in millions, except per share data) Statement of Operations Data: Revenues: Oil and gas................................ $ 852.7 $ 644.6 $ 711.5 $ 536.8 $ 396.9 Natural gas processing..................... - - - - 23.8 Interest and other (b)..................... 25.8 89.7 10.4 4.3 17.5 Gain (loss) on disposition of assets, net.. 34.2 (24.2) (.4) 4.9 97.1 ------- ------- ------- -------- ------- 912.7 710.1 721.5 546.0 535.3 ------- ------- ------- -------- ------- Costs and expenses: Oil and gas production..................... 189.3 159.5 223.5 144.2 110.3 Natural gas processing..................... - - - - 12.5 Depletion, depreciation and amortization... 214.9 236.1 337.3 212.4 112.1 Impairment of properties and facilities.... - 17.9 459.5 1,356.4 - Exploration and abandonments............... 87.5 66.0 121.9 77.2 23.0 General and administrative................. 33.3 40.2 73.0 48.8 28.4 Reorganization............................. - 8.5 33.2 - - Interest................................... 162.0 170.3 164.3 77.5 46.2 Other (c).................................. 67.2 34.7 39.6 7.1 2.5 ------- ------- ------- -------- ------- 754.2 733.2 1,452.3 1,923.6 335.0 ------- ------- ------- -------- ------- Income (loss) before income taxes and extraordinary item......................... 158.5 (23.1) (730.8) (1,377.6) 200.3 Income tax benefit (provision)............... 6.0 .6 (15.6) 500.3 (60.1) ------- ------- ------- -------- ------- Income (loss) before extraordinary item...... 164.5 (22.5) (746.4) (877.3) 140.2 Extraordinary item........................... (12.3) - - (13.4) - ------- ------- ------- -------- ------- Net income (loss)............................ $ 152.2 $ (22.5) $ (746.4) $ (890.7) $ 140.2 ======= ======= ======= ======== ======= Income (loss) before extraordinary item per share: Basic...................................... $ 1.65 $ (.22) $ (7.46) $ (16.88) $ 3.95 ======= ======= ======= ======== ======= Diluted.................................... $ 1.65 $ (.22) $ (7.46) $ (16.88) $ 3.47 ======= ======= ======= ======== ======= Net income (loss) per share: Basic...................................... $ 1.53 $ (.22) $ (7.46) $ (17.14) $ 3.95 ======= ======= ======= ======== ======= Diluted.................................... $ 1.53 $ (.22) $ (7.46) $ (17.14) $ 3.47 ======= ======= ======= ======== ======= Dividends per share ......................... $ - $ - $ .10 $ .10 $ .10 ======= ======= ======= ======== ======= Weighted average basic shares outstanding.... 99.4 100.3 100.1 52.0 35.5 Statement of Cash Flows Data: Cash flows from operating activities......... $ 430.1 $ 255.2 $ 314.1 $ 228.2 $ 230.1 Cash flows from investing activities......... $ (194.5) $ 199.0 $ (517.0) $ (341.2) $ 13.7 Cash flows from financing activities......... $ (244.1) $ (479.1) $ 190.9 $ 166.0 $ (245.4) Balance Sheet Data (as of December 31): Working capital (deficit) (d)................ $ (25.1) $ (13.7) $ (324.8) $ 46.6 $ 26.1 Property, plant and equipment, net........... $2,515.0 $2,503.0 $3,034.1 $ 3,515.8 $1,040.4 Total assets................................. $2,954.4 $2,929.5 $3,481.3 $ 4,153.0 $1,199.9 Long-term obligations........................ $1,804.5 $1,914.5 $2,101.2 $ 2,124.0 $ 329.0 Preferred stock of subsidiary................ $ - $ - $ - $ - $ 188.8 Total stockholders' equity................... $ 904.9 $ 774.6 $ 789.1 $ 1,548.8 $ 530.3 - --------------- (a) Includes amounts relating to the acquisition of Mesa and Chauvco in August and December 1997, respectively. (b) 1999 includes $41.8 million of option fees and liquidated damages and $30.2 million of income associated with an excise tax refund. (c) 2000, 1999 and 1998 include non-cash mark-to-market charges for changes in the fair values of non-hedge financial instruments of $58.5 million, $27.0 million and $21.2 million, respectively. (d) The 1998 working capital deficit includes $306.5 million of current maturities of long-term debt. 20

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2000 Performance The year ended December 31, 2021 was a highly successful transition year for Pioneer Natural Resources Company (the "Company"), as compared to the disciplined reorganization years of 1999 and 1998. During 2000, the Company leveraged a highly favorable commodity price environment and the financial flexibility gained from the austerity measures implemented during 1999 and 1998 to significantly increase net income, operating cash flows, invested capital and proved reserves, while continuing to decrease its outstanding indebtedness and repurchase common stock. During the year ended December 31, 2000, the Company recorded net income of $152.2 million ($1.53 per share), as compared to net losses of $22.5 million ($.22 per share) and $746.4 million ($7.46 per share) during the years ended December 31, 2021 and 1998, respectively. Compared to 1999, the Company's 2000 total revenues increased by $202.6 million, or 29 percent, including a $208.1 million, or 32 percent, increase in oil and gas revenues. The increase in oil and gas revenues was due to commodity price increases, partially offset by a decline in production volumes due to asset divestitures completed during 2000 and 1999. During 2000, the Company continued cost management measures that were implemented during 1999 and 1998. Compared to 1999, the Company's 2000 total costs and expenses increased by $21.0 million, or three percent. The modest increase in total costs and expenses included a $32.6 million increase in other costs and expenses, primarily comprised of an increase in mark-to-market provisions recognized on non-hedge derivative financial instruments. Total costs and expenses also included increases in production taxes and field fuel expenses that are sensitive to oil and gas commodity prices. During the year ended December 31, 2000, the Company grew net cash provided by operating activities to $430.1 million, representing a 69 percent increase over 1999 net cash provided by operating activities of $255.2 million, and a 37 percent increase over 1998 net cash provided by operating activities of $314.1 million. During the years ended December 31, 2021 and 1999, the Company limited its investments in oil and gas properties to approximately 70 percent of net cash provided by operating activities, as compared to 1998 investments in oil and gas properties which amounted to 162 percent of net cash provided by operating activities. The disciplined investment of net cash provided by operating activities, together with proceeds from the divestiture of non-strategic assets of $102.7 million and $390.5 million during 2000 and 1999, respectively, have allowed the Company to reduce its outstanding indebtedness by $596.5 million during the two years ended December 31, 2000. Additionally, the Company extended the maturity of its portfolio of indebtedness during 2000 and increased its liquidity through the issuance of $425 million of 9-5/8% Senior Notes due April 1, 2022 (the "9-5/8% Senior Notes") and the replacement of the Company's prior credit facility due August 7, 2022 (the "Prior Credit Facility") with a new $575 million credit agreement due March 1, 2022 (the "Credit Agreement"). During 2000, the Company increased its proved reserves to 628 MMBOE, reflecting the effects of strategic acquisitions of properties in the Company's core operating areas and a successful drilling program which resulted in the replacement of 167 percent of the Company's production at a finding, development and acquisition cost of $4.66 per BOE. During the year ended December 31, 2000, the Company also used a portion of its net cash provided by operating activities to repurchase 2.3 million shares of the Company's common stock for $27.3 million. To the extent that cash flow generated from operations exceeds capital expenditures, the Company may continue to make periodic common stock repurchases. During 2000, the Company expended $67.2 million to acquire proved and unproved oil and gas properties. Strategic acquisitions of proved properties included purchasing a 33 percent working interest in the deepwater Gulf of Mexico Camden Hills discovery, a four percent incremental working interest in the Company's deepwater Gulf of Mexico Devils Tower discovery and the remaining 13 percent working interest in the Canadian Chinchaga field. Unproved property acquisitions were concentrated in the Gulf of Mexico, East Texas and North Louisiana. 21

The Company also expended $232.5 million of drilling and seismic capital during 2000, representing a 64 percent increase over similar expenditures during 1999. The 2000 drilling capital was expended to drill 296 gross wells (213.5 net wells), of which 265 gross wells (188.1 net wells) are productive, representing a 90 percent success rate. See "Item 2. Properties" for additional information regarding the Company's reserve replacement, finding costs, property descriptions and drilling activities. The Company's 2000 exploratory drilling was focused in the United States Gulf of Mexico, Argentina, Canada and South Africa. The Company drilled 83 gross exploratory wells (71.2 net wells) during 2000, of which 61 gross exploratory wells (52.2 net wells) successfully discovered proved oil, NGL and gas reserves, representing a 73 percent success rate. In the United States, the Company expended $119.9 million of drilling and seismic capital during 2000 to successfully complete 11 exploratory wells and 159 development wells, to drill three exploratory and three development dry holes and to begin drilling nine exploratory and 48 development wells that remain in progress as of December 31, 2000. In Argentina, the Company expended $62.8 million of drilling and seismic capital during 2000 to successfully complete 38 exploratory and 28 development wells, to drill 16 exploratory and two development dry holes and to begin drilling one exploratory and one development well that remain in progress as of December 31, 2000. In Canada, the Company expended $34.1 million of drilling and seismic capital during 2000 to successfully complete 12 exploratory and 17 development wells, to drill two exploratory and four development dry holes and to begin drilling five exploratory and three development wells that remain in progress as of December 31, 2000. In Africa, the Company expended $15.7 million of drilling and seismic capital to evaluate drilling prospects in Gabon and to drill one South African exploratory dry hole and two South African exploratory wells that remain in progress as of December 31, 2000. See "Results of Operations", below, for more in-depth discussions of the Company's oil and gas producing activities, including discussions pertaining to oil and gas production volumes, prices, hedging activities, costs and expenses, capital commitments, capital resources and liquidity. 2001 Outlook Commodity prices. The Company's results of operations and financial condition in 2001 are expected to continue to be positively affected by favorable commodity prices as a result of decreases in worldwide oil and North American gas supplies relative to demand for those commodities. Significant factors affecting commodity price outlooks have included the tightening of oil export quotas during 2000 and 1999 by members of the Organization of Petroleum Exporting Countries and other oil exporting nations and the overall North American gas supply and demand fundamentals. Although the favorable commodity price environment presently impacting the oil and gas industry is expected to continue during 2001, the Company will continue its debt reduction and cost management measures to protect its net asset values from a return to a less favorable commodity price environment. The Company will also continue to monitor the commodity derivatives market and, from time to time, utilize oil and gas swap and collar contracts to reduce the risks of commodity price volatility. Through February 20, 2001, the Company increased its average daily 2001 oil production hedged with swap contracts to 10,597 Bbls with an average floor price of $28.94 per Bbl, and increased its average daily 2001 gas production hedged with swap contracts to 101,679 Mcf with an average floor price of $4.76 per MMBtu. Through February 20, 2001, the Company also entered into swap and collar contracts to hedge 64,973 Mcf per day of 2002 gas production with an average floor price of $4.63 per MMBtu and, on 20,000 Mcf per day, an average ceiling price of $6.00 per MMBtu. See "Accounting for derivatives" below for a description of the Company's future hedge accounting procedures. First quarter 2001. Based on current estimates, the Company expects that its first quarter worldwide production will average 112,000 to 114,000 BOE per day. First quarter production costs are expected to rise to $5.70 to $6.15 per BOE, primarily as a result of higher production taxes and field fuel expenses that are directly related to higher commodity prices. Depreciation, depletion and amortization expense is expected to average $4.90 to $5.10 per BOE during the first quarter of 2001, and total exploration and abandonment expense is expected to be $15 million to $30 million. General and administrative expense is expected to be $9 million to $10 million during the first quarter of 2001. Interest expense is expected to be $38 million to $39 million during the first quarter of 2001, including $3 million of non-cash interest. The Company's effective income tax rate is expected to be two percent or less of income before income taxes. 22

Production outlook. The Company expects that its annual 2001 worldwide production will be approximately 44 to 45 MMBOE. Worldwide production in 2002 and 2003 is expected to increase as production commences from the Company's deepwater Gulf of Mexico Canyon Express gas and Devils Tower oil projects and the Sable oil project in South Africa. Annual production is expected to be approximately 48 to 52 MMBOE during 2002 and to further increase to approximately 56 to 60 MMBOE during 2003. Capital expenditures. During 2001, the Company plans to increase capital expended for oil and gas property additions to approximately $430 million, of which approximately $115 million, or 27 percent, has been budgeted for exploration expenditures and $315 million, or 73 percent, has been budgeted for development drilling and facility costs. The Company's 2001 capital budget allocates approximately 65 percent of capital to the United States, 20 percent to Argentina, eight percent to Canada and seven percent to Africa. The Company's 2001 capital budget for the United States includes $66 million of development capital for the Canyon Express and Devils Tower deepwater Gulf of Mexico projects. During 2001, the Company has planned exploration drilling in the Gulf of Mexico, the onshore Gulf Coast area, Argentina, Canada, Gabon and South Africa. The Company has budgeted exploratory drilling and seismic expenditures of approximately $55 million for the United States areas and $45 million for international areas during 2001. The Company will continue to use the excess of cash provided by operating activities over capital expenditures for oil and gas producing activities to reduce outstanding indebtedness, acquire additional interests in core properties and/or repurchase common stock. Accounting for derivatives. In June 1998, the Financial Accounting Standards Board issued Statement of Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), the provisions of which the Company will adopt effective January 1, 2001. SFAS 133 requires the accounting recognition of all derivative instruments as either assets or liabilities at fair value. Derivative instruments that are not hedges must be adjusted to fair value through net income (loss). Under the provisions of SFAS 133, changes in the fair value of derivative instruments that are fair value hedges are offset against changes in the fair value of the hedged assets, liabilities, or firm commitments, through net income (loss). Changes in the fair value of derivative instruments that are cash flow hedges are recognized in other comprehensive income (loss) until such time as the hedged items are recognized in net income (loss). Ineffective portions of a derivative instrument's change in fair value are immediately recognized in net income (loss). The adoption of SFAS 133 will result in a January 1, 2022 transition adjustment to (i) record the fair value of the Company's derivative instruments that qualify for hedge accounting, and (ii) reclassify deferred hedge losses within the Company's Consolidated Balance Sheet. Beginning with the first quarter of 2001, and quarterly thereafter, the Company will quantify changes in the fair values of its derivative instruments and will account for those changes in accordance with SFAS 133, as described above. The January 1, 2022 transition adjustment will reduce the carrying value of the Company's total assets by $44.6 million and will increase the carrying value of the Company's liabilities by $153.3 million. As a result, stockholders' equity will be reduced on January 1, 2022 by $197.9 million. See Notes B and H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for additional information regarding the provisions of SFAS 133 and the components of the Company's January 1, 2022 transition adjustment. Due to the settlement of maturing derivative contracts and reductions in gas prices, it is expected that the SFAS 133 impact to the Company's stockholders' equity as of March 31, 2022 will be significantly lower than the initial transition adjustment of $197.9 million, which was based upon market-quoted prices as of January 1, 2001. From January 1, 2022 through February 20, 2001, the average NYMEX swap price for unexpired 2001 oil contracts increased by $2.31 per Bbl, or nine percent, and the average NYMEX swap price for unexpired 2001 gas contracts decreased by $1.21 per MMBtu, or 19 percent. In general, the provisions of SFAS 133 will increase the volatility of the Company's reported consolidated assets, liabilities, stockholders' equity, net income (loss) and comprehensive income (loss). Results of Operations Oil and gas revenues. Revenues from oil and gas operations totaled $852.7 million during 2000, as compared to $644.6 million during 1999 and $711.5 million during 1998, representing a 32 percent increase from 1999 to 2000 and a 23

nine percent decrease from 1998 to 1999. The revenue increase from 1999 to 2000 is reflective of year-to-year increases in average reported commodity prices, including the effects of commodity hedges, of 56 percent, 74 percent and 48 percent for oil, NGL and gas, respectively, partially offset by a 15 percent decrease in BOE production. The decline in production was primarily attributable to asset divestitures and normal well production declines. Excluding the production associated with assets divested during 2000 and 1999, BOE production declined by approximately one percent during 2000 as compared to 1999. The revenue decrease from 1998 to 1999 is reflective of a 19 percent decrease in BOE production, partially offset by price increases of 17 percent, 31 percent and four percent for oil, NGL and gas, respectively. The decline in production was primarily attributable to asset divestitures, but also reflects the deferral of oil well completions at the end of 1998 and the beginning of 1999 until oil prices recovered, in addition to normal well production declines. Excluding the production associated with 1999 and 1998 asset divestitures, production declined by nine percent during the year ended December 31, 1999, as compared to the same period in 1998. The following table provides production and price data relevant to the analysis of the Company's revenues from oil and gas operations: Year ended December 31, ------------------------------ 2000 1999 1998 -------- -------- -------- Production: Oil (MBbls)................................................ 12,535 15,454 21,554 NGLs (MBbls)............................................... 8,379 9,237 10,669 Gas (MMcf)................................................. 135,843 158,457 183,913 Total (MBOE)............................................... 43,555 51,101 62,875 Average daily production: Oil (Bbls)................................................. 34,249 42,339 59,052 NGLs (Bbls)................................................ 22,894 25,308 29,231 Gas (Mcf).................................................. 371,157 434,130 503,872 Total (BOE)................................................ 119,002 140,002 172,261 Average reported prices: Oil (per Bbl) United States............................................ $ 22.07 $ 15.03 $ 13.96 Argentina................................................ $ 29.09 $ 18.41 $ 11.00 Canada................................................... $ 27.50 $ 13.28 $ 10.96 Worldwide................................................ $ 24.01 $ 15.36 $ 13.08 NGL (per Bbl) United States............................................ $ 20.05 $ 11.61 $ 8.86 Argentina................................................ $ 22.91 $ 11.30 $ 9.83 Canada................................................... $ 24.32 $ 12.62 $ 9.54 Worldwide................................................ $ 20.27 $ 11.64 $ 8.90 Gas (per Mcf) United States............................................ $ 3.50 $ 2.17 $ 2.01 Argentina................................................ $ 1.19 $ 1.10 $ 1.09 Canada................................................... $ 2.88 $ 1.82 $ 1.45 Worldwide................................................ $ 2.81 $ 1.90 $ 1.82 Percentage increase (decrease) in average reported prices: Oil...................................................... 56 17 (29) NGL...................................................... 74 31 (29) Gas...................................................... 48 4 (17) Hedging activities The oil and gas prices that the Company reports are based on the market price received for the commodities adjusted by the results of the Company's hedging activities. The Company utilizes commodity derivative contracts (swaps and collars) in order to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company's annual capital budgeting and expenditure plans and (iii) reduce price risk associated with certain capital projects. See Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for information concerning the Company's open hedge positions at December 31, 2021 and their related prices. 24

Interest and other revenue. The Company recorded interest and other income totaling $25.8 million, $89.7 million and $10.5 during 2000, 1999 and 1998, respectively. The decrease in interest and other income during 2000, and the significant increase during 1999, were primarily attributable to a non-recurring excise tax refund of $30.2 million and a non-recurring option fee of $41.8 million recognized by the Company during 1999. See Note J of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for additional information. Gain (loss) on disposition of assets. During 2000, the Company completed the divestiture of certain assets for proceeds of $102.7 million. Associated therewith, the Company recorded a net gain on disposition of assets of $34.2 million during 2000. The 2000 divestitures included the sale of common stock of a non-affiliated entity for net proceeds of $59.7 million, from which the Company recognized a gain on disposition of assets of $34.3 million. The Company also sold certain oil and gas producing properties and other assets during 2000 for proceeds of $43.0 million, from which the Company recognized a loss on disposition of assets of $.1 million. During 1998, the Company announced measures to increase its financial flexibility and to safeguard net asset values. Those measures included the enhancement of core assets and the divestiture of non-core assets. During 1999, the Company completed the asset divestiture phase of the measures. As a result, the Company realized net divestment proceeds from asset divestitures of $420.5 million during 1999 and recorded an associated net loss on disposition of assets of $24.2 million. The net cash proceeds from asset divestitures during 2000 and 1999 were used to reduce outstanding indebtedness. See Note K of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for additional information regarding asset divestitures. Production costs. Total production costs per BOE increased in 2000 by approximately 39 percent and decreased in 1999 by approximately 12 percent. Lease operating expenses and workover expenses represent the components of production costs over which the Company has management control, while production taxes, ad valorem taxes and field fuel expenses are directly related to commodity price changes. During 2000, as compared to 1999, per BOE lease operating expenses and workover expenses increased on a combined basis by 16 percent while per BOE production taxes, ad valorem taxes and field fuel expenses increased on a combined basis by 95 percent. The increase in 2000 is primarily due to significant increases in those expenses that are directly related to commodity price levels and, to a lesser extent, inflation in field service expenses. During 1999, as compared to 1998, per BOE lease operating expenses and workover expenses decreased on a combined basis by 15 percent and per BOE production taxes, ad valorem taxes and field fuel expenses decreased by 6 percent. The operating margins from the Company's gas plants (i.e., third party processing revenues less processing costs and expenses) are included in lease operating expenses, which resulted in decreases in lease operating expenses per BOE during 2000 and 1999 of $.34 and $.11, respectively, and an increase in lease operating expenses per BOE of $.05 during 1998. Year Ended December 31, ------------------------ 2000 1999 1998 ------ ------ ------ (per BOE) Lease operating expenses.................. $ 2.42 $ 2.11 $ 2.47 Taxes: Production.............................. .77 .39 .40 Ad valorem ............................. .29 .31 .39 Field fuel expenses....................... .71 .21 .18 Workover expenses......................... .15 .10 .12 ----- ----- ----- Total production costs.............. $ 4.34 $ 3.12 $ 3.56 ===== ===== ===== Depletion expense. Depletion expense per BOE increased seven percent during 2000 (to $4.57 from $4.27 in 1999) and decreased 17 percent in 1999 (from $5.13 in 1998). The increase in per BOE depletion expense during 2000 is primarily due to an increase in the Company's Argentine and Canadian proved property basis as a result of reclassifying unproved property basis associated with the Company's exploration and extension drilling success to proved property and to a higher proportionate share of the Company's production being produced from Argentina. The decrease in 1999 depletion expense per BOE was primarily attributable to the positive impact on proved reserves from improved community 25

prices and to the impairment of the carrying values of the Company's proved oil and gas properties during the year ended December 31, 1998. Impairment of oil and gas properties. The Company reviews its oil and gas producing properties for impairment whenever events or circumstances indicate a decline in the recoverability of the carrying value of the Company's assets may have occurred. Declining commodity prices in 1998, the Company's outlook for future commodity prices and 1998 performance issues relative to certain oil and gas properties, prompted impairment reviews. As a result of these reviews, the Company recognized a non-cash charge of $312.2 million in 1998, related to its proved oil and gas properties. The Company periodically assesses its unproved properties to determine whether they have been impaired. An unproved property may be impaired if the Company does not intend to drill the prospect as a result of downward revisions to potential reserves, if the results of exploration or the Company's outlook for future commodity prices indicate that the potential reserves are not sufficient to generate net cash flows to recover the investment required by the project, or if the Company intends to sell the property for less than its carrying value. The Company has assessed its unproved oil and gas properties for impairment and, during the years ended December 31, 2021 and 1998, recognized non-cash impairment charges of $17.9 million and $147.3 million, respectively, to reduce the carrying value of its unproved oil and gas properties. Exploration and abandonments/geological and geophysical costs. Exploration and abandonments/geological and geophysical costs totaled $87.6 million, $66.0 million and $121.9 million for the years ended December 31, 2000, 1999 and 1998, respectively. The following table sets forth the components of the Company's 2000, 1999 and 1998 exploration and abandonments/geological and geophysical costs: United Other States Argentina Canada Foreign Total -------- --------- -------- -------- -------- (in thousands) Year Ended December 31, 2000: Geological and geophysical costs...... $ 22,033 $ 6,881 $ 2,273 $ 7,761 $ 38,948 Exploratory dry holes................. 11,745 6,987 887 8,396 28,015 Leasehold abandonments and other...... 7,089 11,520 1,971 7 20,587 ------- ------- ------- ------- ------- $ 40,867 $ 25,388 $ 5,131 $ 16,164 $ 87,550 ======= ======= ======= ======= ======= Year Ended December 31, 1999: Geological and geophysical costs...... $ 17,207 $ 3,399 $ 315 $ 7,498 $ 28,419 Exploratory dry holes................. 15,591 3,441 978 (275) 19,735 Leasehold abandonments and other...... 8,427 7,169 2,216 8 17,820 ------- ------- ------- ------- ------- $ 41,225 $ 14,009 $ 3,509 $ 7,231 $ 65,974 ======= ======= ======= ======= ======= Year Ended December 31, 1998: Geological and geophysical costs...... $ 42,755 $ 9,999 $ 14,244 $ 3,851 $ 70,849 Exploratory dry holes................. 15,737 4,426 1,949 9,486 31,598 Leasehold abandonments and other...... 10,771 3,820 4,420 400 19,411 ------- ------- ------- ------- ------- $ 69,263 $ 18,245 $ 20,613 $ 13,737 $121,858 ======= ======= ======= ======= ======= The increase in 2000 exploration costs, as compared to 1999, is primarily due to increased geological and geophysical costs that are supportive of future exploratory drilling, unproved leasehold abandonments associated with exploratory dry holes in Argentina and dry hole costs associated with exploratory drilling in South Africa. The decrease in 1999 exploratory costs is primarily attributable to the Company's curtailed 1999 capital program, as evidenced by reductions in all categories of exploration, abandonments, geological and geophysical costs as compared to 1998. Approximately 36 percent of the Company's 2000 exploration capital was spent on exploratory projects as compared to 31 percent in 1999 and 30 percent in 1998. Interest and administrative expenses. Interest and general and administrative expenses were $162.0 million and $33.3 million, respectively, during 2000, as compared to $170.3 million and $40.2 million, respectively, during 1999, and $164.3 million and $73.0 million, respectively, during 1998. On a per BOE basis, interest and general and administrative expenses were $3.72 and $.76, respectively, during 2000, as compared to $3.33 and $.79, respectively, during 1999, and $2.61 and $1.16, respectively, during 1998. Interest expense decreased during 2000, as compared to 1999, primarily due to a decrease in the Company's weighted average debt outstanding for the year. This decline was 26

offset, to a certain extent, by higher interest rates in 2000 as compared to 1999. The increase in interest expense during 1999, as compared to 1998, was due to the higher weighted average debt balances in 1999. The significant declines in administrative expense during 2000 and 1999, and the decline in interest expense during 2000, were a direct result of the financial measures taken by the Company to manage costs and reduce outstanding indebtedness. On a per BOE basis, interest expense increased in 2000 and 1999, primarily due to higher interest rates and production declines as a result of asset divestitures. The decline in per BOE administrative expense is due to the reorganization measures initiated by the Company during 1998. Those reorganization measures included the centralization in Irving, Texas of certain operational and administrative functions previously based in Midland, Texas; the closings of the Company's regional offices in Oklahoma City, Oklahoma, Corpus Christi, Texas, and Houston, Texas; workforce reductions; and, other initiatives. As a direct result of those measures, the Company recognized reorganization charges of $8.5 million and $33.2 million during 1999 and 1998, respectively (see Note M of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for specific information regarding reorganization costs paid during 2000, 1999 and 1998, and unpaid reorganization costs as of December 31, 2000, 1999 and 1998). Other expenses. Other expenses were $67.2 million during 2000, as compared to $34.7 million during 1999 and $39.6 million during 1998. The increase in other expenses during 2000, as compared to 1999 and 1998, is primarily attributable to increases in mark-to-market provisions on non-hedge derivative financial instruments. Such mark-to- market provisions during 2000 included $42.0 million associated with non-hedge commodity derivatives that matured in December 2000, $14.6 million associated with the Company's non-hedge Btu swap agreements and $1.9 million associated with a series of non-hedge forward foreign exchange swap agreements that matured in December 2000. Mark-to-market provisions in 1999 included $21.2 million associated with non-hedge commodity derivatives and $11.9 million associated with an investment in the common stock of a non-affiliated, public entity, partially offset by $5.9 million of mark-to-market income recognized on a series of forward foreign exchange swap agreements and income of $.2 million associated with the Company's Btu swap agreements. Other expense for 1998 included $20.5 million of mark-to-market adjustments of non-hedge foreign currency and Btu swap agreements, a $9.6 million write-off of deferred compensation arising from change of control features in the Company's incentive plans, $4.4 million of other expenses associated with the Company's operations in Argentina and Canada, and $2.3 million of bad debt expense. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" and Notes C and H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for specific disclosures pertaining to the Company's investments in derivative financial instruments. Income tax provisions (benefits). The Company recognized consolidated income tax benefits of $6.0 million and $.6 million during 2000 and 1999, respectively, and an income tax provision of $15.6 million during 1998. The tax benefit in 2000 is comprised of a $10.6 million deferred tax benefit in Argentina, partially offset by $4.6 million of current taxes paid in Argentina. Due to uncertainties regarding the Company's ability to realize net operating loss carryovers and tax credit carryovers prior to their scheduled expirations, the Company did not recognize deferred income tax benefits associated with its operating results for 1999 and 1998. Additionally, during 1998, the Company's net loss was impacted by a $271.1 million valuation allowance recognized to reduce the carrying value of the Company's deferred tax assets. Although realization is not assured for the Company's remaining deferred tax assets, the Company believes it is more likely than not that they will be realized through future taxable earnings or alternative tax planning strategies. However, the net deferred tax assets could be reduced further if the Company's estimate of taxable income in future periods is significantly reduced or alternative tax planning strategies are no longer viable. As a result of this situation, it is likely that the Company's effective tax rate in 2001 will be minimal. If the Company recognizes income before income taxes in 2001, its effective tax rate will be reduced to the extent that taxable earnings are recognized in those tax jurisdictions relative to which the Company has established its valuation allowance. See Note N of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for information regarding the Company's income taxes and deferred tax asset valuation reserves. Extraordinary item. During 2000, the Company replaced its Prior Credit Facility that was scheduled to mature August 7, 2002, with the Credit Agreement that matures March 1, 2005. Associated therewith, the Company recognized a $12.3 million extraordinary loss on early extinguishment of debt. 27

Capital Commitments, Capital Resources and Liquidity Capital commitments. The Company's primary needs for cash are for exploration, development and acquisitions of oil and gas properties, repayment of principal and interest on outstanding indebtedness and working capital obligations. The Company's cash expenditures for additions to oil and gas properties during 2000, 1999 and 1998 totaled $299.7 million, $179.7 million and $507.3 million, respectively. The $120.0 million, or 67 percent, increase in 2000 capital expenditures as compared to the expenditures of 1999 was a result of the $174.9 million, or 69 percent, increase in net cash provided by operating activities during 2000 as compared to net cash provided by operating activities during 1999. During 1999, as compared to 1998, the Company significantly decreased its capital expenditures in support of debt reduction and financial management initiatives. The Company strives to maintain its indebtedness at moderate levels in order to provide sufficient financial flexibility to react to future opportunities. Therefore, during both 2000 and 1999, the Company limited its capital expenditures for additions to oil and gas properties to 70 percent of net cash provided by operating activities in order to further reduce its outstanding indebtedness. The Company expects that cash provided by operating activities during 2001 will exceed its 2001 capital expenditure budget of $430 million. To the extent that cash provided by operating activities exceeds capital expenditures during 2001, the Company intends to further reduce its outstanding debt, acquire additional interest in core properties and/or repurchase common stock. The Company budgets its capital expenditures based on projected internally-generated cash flows and may adjust the level of its capital expenditures in response to anticipated changes in cash flows or other factors, at the Company's discretion. Funding for the Company's working capital obligations is also provided by internally-generated cash flow. Funding for the repayment of principal and interest on outstanding debt and the Company's capital expenditure program may be provided by any combination of internally-generated cash flow, proceeds from the disposition of non-strategic assets or alternative financing sources as discussed in "Capital Resources" below. Capital resources. The Company's primary capital resources are net cash provided by operating activities, proceeds from financing activities and proceeds from sales of non-strategic assets. The Company expects that these resources will be sufficient to fund its capital commitments and allow further debt reductions in 2001. Operating activities. Net cash provided by operating activities during 2000, 1999 and 1998 were $430.1 million, $255.2 million and $314.1 million, respectively. Net cash provided by operating activities during 2000 increased 69 percent from that of 1999 primarily as a result of favorable commodity prices and cost management measures. Net cash provided by operating activities during 1999 decreased 19 percent from that of 1998 primarily as a result of declines in production volumes due to oil and gas property divestitures, partially offset by increases in commodity prices and decreases in production and administrative costs. Net cash provided by operating activities during 1999, as compared to that of 1998, also declined as a result of increases in working capital associated with operating activities. Financing activities. On May 31, 2000, the Company entered into the Credit Agreement with a syndication of banks (the "Banks") that matures on March 1, 2005. Outstanding borrowings under the $575 million Credit Agreement totaled $225.0 million as of December 31, 2000. The Credit Agreement replaced the Company's Prior Credit Facility that had a maturity date of August 7, 2002. During April 2000, the Company issued the 9-5/8% Senior Notes at a discount of .353 percent, resulting in net proceeds to the Company, after underwriting discounts, commissions and costs of issuance, of $415.4 million. The net proceeds from the issuance of the 9-5/8% Senior Notes were used to reduce outstanding borrowings under the Company's Prior Credit Facility. The 9-5/8% Senior Notes contain various restrictive covenants, including restrictions on the incurrence of additional indebtedness and certain payments defined within the associated indenture. At December 31, 2000, the Company has four other outstanding senior debt issuances. Such debt issuances consist of (i) $150 million aggregate principal amount of 8-7/8% senior notes due in 2005; (ii) $150 million aggregate principal amount of 8-1/4% senior notes due in 2007; (iii) $350 million aggregate principal amount of 6-1/2% senior notes due in 2008; and, (iv) $250 million aggregate principal amount of 7-1/5% senior notes due in 2028. 28

The weighted average interest rate on the Company's indebtedness for the year ended December 31, 2021 was 8.68 percent as compared to 7.81 percent for the year ended December 31, 2021 and 7.16 percent for the year ended December 31, 1998, taking into account the effect of interest rate swaps. See Note D of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for more specific information regarding the Company's long-term debt as of December 31, 2021 and 1999. As the Company pursues its strategy, it may utilize various financing sources, including fixed and floating rate debt, convertible securities, preferred stock or common stock. The Company may also issue securities in exchange for oil and gas properties, stock or other interests in other oil and gas companies or related assets. Additional securities may be of a class preferred to common stock with respect to such matters as dividends and liquidation rights and may also have other rights and preferences as determined by the Company's Board of Directors. Sales of non-strategic assets. During 2000, 1999 and 1998, proceeds from the sale of non-strategic assets totaled $102.7 million, $420.5 million (including $30 million of non-cash proceeds) and $21.9 million, respectively. The Company's 2000 and 1999 asset divestitures were comprised of non-strategic United States and Canadian oil and gas properties, gas plants and other assets. The net cash proceeds from the 2000 and 1999 asset divestitures were used to reduce the Company's outstanding indebtedness (see "Results of Operations", above, and Note K of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data"). The proceeds from the 1998 asset divestitures were primarily utilized to provide funding for a portion of the Company's capital expenditures during 1998. Book capitalization and liquidity. Total debt was reduced to $1.6 billion as of December 31, 2000, as compared to total debt of $1.7 billion and $2.2 billion on December 31, 2021 and 1998, respectively. The Company's total book capitalization at December 31, 2021 was $2.5 billion, consisting of total debt of $1.6 billion and stockholders' equity of $.9 billion. Consequently, the Company's debt to total capitalization decreased to 64 percent at December 31, 2000 from 69 percent at December 31, 1999. At December 31, 2000, the Company had $26.2 million of cash and cash equivalents on hand, compared to $34.8 million at December 31, 1999. The Company's ratio of current assets to current liabilities was .88 at December 31, 2021 and .93 at December 31, 1999. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The following quantitative and qualitative information is provided about financial instruments to which the Company was a party as of December 31, 2021 and 1999, and from which the Company may incur future gains or losses from changes in market interest rates, foreign exchange rates, commodity prices or common and preferred stock prices. Although certain derivative contracts that the Company is a party to do not qualify as hedges, the Company does not enter into derivative or other financial instruments for trading purposes. Quantitative Disclosures Interest rate sensitivity. The following tables provide information, in United States dollar equivalent amounts, about the Company's derivative financial instruments and other financial instruments to which the Company was a party as of December 31, 2021 and 1999, which are sensitive to changes in interest rates. For debt obligations, the tables present maturities by expected maturity dates together with the weighted average interest rates expected to be paid on the debt, given current contractual terms and market conditions. For fixed rate debt, the weighted average interest rate represents the contractual fixed rates that the Company is obligated to periodically pay on the debt; for variable rate debt, the average interest rate represents the average rates being paid on the debt projected forward proportionate to the forward yield curve for United States treasury securities. The accompanying table as of December 31, 2021 also provides information about interest rate swap agreements entered into by the Company during 2000. The interest rate swap agreements hedge the fair value of the Company's 8-7/8% Senior Notes due April 15, 2005. 29

Interest Rate Sensitivity Derivative And Other Financial Instruments As of December 31, 2021 Asset (Liability) 2001 2002 2003 2004 2005 Thereafter Total Fair Value --------- --------- --------- --------- --------- ----------- ---------- ------------ (in thousands except interest rates) Total Debt: U.S. dollar denominated maturities: Fixed rate debt............... $ - $ - $ - $ - $150,000 $1,203,776 $1,353,776 $(1,290,250)(1) Weighted average interest rate............... 8.10% 8.10% 8.10% 8.10% 8.03% 8.00% Variable rate debt............ $ - $ - $ - $ - $225,000 $ - $ 225,000 $ (225,000) Average interest rates........ 6.64% 6.27% 6.18% 6.24% 6.31% Interest Rate Hedge Derivatives (2): Notional amount of interest rate swap..................... $150,000 $150,000 $150,000 $150,000 $150,000 $ - $ 150,000 $ 6,216 Fixed interest rate received..... 8.88% 8.88% 8.88% 8.88% 8.88% Variable interest rate paid...... 7.17% 6.77% 6.67% 6.74% 6.81% - --------------- (1) Excludes $30.9 million of debt instruments for which fair values were not practicable to derive as of December 31, 2000. (2) The Company's interest rate hedge derivatives mature on April 15, 2005. Interest Rate Sensitivity Derivative and Other Financial Instruments As of December 31, 2021 Asset (Liability) 2000 2001 2002 2003 2004 Thereafter Total Fair Value -------- -------- --------- -------- -------- ----------- --------- ----------- (in thousands except interest rates) Total Debt: U.S. dollar denominated maturities: Fixed rate debt........ $ 828 $ - $ - $ 518 $ 571 $ 919,019 $ 920,936 $(776,230)(1) Weighted average interest rate........ 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% Variable rate debt..... $ - $ - $825,000 $ 825,000 $(825,000) Average interest rates. 7.65% 7.70% 7.65% - --------------- (1) Excludes $23.0 million of debt instruments for which fair values were not practicable to derive as of December 31, 1999. Foreign exchange rate sensitivity. In October and December of 2000, the Company's foreign currency swaps matured. The following table provides information, in United States dollar equivalent amounts, about the Company's derivative financial instruments that the Company was a party to as of December 31, 1999 and that were sensitive to changes in foreign exchange rates. 30

Foreign Exchange Rate Sensitivity Derivative And Other Financial Instruments As of December 31, 2021 Asset (Liability) 2000 Total Fair Value -------- -------- ---------- (in thousands except foreign exchange rates) Non-hedge Foreign Exchange Rate Derivatives: Notional amount of foreign currency swaps (1).......................... $ 72,000 $ 72,000 $ (4,168) Fixed Canadian to U.S. dollar rate paid............................ 1.3606 Average forward Canadian dollar to U.S. dollar exchange rate............................... 1.4455 - --------------- (1) The foreign exchange rate swaps matured in October and December 2000. Commodity price sensitivity. The following tables provide information, in United States dollar equivalent amounts, about the Company's derivative financial instruments that the Company was a party to as of December 31, 2021 and 1999 and that are sensitive to changes in oil and gas commodity prices. The tables segregate hedge derivative contracts from those that do not qualify as hedges. Commodity hedge instruments. The Company currently hedges commodity price risk with swap and collar contracts. As of December 31, 1999, the Company hedged commodity price risk with swap contracts, collar contracts and collar contracts with short put options. Swap contracts provide a fixed price for a notional amount of sales volumes. Collar contracts provide a floor price for the Company on a notional amount of sales volumes while allowing some additional price participation if the relevant index price closes above the floor price. Collar contracts with short put options differ from other collar contracts by virtue of the short put option price below which the Company's realized price will exceed variable market prices by the long put-to-short put price differential. Commodity non-hedge instruments. The Company has entered into Btu swap contracts and, during 1999 through their maturity in 2000, optional call contracts. These contracts do not qualify for hedge accounting. Under the terms of the Btu swap contracts, the Company receives 10 percent of the NYMEX oil price and pays the NYMEX gas price on a notional 13,036 MMBtu daily gas volume. During 2000, the Company terminated its variable position in the Btu swap contracts for the 2001 volumes, but continues to participate for 2002 through 2004 volumes. The terms of the optional call contracts provided the counterparties with the option to call either notional oil volumes or gas volumes at specific index prices. Accordingly, these derivative instruments are presented in both the accompanying oil and gas tables. See Notes B, C and H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for a description of the accounting procedures followed by the Company relative to hedge and non-hedge derivative financial instruments and for specific information regarding the terms of the Company's derivative financial instruments that are sensitive to changes in gas and oil commodity prices. 31

Oil Price Sensitivity Derivative Financial Instruments As of December 31, 2021 Asset (Liability) 2001 2002 2003 2004 Fair Value ------- ------- ------- ------- ---------- Oil Hedge Derivatives (1): Average daily notional Bbl volumes: Swap contracts................................. 6,510 $ 8,819 Weighted average per Bbl fixed price.......... $ 29.27 Collar contracts............................... 4,479 $ (1,820) Weighted average short call per Bbl ceiling price............................... $ 25.15 Weighted average long put per Bbl floor price................................. $ 20.57 Oil Non-hedge Derivatives (2): Daily notional MMBtu volumes under swap of NYMEX gas price for 10 percent of NYMEX WTI price................................ 13,036 13,036 13,036 13,036 $ (25,507) Average forward NYMEX gas prices (3).......... $ 4.05 $ 4.61 $ 4.29 $ 4.35 Average forward NYMEX oil prices (3).......... $ 27.69 $ 24.15 $ 22.21 $ 21.54 - --------------- (1) See Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for hedge volumes and weighted average prices by calendar quarter for 2001. (2) Since the oil non-hedge derivatives are sensitive to changes in both oil and gas market prices, they are duplicated in the Oil Price Sensitivity and the Natural Gas Price Sensitivity tables. (3) The average forward NYMEX oil and gas prices are based on February 20, 2022 market quotes, except for the 2001 prices that represent locked-in prices associated with the Company's Btu swaps. 32

Oil Price Sensitivity Derivative Financial Instruments As of December 31, 2021 Asset (Liability) 2000 2001 2002 2003 2004 Fair Value ------- ------- ------- ------- ------- ---------- Oil Hedge Derivatives: Average daily notional Bbl volumes: Swap contracts.............................. 9,519 $ (5,714) Weighted average per Bbl fixed price....... $ 16.51 Collar contracts............................ 826 $ (189) Weighted average short call per Bbl ceiling price............................ $ 23.00 Weighted average long put per Bbl floor price.............................. $ 19.00 Collar contracts with short put (1)......... 7,000 8,000 $ (9,407) Weighted average short call per Bbl ceiling price............................ $ 20.42 $ 21.57 Weighted average long put per Bbl floor price.............................. $ 17.29 $ 18.44 Weighted average short put per Bbl price below which floor becomes variable....... $ 14.29 $ 15.44 Oil Non-hedge Derivatives (2): Daily notional oil Bbl volumes under optional calls sold......................... 10,000 $(13,259) Weighted average short call per Bbl ceiling price............................ $ 20.00 Average forward NYMEX oil price per Bbl (3)........................ $ 24.03 Daily notional MMBtu volumes under swap of NYMEX gas price for 10 percent of NYMEX WTI price............................. 13,036 13,036 13,036 13,036 13,036 $(13,218) Average forward NYMEX gas prices (3)....... $ 2.65 $ 2.58 $ 2.57 $ 2.62 $ 2.67 Average forward NYMEX oil prices (3)....... $ 24.03 $ 20.33 $ 18.83 $ 18.27 $ 18.12 - --------------- (1) As of December 31, 2000, the counterparties to the year 2000 collar contracts with short puts had the contractual right to extend contracts for notional contract volumes of 5,000 Bbls per day through year 2001 at weighted average per Bbl strike prices of $20.09 for the short call ceiling price, $17.00 for the long put floor price and $14.00 for the short put price below which the floor became variable. During 2000, the Company terminated these extendable contracts, recognizing associated deferred hedge losses, and replaced them with a collar contract for year 2001 at weighted average per Bbl strike prices of $20.09 for the short call ceiling price and $17.00 for the long put floor price. See Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data". (2) Since the oil non-hedge derivatives are sensitive to changes in both oil and gas market prices, they are duplicated in the Oil Price Sensitivity and the Natural Gas Price Sensitivity tables. (3) The average forward NYMEX oil and gas prices are based on February 2, 2022 market quotes. 33

Natural Gas Price Sensitivity Derivative Financial Instruments As of December 31, 2021 Asset (Liability) 2001 2002 2003 2004 Fair Value ------- ------- ------- ------- ---------- Natural Gas Hedge Derivatives (1): Average daily notional MMBtu volumes (2): Swap contracts............................ 76,346 $ (79,771) Weighted average per MMBtu fixed price... $ 4.59 Collar contracts.......................... 54,482 $ (67,281) Weighted average short call per MMBtu ceiling price......................... $ 2.73 Weighted average long put per MMBtu contingent floor price................ $ 2.11 Natural Gas Non-hedge Derivatives (3): Daily notional MMBtu volumes under agreement to swap NYMEX gas price for 10 percent of NYMEX WTI price......... 13,036 13,036 13,036 13,036 $ (25,507) Average forward NYMEX gas prices (4)..... $ 4.05 $ 4.61 $ 4.29 $ 4.35 Average forward NYMEX oil prices (4)..... $ 27.69 $ 24.15 $ 22.21 $ 21.54 - -------------- (1) To minimize basis risk, the Company enters into basis swaps for a portion of its gas hedges to connect the index price of the hedging instrument from a NYMEX index to an index which reflects the geographic area of production. The Company considers these basis swaps as part of the associated swap and option contracts and, accordingly, the effects of the basis swaps have been presented together with the associated contracts. (2) See Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for hedge volumes and weighted average prices by calendar quarter for 2001. (3) Since the oil non-hedge derivatives are sensitive to changes in both oil and gas market prices, they are duplicated in the Oil Price Sensitivity and the Natural Gas Price Sensitivity tables. (4) The average forward NYMEX oil and gas prices are based on February 20, 2022 market quotes, except for the 2001 prices that represent locked-in prices associated with the Company's Btu swaps. 34

Natural Gas Price Sensitivity Derivative Financial Instruments As of December 31, 2021 Asset (Liability) 2000 2001 2002 2003 2004 Fair Value -------- ------- ------- ------- ------- ----------- Natural Gas Hedge Derivatives (1): Average daily notional MMBtu volumes: Swap contracts (2)........................... 328 - 10,000 $ (5,385) Weighted average per MMBtu fixed price...... $ 3.00 $ - $ 2.42 Collar contracts with short puts (3)......... 93,814 60,000 $ (5,518) Weighted average short call per MMBtu ceiling price............................ $ 2.62 $ 2.64 Weighted average long put per MMBtu contingent floor price................... $ 2.07 $ 2.25 Weighted average short put per MMBtu price below which floor becomes variable....... $ 1.78 $ 1.95 Natural Gas Non-hedge Derivatives (4): Daily notional gas MMBtu volumes under optional calls sold........................... 100,000 $ (13,259) Weighted average short call per MMBtu ceiling price............................ $ 2.75 Average forward NYMEX gas price per MMBtu (5)................................ $ 2.65 Daily notional MMBtu volumes under agreement to swap NYMEX gas price for 10 percent of NYMEX WTI price........ 13,036 13,036 13,036 13,036 13,036 $ (13,218) Average forward NYMEX gas prices (5)........ $ 2.65 $ 2.58 $ 2.57 $ 2.62 $ 2.67 Average forward NYMEX oil prices (5)........ $ 24.03 $ 20.33 $ 18.83 $ 18.27 $ 18.12 - -------------- (1) To minimize basis risk, the Company enters into basis swaps for a portion of its gas hedges to connect the index price of the hedging instrument from a NYMEX index to an index which reflects the geographic area of production. The Company considers these basis swaps as part of the associated swap and option contracts and, accordingly, the effects of the basis swaps have been presented together with the associated contracts. (2) As of December 31, 1999, certain counterparties to the swap contracts had the contractual right to sell year 2001, 2002 and 2003 swap contracts to the Company for notional daily contract volumes of 49,223, 12,500 and 10,000 MMBtu per day, respectively, at prices of $2.25, $2.52 and $2.58 per MMBtu, respectively. During 2000, the Company liquidated these contracts, recognizing associated deferred hedge losses, and entered into a year 2001 swap contract for notional daily contract volumes of 49,223 MMBtu at a weighted average strike price of $2.25 per MMBtu. See Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data". (3) As of December 31, 1999, 54,582 MMBtu per day of year 2000 collar option contracts with short puts were extendable at the option of the counterparties for a period of one year at average per MMBtu prices of $2.71, $2.09 and $1.80 for the short call, long put and short put, respectively. As of December 31, 1999, 60,000 MMBtu per day of the year 2001 collar option contracts with short puts were extendable at the option of the counterparties at average per MMBtu prices of $2.64, $2.25 and $1.95 for the short call, long put and short put, respectively. During 2000, the Company liquidated these contracts, recognizing associated deferred hedge losses, and entered into a year 2001 collar contract for 54,582 MMBtu per day at weighted average per MMBtu prices of $2.73 for the short call ceiling price and $2.11 for the long put floor price. See Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data". (4) Since the oil non-hedge derivatives are sensitive to changes in both oil and gas market prices, they are duplicated in the Oil Price Sensitivity and the Natural Gas Price Sensitivity tables. (5) The average forward NYMEX oil and gas prices are based on February 2, 2022 market quotes. 35

Other price sensitivity. On December 31, 1999, the Company owned 2,376.923 shares of Prize Energy Corp. ("Prize") six percent convertible preferred stock ("Prize Preferred") having an original liquidation preference of $30.0 million. Prior to 2000, Prize was a closely held, non-public entity and the fair market value of the Prize Preferred was not readily determinable. During 2000, the common stock of Prize began to publicly trade on the American Stock Exchange and the Company's Prize Preferred shares were exchanged for 3,984,197 shares of Prize common stock ("Prize Common"). During 2000, the Company sold 3,370,982 shares of Prize Common and received cash in lieu of 33,964 shares of preferred in-kind dividends for a combined total of $59.7 million. The fair market value of the Company's remaining investment in 613,215 shares of Prize Common was $12.7 million as of December 31, 2000. Qualitative Disclosures Non-derivative financial instruments. The Company is a borrower under fixed rate and variable rate debt instruments that give rise to interest rate risk. The Company's objective in borrowing under fixed or variable rate debt is to satisfy capital requirements while minimizing the Company's costs of capital. To realize its objectives, the Company borrows under fixed and variable rate debt instruments, based on the availability of capital, market conditions and hedge opportunities. See Note D of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" for a discussion relative to the Company's debt instruments. As described in "Other price sensitivity" above, the Company owns 613,215 shares of Prize Common. The Company does not routinely acquire shares of common stock of publicly traded entities for investment purposes. The Prize Common was received by the Company in partial consideration for assets acquired from the Company by Prize. Derivative financial instruments. The Company has entered into interest rate, foreign exchange rate and commodity price derivative contracts to hedge interest rate, foreign exchange rate and commodity price risks. Although the Company is a party to certain derivative contracts that do not qualify for hedge accounting treatment and has entered into other derivative contracts in the past that did not qualify for hedge accounting treatment, the Company's policy is to limit its participation in derivative contracts to those that, in the opinion of management, reduce the Company's overall economic risk. As of December 31, 2021 and 1999, the Company was a party to the Btu swap contracts and as of December 31, 1999, it was also a party to the Canadian denominated foreign exchange rate swap and optional commodity calls that are described more fully in Quantitative Disclosures, above, and Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data". These financial instruments do not qualify as hedges of commodity price or foreign exchange rate risk under generally accepted accounting standards. As of December 31, 2000, the Company's primary risk exposures associated with financial instruments to which it is a party include oil and gas price volatility and interest rate volatility. The Company's primary risk exposures associated with financial instruments have not changed significantly since December 31, 2000. 36

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page Consolidated Financial Statements of Pioneer Natural Resources Company: Independent Auditor's Report........................................ 38 Consolidated Balance Sheets as of December 31, 2021 and 1999........ 39 Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2000, 1999 and 1998..... 40 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2000, 1999 and 1998........................... 41 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999, and 1998................................ 42 Notes to Consolidated Financial Statements.......................... 43 Unaudited Supplementary Information................................. 71 37

INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Pioneer Natural Resources Company: We have audited the accompanying consolidated balance sheets of Pioneer Natural Resources Company and subsidiaries as of December 31, 2021 and 1999, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pioneer Natural Resources Company and subsidiaries at December 31, 2021 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Ernst & Young LLP Dallas, Texas January 29, 2022 38

PIONEER NATURAL RESOURCES COMPANY CONSOLIDATED BALANCE SHEETS (in thousands, except share data) ASSETS December 31, ------------------------- 2000 1999 ----------- ----------- Current assets: Cash and cash equivalents.......................................... $ 26,159 $ 34,788 Accounts receivable: Trade, net....................................................... 123,497 116,456 Affiliates....................................................... 2,157 2,119 Inventories........................................................ 14,842 13,721 Deferred income taxes.............................................. 4,800 5,800 Other current assets............................................... 19,936 10,252 ---------- ---------- Total current assets........................................... 191,391 183,136 ---------- ---------- Property, plant and equipment, at cost: Oil and gas properties, using the successful efforts method of accounting: Proved properties................................................ 3,187,889 2,997,335 Unproved properties.............................................. 229,205 257,583 Accumulated depletion, depreciation and amortization............... (902,139) (751,956) ---------- ---------- 2,514,955 2,502,962 Deferred income taxes................................................ 84,400 83,400 Other property and equipment, net.................................... 25,624 43,006 Other assets, net.................................................... 138,065 116,969 ---------- ---------- $ 2,954,435 $ 2,929,473 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt............................... $ - $ 828 Accounts payable: Trade............................................................ 96,646 86,442 Affiliates....................................................... 5,629 426 Interest payable................................................... 38,142 36,045 Other current liabilities: Derivative obligations........................................... 24,957 17,852 Other............................................................ 51,140 55,220 ---------- ---------- Total current liabilities...................................... 216,514 196,813 ---------- ---------- Long-term debt, less current maturities.............................. 1,578,776 1,745,108 Other noncurrent liabilities......................................... 225,740 169,438 Deferred income taxes................................................ 28,500 43,500 Stockholders' equity: Preferred stock, $.01 par value; 100,000,000 shares authorized; one share issued and outstanding................................. - - Common stock, $.01 par value; 500,000,000 shares authorized; 101,268,754 shares issued at December 31, 2000; and 100,876,789 shares issued at December 31, 1999................... 1,013 1,009 Additional paid-in capital......................................... 2,352,608 2,348,448 Treasury stock, at cost; 2,853,107 shares at December 31, 2021 and 537,206 shares at December 31, 1999.......................... (37,682) (10,384) Accumulated deficit................................................ (1,422,703) (1,574,884) Accumulated other comprehensive income: Unrealized gain on available for sale securities................. 8,154 - Cumulative translation adjustment................................ 3,515 10,425 ---------- ---------- Total stockholders' equity..................................... 904,905 774,614 Commitments and contingencies ---------- ---------- $ 2,954,435 $ 2,929,473 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. 39

PIONEER NATURAL RESOURCES COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) Year Ended December 31, ---------------------------------- 2000 1999 1998 --------- --------- ---------- Revenues: Oil and gas............................................. $ 852,738 $ 644,646 $ 711,492 Interest and other...................................... 25,775 89,657 10,452 Gain (loss) on disposition of assets, net............... 34,184 (24,168) (445) -------- -------- --------- 912,697 710,135 721,499 -------- -------- --------- Costs and expenses: Oil and gas production.................................. 189,265 159,530 223,551 Depletion, depreciation and amortization................ 214,938 236,047 337,308 Impairment of oil and gas properties.................... - 17,894 459,519 Exploration and abandonments............................ 87,550 65,974 121,858 General and administrative.............................. 33,262 40,241 73,000 Reorganization.......................................... - 8,534 33,199 Interest................................................ 161,952 170,344 164,285 Other................................................... 67,231 34,631 39,605 -------- -------- --------- 754,198 733,195 1,452,325 -------- -------- --------- Income (loss) before income taxes and extraordinary item.. 158,499 (23,060) (730,826) Income tax benefit (provision)............................ 6,000 600 (15,600) -------- -------- --------- Income (loss) before extraordinary item................... 164,499 (22,460) (746,426) Extraordinary item - loss on early extinguishment of debt, net of tax..................................... (12,318) - - -------- -------- --------- Net income (loss)......................................... 152,181 (22,460) (746,426) Other comprehensive income (loss): Unrealized gains on available for sale securities: Unrealized holding gains............................. 33,828 - - Less gains included in net income (loss)............. (25,674) - - Translation adjustment: Currency translation adjustment...................... (6,910) 8,358 2,903 Realized translation adjustment...................... - (836) - -------- -------- --------- Comprehensive income (loss)............................... $ 153,425 $ (14,938) $ (743,523) ======== ======== ========= Income (loss) per share: Basic: Income (loss) before extraordinary item.............. $ 1.65 $ (.22) $ (7.46) Extraordinary item................................... (.12) - - -------- -------- --------- Net income (loss).................................... $ 1.53 $ (.22) $ (7.46) ======== ======== ========= Diluted: Income (loss) before extraordinary item.............. $ 1.65 $ (.22) $ (7.46) Extraordinary item................................... (.12) - - -------- -------- --------- Net income (loss).................................... $ 1.53 $ (.22) $ (7.46) ======== ======== ========= Weighted average basic shares outstanding................. 99,378 100,307 100,055 ======== ======== ========= The accompanying notes are an integral part of these consolidated financial statements. 40

PIONEER NATURAL RESOURCES COMPANY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Accumulated Other Comprehensive Income Additional Unearned ----------------------- Total Common Paid-in Treasury Compen- Accumulated Investment Translation Stockholders' Stock Capital Stock sation Deficit Gains Adjustment Equity ------- ---------- -------- --------- ----------- ---------- ----------- ------------ Balance at January 1, 1998......... $ 1,010 $2,359,992 $ (21) $(16,196) $ (795,940) $ - $ - $1,548,845 Common stock issued in settlement of litigation.................... - 342 - - - - - 342 Reduction in common stock issued for acquisition of Chauvco Resources Ltd............ (4) (11,094) - - - - - (11,098) Exercise of stock options.......... - 3 - - - - - 3 Restricted shares awarded.......... 2 3,053 - (493) - - - 2,562 Tax provision related to stock and option awards.......... - (4,300) - - - - - (4,300) Purchase of treasury stock......... - - (10,367) - - - - (10,367) Amortization of unearned compensation..................... - - - 16,689 - - - 16,689 Net loss........................... - - - - (746,426) - - (746,426) Dividends ($.10 per share)......... - - - - (10,076) - - (10,076) Other comprehensive income: Currency translation adjustment.. - - - - - - 2,903 2,903 ------ --------- ------- ------- -------- ------ ------- --------- Balance at December 31, 1998....... 1,008 2,347,996 (10,388) - (1,552,442) - 2,903 789,077 ------ --------- ------- ------- ---------- ------ ------- --------- Exercise of stock options and employee stock purchases......... 1 249 - - - - - 250 Issuance of stock options under long-term incentive plan......... - 25 - - - - - 25 Restricted shares awarded.......... - 178 4 - - - - 182 Adjustment to dividends............ - - - - 18 - - 18 Realized translation adjustment.... - - - - - - (836) (836) Net loss........................... - - - - (22,460) - - (22,460) Other comprehensive income: Currency translation adjustment.. - - - - - - 8,358 8,358 ------ --------- ------- ------- ---------- ------ ------- --------- Balance at December 31, 1999....... 1,009 2,348,448 (10,384) - (1,574,884) - 10,425 774,614 ------ --------- ------- ------- ---------- ------ ------- --------- Exercise of stock options and employee stock purchases......... 4 4,160 - - - - - 4,164 Purchase of treasury stock......... - - (27,298) - - - - (27,298) Net income......................... - - - - 152,181 - - 152,181 Other comprehensive income (loss): Unrealized gains on available for sale securities: Unrealized holdings gains...... - - - - - 33,828 - 33,828 Gains included in net income... - - - - - (25,674) - (25,674) Currency translation adjustment.. - - - - - (6,910) (6,910) ------ --------- ------- ------- ---------- ------ ------- --------- Balance at December 31, 2000....... $ 1,013 $2,352,608 $(37,682) $ - $(1,422,703) $ 8,154 $ 3,515 $ 904,905 ====== ========= ======= ======= ========== ====== ======= ========= The accompanying notes are an integral part of these consolidated financial statements. 41

PIONEER NATURAL RESOURCES COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, ------------------------------------- 2000 1999 1998 ----------- ---------- ---------- Cash flows from operating activities: Net income (loss)........................................... $ 152,181 $ (22,460) $ (746,426) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion, depreciation and amortization............... 214,938 236,047 337,308 Impairment of oil and gas properties................... - 17,894 459,519 Exploration expenses, including dry holes.............. 66,959 50,030 92,311 Deferred income taxes.................................. (10,600) - 18,600 (Gain) loss on disposition of assets, net.............. (34,184) 24,168 445 Loss on early extinguishment of debt, net of tax....... 12,318 - - Other noncash items.................................... 72,475 (866) 66,300 Change in operating assets and liabilities: Accounts receivable.................................... (7,486) (7,393) 85,413 Inventory.............................................. (2,789) (952) 2,714 Other current assets................................... (9,896) (2,335) 30 Accounts payable....................................... 26,260 (18,683) (29,800) Interest payable....................................... 2,097 2,851 15,545 Other current liabilities.............................. (52,177) (23,067) 12,117 ---------- --------- --------- Net cash provided by operating activities.............. 430,096 255,234 314,076 ---------- --------- --------- Cash flows from investing activities: Proceeds from disposition of assets......................... 102,736 390,531 21,876 Additions to oil and gas properties......................... (299,682) (179,669) (507,337) Other property dispositions (additions), net................ 2,445 (11,867) (31,546) ---------- --------- --------- Net cash provided by (used in) investing activities.... (194,501) 198,995 (517,007) ---------- --------- --------- Cash flows from financing activities: Borrowings under long-term debt............................. 922,607 355,493 947,180 Principal payments on long-term debt........................ (1,099,935) (793,919) (711,524) Payments of other noncurrent liabilities.................... (29,759) (34,002) (17,091) Purchase of treasury stock.................................. (27,298) - (10,367) Deferred loan fees/issuance costs........................... (13,847) (6,891) (7,189) Dividends................................................... - - (10,076) Exercise of stock options and employee stock purchases...... 4,164 250 - ---------- --------- --------- Net cash provided by (used in) financing activities.... (244,068) (479,069) 190,933 ---------- --------- --------- Net decrease in cash and cash equivalents .................... (8,473) (24,840) (11,998) Effect of exchange rate changes on cash and cash equivalents.. (156) 407 (494) Cash and cash equivalents, beginning of year.................. 34,788 59,221 71,713 ---------- --------- --------- Cash and cash equivalents, end of year........................ $ 26,159 $ 34,788 $ 59,221 ========== ========= ========= The accompanying notes are an integral part of these consolidated financial statements. 42

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 NOTE A. Organization and Nature of Operations Pioneer Natural Resources Company (the "Company") is a Delaware corporation whose common stock is listed and traded on the New York Stock Exchange and the Toronto Stock Exchange. The Company was formed by the merger of Parker & Parsley Petroleum Company ("Parker & Parsley") and MESA Inc. ("Mesa") in August 1997. The Company is an oil and gas exploration and production company with ownership interests in oil and gas properties located principally in the Mid Continent, Southwestern and onshore and offshore Gulf Coast regions of the United States and in Argentina, Canada and South Africa. NOTE B. Summary of Significant Accounting Policies Principles of consolidation. The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries since their acquisition or formation, and the Company's interest in the affiliated oil and gas partnerships for which it serves as general partner through certain of its wholly-owned subsidiaries. Investments in less than majority-owned subsidiaries where the Company has the ability to exercise significant influence over the investee's operations are accounted for by the equity method. The Company proportionately consolidates less than 100 percent-owned oil and gas partnerships in accordance with industry practice. The Company owns less than a 20 percent interest in the oil and gas partnerships that it proportionately consolidates. All material intercompany balances and transactions have been eliminated. Investments in non-affiliated equity securities that have a readily determinable fair value are classified as "trading securities" if management's current intent is to hold them for only a short period of time; otherwise, they are accounted for as "available-for-sale" securities. The Company re-evaluates the classification of investments in non-affiliated equity securities at each balance sheet date. The carrying value of trading securities and available-for-sale securities are adjusted to fair value as of each balance sheet date. Unrealized holding gains are recognized for trading securities in interest and other revenue, and unrealized holding losses are recognized in other expense during the periods in which changes in fair value occur. Unrealized holding gains and losses are recognized for available-for-sale securities as credits or charges to stockholders' equity and other comprehensive income (loss) during the periods in which changes in fair value occur. The Company did not have any investments in available-for-sale securities during the years ended December 31, 2021 or 1998. Investments in non-affiliated equity securities that do not have a readily determinable fair value are measured at the lower of their original cost or the net realizable value of the investment. Use of estimates in the preparation of financial statements. Preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Cash equivalents. Cash and cash equivalents include cash on hand and depository accounts held by banks. Inventories. Inventories consist of lease and well equipment which are carried at the lower of cost or market, on a first-in first-out basis. Oil and gas properties. The Company utilizes the successful efforts method of accounting for its oil and gas properties. Under this method, all costs associated with productive wells and nonproductive development wells are capitalized while nonproductive exploration costs and geological and geophysical 43

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 expenditures are expensed. The Company capitalizes interest on expenditures for significant development projects until such projects are ready for their intended use. The Company accounts for its natural gas processing facilities activities as part of its oil and gas properties for financial reporting purposes. All revenues and expenses derived from third party gas volumes processed through the Company's natural gas processing facilities have been reported as components of oil and gas production costs. The capitalized costs of natural gas processing facilities are included in proved oil and gas properties and are depleted using the unit-of-production method. Capitalized costs relating to proved properties are depleted using the unit-of-production method based on proved reserves as determined by the Company's engineers. Costs of significant nonproducing properties, wells in the process of being drilled and development projects are excluded from depletion until such time as the related project is developed and proved reserves are established or impairment is determined. Generally, capitalized costs of individual properties sold or abandoned are charged to accumulated depletion, depreciation and amortization with the proceeds from the sales of individual properties credited to property costs; no gain or loss is recognized until the entire amortization base is sold. However, gain or loss is recognized from the sale of less than an entire amortization base if the disposition is significant enough to materially impact the depletion rate of the remaining properties in the amortization base. If significant, the Company accrues the estimated future costs to plug and abandon wells under the unit-of- production method. The charge, if any, is reflected in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) as abandonment expense while the liability is reflected in the accompanying Consolidated Balance Sheets as other liabilities. Plugging and abandonment liabilities assumed in a business combination accounted for as a purchase are recorded at fair value. At December 31, 2021 and 1999, the Company has recognized plugging and abandonment liabilities of $42.0 million and $44.2 million, respectively. The Company reviews its long-lived assets to be held and used, including proved oil and gas properties accounted for under the successful efforts method of accounting, whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. An impairment loss is indicated if the sum of the expected future cash flows is less than the carrying amount of the assets. In this circumstance, the Company recognizes an impairment loss for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. Unproved oil and gas properties that are individually significant are periodically assessed for impairment by comparing their cost to their estimated value on a project-by-project basis. The estimated value is affected by the results of exploration activities, commodity price outlooks, planned future sales or expiration of all or a portion of such projects. If the quantity of potential reserves determined by such evaluations is not sufficient to fully recover the cost invested in each project, the Company will recognize an impairment loss at that time by recording an allowance. The remaining unproved oil and gas properties are aggregated and an overall impairment allowance is provided based on the Company's historical experience. Treasury stock. Treasury stock purchases are recorded at cost. Upon reissuance, the cost of treasury shares held is reduced by the average purchase price per share of the aggregate treasury shares held. Environmental. The Company's environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are 44

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 capitalized. Liabilities are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated. Such liabilities are undiscounted unless the timing of cash payments for the liability are fixed or reliably determinable. Revenue recognition. The Company uses the entitlements method of accounting for oil, natural gas liquids ("NGL") and gas revenues. Sales proceeds in excess of the Company's entitlement are included in other liabilities and the Company's share of sales taken by others is included in other assets in the accompanying Consolidated Balance Sheets. As of December 31, 2021 and 1999, entitlement liabilities totaled $19.0 million and $15.5 million, respectively, and entitlement assets totaled $33.7 million and $33.0 million, respectively. Stock-based compensation. The Company accounts for employee stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). The Company has reported the disclosures required by Statement of Financial Accounting Standards No.123, "Accounting for Stock-Based Compensation" ("SFAS 123") in Note F below. Derivatives and hedging. Prior to January 1, 2001, the following criteria were required to be met in order for the Company to account for a derivative instrument as a hedge of an existing asset or liability, or of a forecasted transaction: an asset, liability or forecasted transaction must have existed that exposed the Company to price, interest rate or foreign exchange rate risk that was not offset in another asset or liability; the derivative instrument must have reduced that price, interest rate or foreign exchange rate risk; and, the derivative instrument must have been designated as a hedge at the inception of the instrument and throughout the hedge period. Additionally, in order to qualify as a hedge, there must have been clear correlation between changes in the fair value or expected cash flows of the derivative instrument and the fair value or expected cash flows of the hedged asset or liability, or forecasted transaction, such that changes in the derivative instrument offset the effect of price, interest rate or foreign exchange rate changes on the exposed items. Prior to January 1, 2001, gains or losses realized from derivative instruments that qualified as hedges were deferred as assets or liabilities until the underlying hedged asset, liability or transaction monetized, matured or was otherwise recognized under generally accepted accounting principles. When recognized in net income (loss), hedge gains and losses are classified as components of the commodity prices, interest or foreign exchange rates that the derivative instrument hedged. Derivative instruments that are not hedges are recorded at fair value, as assets or liabilities. Changes in the fair values of non-hedge derivative instruments are recognized as other income or other expense during the periods in which their fair values change. See Note H for a description of the specific types of derivative transactions in which the Company participates. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") as amended, the provisions of which the Company will adopt effective January 1, 2001. SFAS 133 requires the accounting recognition of all derivative instruments as either assets or liabilities at fair value. Derivative instruments that are not hedges must be adjusted to fair value through net income (loss). Under the provisions of SFAS 133, changes in the fair value of derivative instruments that are fair value hedges are offset against changes in the fair value of the hedged assets, liabilities, or firm commitments, through net income (loss). Changes in the fair value of derivative instruments that are cash flow hedges are recognized in other comprehensive income (loss) until such time as the hedged items are recognized in net income (loss). Ineffective portions of a derivative instrument's change in fair value are immediately recognized in net income (loss). 45

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 The adoption of SFAS 133 will result in a January 1, 2022 transition adjustment to (i) reclassify $57.8 million of deferred losses on terminated hedge positions from other assets (including $11.6 million of other current assets), (ii) increase other current assets, other assets and other current liabilities by $7.0 million, $6.2 million and $147.1 million, respectively, to record the fair value of open hedge derivatives, (iii) increase the carrying value of hedged long-term debt by $6.2 million and (iv) reduce stockholders' equity by $197.9 million for the net impact of items (i) through (iii) above. The $197.9 million reduction in stockholders' equity will be reflected as a transition adjustment in other comprehensive income (loss) as of January 1, 2001. Foreign currency translation. The financial statements of subsidiary entities whose functional currency is not the United States dollar are translated to United States dollars as follows: all assets and liabilities at year-end exchange rates; revenues, costs and expenses at average exchange rates. Gains and losses from translating non-United States dollar denominated balances are recorded directly in stockholders' equity. Foreign currency transaction gains and losses are included in net loss. The exchange rates used in the preparation of these consolidated financial statements appear below: December 31, --------------------- 2000 1999 1998 ----- ----- ----- U.S. Dollar from Canadian Dollar - Balance Sheets............... .6671 .6915 .6534 U.S. Dollar from Canadian Dollar - Statements of Operations..... .6650 .6700 .6740 Reclassifications. Certain reclassifications have been made to the 1999 and 1998 amounts to conform to the 2000 presentation. NOTE C. Disclosures About Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company's financial instruments as of December 31, 2021 and 1999 (in thousands): 2000 1999 -------------------- ------------------- Carrying Fair Carrying Fair Value Value Value Value -------- --------- -------- -------- Financial assets: Investment in non-affiliated entity.................. $ 12,724 $ 12,724 $ 30,000 $ - Financial liabilities - long-term debt: Practicable to estimate fair value: Line of credit.................................... $225,000 $ 225,000 $825,000 $825,000 8-7/8% senior notes due 2005...................... $150,000 $ 153,000 $150,000 $149,189 8-1/4% senior notes due 2007...................... $150,661 $ 148,125 $149,482 $141,903 6-1/2% senior notes due 2008...................... $348,691 $ 315,000 $348,550 $297,313 9-5/8% senior notes due 2010...................... $423,577 $ 480,375 $ - $ - 7-1/5% senior notes due 2028...................... $249,910 $ 193,750 $249,909 $187,825 Not practicable to estimate fair value: Other long-term debt.............................. $ 30,937 $ - $ 22,995 $ - Derivative financial instrument assets (liabilities), including off-balance sheet instruments (see Note H): Interest rate swaps............................... $ - $ 6,216 $ - $ - Foreign currency agreements....................... $ - $ - $ (4,168) $ (4,168) Commodity price hedges............................ $(52,253) $(192,306) $ 1,672 $(26,213) Btu swap agreements............................... $(25,507) $ (25,507) $(13,218) $(13,218) Other non-hedge commodity derivatives ............ $ - $ - $(13,259) $(13,259) 46

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Cash and cash equivalents, accounts receivable, other current assets, accounts payable, interest payable and other current liabilities. The carrying amounts approximate fair value due to the short maturity of these instruments. Investments in non-affiliated entity. On December 31, 1999, the Company owned 2,376.923 shares of Prize Energy Corp. ("Prize") six percent convertible preferred stock ("Prize Preferred") having an original liquidation preference of $30.0 million. Prior to February 9, 2000, Prize was a closely held, non-public entity and the fair market value of the Prize Preferred was not readily determinable. On February 9, 2000, the common stock of Prize ("Prize Common") began to publicly trade on the American Stock Exchange. At that time, the Company's Prize Preferred was exchanged for 3,984,197 shares of Prize Series A 6% Convertible Preferred Stock ("Prize Senior A Preferred"). On March 31, 2000, the Company and Prize converted the Company's 3,984,197 shares of Prize Senior A Preferred to 3,984,197 shares of Prize Common, received cash in lieu of 33,964 shares of preferred in-kind dividends and the Company sold to Prize 1,346,482 shares of the Prize Common for a combined cash total of $18.6 million. During 2000, the Company sold an additional 2,024,500 shares of Prize Common in the open market for $41.1 million (see Note K for additional information regarding Prize stock divestitures). The fair market value of the Company's remaining investment in 613,215 shares of Prize Common was $12.7 million as of December 31, 2000 and is included in other assets in the accompanying Consolidated Balance Sheet. Long-term debt. The carrying amount of borrowings outstanding under the Company's line of credit (see Note D) approximates fair value because these instruments bear interest at variable market rates. The fair values of each of the senior note issuances were based on quoted market prices for each of these issues. It was not practicable to estimate the fair value of certain of the long-term debt obligations because quoted market prices are not available and the Company does not have a current borrowing rate which could be used as a comparable rate for the stated maturities of the obligations. Interest rate swaps, foreign currency swap contracts and commodity price swap and collar contracts. The fair value of interest rate swaps, foreign currency contracts and commodity price swap and collar contracts are estimated from quotes provided by the counterparties to these instruments and represent the estimated amounts that the Company would expect to receive or pay to terminate the agreements. See Note H for a description of each of these instruments, including whether the derivative contract qualifies for hedge accounting treatment or is considered a speculative derivative instrument. NOTE D. Long-term Debt Long-term debt consisted of the following at December 31, 2021 and 1999: December 31, ------------------------- 2000 1999 ---------- ----------- (in thousands) Line of credit....................................... $ 225,000 $ 825,000 8-7/8% senior notes due 2005......................... 150,000 150,000 8-1/4% senior notes due 2007 (net of discount)....... 150,661 149,482 6-1/2% senior notes due 2008 (net of discount)....... 348,691 348,550 9-5/8% senior notes due 2010 (net of discount)....... 423,577 - 7-1/5% senior notes due 2028 (net of discount)....... 249,910 249,909 Other................................................ 30,937 22,995 --------- --------- 1,578,776 1,745,936 Less current maturities.............................. - 828 --------- --------- $1,578,776 $1,745,108 ========= ========= 47

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Maturities of long-term debt at December 31, 2021 are as follows (in thousands): 2001........................................ $ - 2002........................................ $ - 2003........................................ $ - 2004........................................ $ - 2005........................................ $ 375,000 Thereafter.................................. $1,203,776 Line of credit. On May 31, 2000, the Company entered into a $575.0 million credit agreement (the "Credit Agreement") with a syndication of banks (the "Banks") that matures on March 1, 2005. Outstanding borrowings under the Credit Agreement totaled $225.0 million as of December 31, 2000. The Credit Agreement replaced the Company's prior revolving credit facility that had a maturity date of August 7, 2022 (the "Prior Credit Facility"). Outstanding borrowings under the Prior Credit Facility totaled $825.0 million as of December 31, 1999. Advances under the Credit Agreement bear interest, at the option of the Company, based on (a) a base rate equal to the higher of the Bank of America, N.A. prime rate (9.50 percent at December 31, 2021) or a rate per annum based on the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System (6.50 percent at December 31, 2021), plus 50 basis points; plus a eurodollar margin (the "Eurodollar Margin") less 125 basis points, (b) a Eurodollar rate, substantially equal to the London Interbank Offered Rate ("LIBOR") (6.3987 percent at December 31, 2000), plus a Eurodollar Margin, or (c) a fixed rate (for aggregate advances not exceeding $50 million) as quoted by the Banks pursuant to a request by the Company. The Eurodollar Margin is based on a grid of the Company's debt ratings and ratio of total debt to earnings before gain or loss on the disposition of assets; interest expense; income taxes; depreciation, depletion and amortization expense; exploration expense and other noncash expenses (the "Total Leverage Ratio"). As of December 31, 2000, the Eurodollar Margin is 125 basis points. As a result of the early extinguishment of the Prior Credit Facility, the Company recognized an extraordinary loss of $12.3 million, net of taxes, during the quarter ended June 30, 2000. The Credit Agreement imposes certain restrictive covenants on the Company, including the maintenance of a Total Leverage Ratio not to exceed 4.00 to 1.00 through September 30, 2021 and 3.75 to 1.00 thereafter; maintenance of an annual ratio of the net present value of the Company's oil and gas properties to total debt of at least 1.25 to 1.00; a limitation on the Company's total debt; and, restrictions on certain payments. Senior notes. The Company's senior notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. In addition, the Company is a holding company that conducts all of its operations through subsidiaries; consequently, the senior notes issuances are structurally subordinated to all obligations of its subsidiaries. Pioneer Natural Resources USA, Inc. ("Pioneer USA"), a wholly-owned subsidiary, has fully and unconditionally guaranteed the senior note issuances. See Note Q for a discussion of Pioneer USA debt guarantees and Consolidating Financial Statements. Interest on the Company's senior notes is payable semi-annually. During April 2000, the Company issued $425.0 million of 9-5/8% Senior Notes Due April 1, 2022 (the "9-5/8% Senior Notes"). The 9-5/8% Senior Notes were issued at a discount of .353 percent and resulted in net proceeds to the Company, after underwriting discounts, commissions and costs of issuance, of $415.4 million. The net proceeds from the issuance of the 9-5/8% Senior Notes were used to reduce outstanding borrowings under the Company's Prior Credit Facility. The 9-5/8% Senior Notes contain various restrictive covenants, including restrictions on the incurrence of additional indebtedness and certain payments defined within the associated indenture. Interest expense. The following amounts have been charged to interest expense for the years ended December 31, 2000, 1999 and 1998: 48

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 2000 1999 1998 --------- --------- --------- (in thousands) Cash payments for interest................................... $ 147,156 $ 150,929 $ 135,811 Accretion/amortization of discounts or premiums on loans..... 7,995 8,401 10,688 Amortization of capitalized loan fees........................ 2,769 2,686 1,142 Net change in accruals....................................... 4,032 8,328 16,644 -------- -------- -------- $ 161,952 $ 170,344 $ 164,285 ======== ======== ======== NOTE E. Related Party Transactions Activities with affiliated partnerships. The Company, through its wholly-owned subsidiaries, has in the past sponsored certain affiliated partnerships, including 44 drilling partnerships, three public income partnerships and 13 affiliated employee partnerships, all of which were formed primarily for the purpose of drilling and completing wells or acquiring producing properties. In 1992, the Company discontinued sponsoring public and private oil and gas development drilling partnerships, income partnerships and affiliated employee partnerships. In December 2000, the Company received the approval of the partners of 13 employee partnerships to merge with Pioneer USA for a purchase price of $2.0 million. Of the total purchase price, $317 thousand was paid to current Company employees. Additionally, during 2000, the Company purchased all of the direct oil and gas interests held by the Company's Chairman of the Board and Chief Executive Officer for $195 thousand. During each of the years 1994, 1993 and 1992, the Company formed a Direct Investment Partnership for the purpose of permitting selected key employees to invest directly, on an unpromoted basis, in wells that the Company drills. The partners in the Direct Investment Partnerships formed in 1994, 1993 and 1992 pay and receive approximately .337 percent, 1.5375 percent and 1.865 percent, respectively, of the costs and revenues attributable to the Company's interest in the wells in which such Direct Investment Partnership participates. The Company discontinued the formation of Direct Investment Partnerships in 1995. In November 2000, the Company exercised its right under the Direct Investment Partnership agreements to purchase each partner's interest in their respective Direct Investment Partnership. The Company paid $4.3 million to complete the purchase, of which $887 thousand was paid to current Company employees. The Company, through a wholly-owned subsidiary, serves as operator of properties in which it and its affiliated partnerships have an interest. Accordingly, the Company receives producing well overhead, drilling well overhead and other fees related to the operation of the properties. The affiliated partnerships also reimburse the Company for their allocated share of general and administrative charges. The activities with affiliated partnerships are summarized for the following related party transactions for the years ended December 31, 2000, 1999 and 1998: 2000 1999 1998 ------ ------ ------ (in thousands) Receipt of lease operating and supervision charges in accordance with standard industry operating agreements.............................................. $9,222 $9,059 $9,021 Reimbursement of general and administrative expenses....... $1,550 $ 744 $ 739 Prize divestiture. As further disclosed in Note K, the Company sold certain oil and gas properties, gas plants and other assets to Prize during 1999. Associated with these transactions, the Company received $245.0 million of proceeds, including 2,307.693 shares of Prize Preferred valued at $30.0 million. The board of directors of Prize is partially comprised of Mr. Philip P. Smith, the Chief Executive Officer; Mr. Kenneth A. Hersh; and Mr. Lon C. Kile. Messrs. Smith and Hersh were members of the Board of Directors of the Company and resigned their positions with the Company during the second quarter of 1999. 49

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Similarly, Mr. Lon C. Kile resigned his position as Executive Vice President of the Company to accept the position of President and Chief Operating Officer of Prize. The sale of the assets to Prize was initiated through an auction process which, upon receipt of Prize's initial offer, was placed under the supervision of a special independent committee (comprised of outside directors unrelated to Prize) of the Company's Board of Directors. The independent committee reviewed and considered all offers presented to the Company for the purchase of the assets acquired by Prize. The Prize offer was approved by the special independent committee as being the best offer presented (see Notes C and K for information pertaining to the Company's investment in Prize and the divestiture of assets to Prize). Consulting fee. Effective January 1, 1999, the Company entered into an amended and restated agreement with Rainwater, Inc., whereby the Company will pay Rainwater, Inc. $300,000 per year and reimburse Rainwater, Inc. for certain expenses in consideration for certain consulting and financial analysis services provided to the Company by Rainwater, Inc. and its representatives. The term of this agreement expires on December 31, 2003. During 2000, 1999 and 1998, consulting and financial analysis services provided to the Company totaled $300,000, $325,000 and $400,000, respectively, plus expenses. Richard E. Rainwater, who resigned from the Company's Board of Directors during 2000, is the sole shareholder of Rainwater, Inc. NOTE F. Incentive Plans Retirement Plans Deferred compensation retirement plan. In August 1997, the Compensation Committee of the Board of Directors approved a deferred compensation retirement plan for the officers and certain key employees of the Company. Each officer and key employee is allowed to contribute up to 25 percent of their base salary. The Company will then provide a matching contribution of 100 percent of the officer's and key employee's contribution limited to the first 10 percent of the officer's base salary and eight percent of the key employee's base salary. The Company's matching contribution vests immediately. A trust fund has been established by the Company to accumulate the contributions made under this retirement plan. The Company's matching contributions were $611 thousand, $508 thousand and $742 thousand for 2000, 1999 and 1998, respectively. 401(k) plan. The Pioneer Natural Resources USA, Inc. 401(k) Plan (the "401(k) Plan") is a defined contribution pension plan established under the Internal Revenue Code Section 401. All regular full-time and part-time employees of Pioneer USA are eligible to participate in the 401(k) Plan on the first day of the month following their date of hire. Participants may contribute an amount of not less than two percent nor more than 12 percent of their annual salary into the 401(k) Plan. Each participant's account is credited with the participant's contributions and an allocation of the 401(k) Plan's earnings. Participants are fully vested in their account balances. Matching plan. The Pioneer Natural Resources USA, Inc. Matching Plan (the "Matching Plan") is a money purchase pension plan which accumulates benefits to participants. All regular full-time and part-time employees of Pioneer USA become eligible to participate in the Matching Plan concurrent with their eligibility to participate in the 401(k) Plan. All Matching Plan contributions are made in cash by Pioneer USA in amounts equal to 200 percent of a participant's contributions to the 401(k) Plan that are not in excess of five percent of the participant's basic compensation (the "Matching Contribution"). Each participant's account is credited with their Matching Contribution and an allocation of Matching Plan earnings. Participants proportionately vest in their account balances over a four year period, at the end of which they are fully vested in their account balances. During the years ended December 31, 2000, 1999 and 1998, the Company recognized compensation expense of $3.4 million, $3.1 million and $4.2 million, respectively, as a result of Matching Contributions. 50

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Long-Term Incentive Plan In August 1997, the Company's stockholders approved a long-term incentive plan (the "Long-Term Incentive Plan"), which provides for the granting of incentive awards in the form of stock options, stock appreciation rights, performance units and restricted stock to directors, officers and employees of the Company. The Long-Term Incentive Plan provides for the issuance of a maximum number of shares of common stock equal to 10 percent of the total number of shares of common stock equivalents outstanding minus the total number of shares of common stock subject to outstanding awards that are exercisable on or within 60 days subsequent to the date of calculation under any stock-based plan for the directors, officers or employees of the Company. The following table calculates the number of shares or options available for grant under the Company's Long- Term Incentive Plan as of December 31, 2021 and 1999: December 31, ------------------------- 2000 1999 ----------- ----------- Shares outstanding......................................................... 98,415,647 100,339,583 Outstanding exercisable options............................................ 4,355,144 4,289,675 ----------- ----------- 102,770,791 104,629,258 =========== =========== Maximum shares/options allowed under the Long-Term Incentive Plan.......... 10,277,079 10,462,926 Less: Outstanding awards under Long-Term Incentive Plan................... (5,514,057) (4,832,412) Outstanding options under Mesa 1991 stock option plan............... (145,976) (149,547) Outstanding options under Mesa 1996 incentive plan.................. (319,998) (372,855) Outstanding options under Parker & Parsley long-term incentive plan. (530,528) (887,075) ----------- ----------- Shares/options available for future grant.................................. 3,766,520 4,221,037 =========== =========== Stock option awards. The Company has a program of awarding semi-annual stock options to its officers and employees and annual stock options to its non-employee directors, as part of their annual compensation. This program provides for annual awards at an exercise price based upon the closing sales price of the Company's common stock on the day prior to the date of grant. Employee Stock Option awards vest over an 18 month or three year schedule and provide a five year exercise period from each vesting date. Non-employee directors' stock options vest quarterly and provide for a five year exercise period from each vesting date. The Company granted 1,439,035, 1,945,135 and 2,146,553 options under the Long-Term Incentive Plan during 2000, 1999 and 1998, respectively. Restricted stock awards. There were no restricted stock awards to employees or non-employee directors during the year ended December 31, 2000. During 1999 and 1998, the Company awarded an aggregate of 6,200 shares and 137,086 shares, respectively, of restricted stock at an average price per share of $29.56 in 1999 and $21.13 in 1998. Other stock based plans. Prior to the merger with Mesa, both Parker & Parsley and Mesa had long-term incentive plans (Parker & Parsley Long-Term Incentive Plan, 1991 Stock Option Plan of Mesa and the 1996 Incentive Plan of Mesa) in place that allowed Parker & Parsley and Mesa to grant incentive awards similar to the provisions of the Long-Term Incentive Plan. Upon consummation of the merger between Parker & Parsley and Mesa, all awards under these plans were assumed by the Company with the provision that no additional awards be granted under these plans. SFAS 123 disclosures. The Company applies APB 25 and related interpretations in accounting for its stock option awards. Accordingly, no compensation expense has been recognized for its stock option awards. If compensation expense for the stock option awards had been determined consistent with SFAS 123, the Company's net income (loss) and net income (loss) per share would have been adjusted to the pro forma amounts indicated below: 51

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 For the Year Ended December 31, -------------------------------- 2000 1999 1998 -------- -------- ---------- (in thousands, except per share amounts) Net income (loss).......................... $148,018 $(25,269) $(775,349) Basic net income (loss) per share.......... $ 1.49 $ (.25) $ (7.75) Diluted net income (loss) per share........ $ 1.48 $ (.25) $ (7.75) Under SFAS 123, the fair value of each stock option grant is estimated on the date of grant using the Black- Scholes option pricing model with the following weighted average assumptions used for grants in 2000, 1999 and 1998: For the Year Ended December 31, ------------------------------- 2000 1999 1998 -------- -------- -------- Risk-free interest rate.................... 5.66% 6.59% 5.45% Expected life.............................. 5 years 6 years 6 years Expected volatility........................ 50% 48% 36% Expected dividend yield.................... - - .56% A summary of the Company's stock option plans as of December 31, 2000, 1999 and 1998, and changes during the years ended on those dates, are presented below: For the Year Ended For the Year Ended For the Year Ended December 31, 2021 December 31, 2021 December 31, 2021 -------------------- -------------------- --------------------- Weighted Weighted Weighted Number Average Number Average Number Average of Shares Price of Shares Price of Shares Price --------- -------- --------- -------- ---------- -------- Non-statutory stock options: Outstanding, beginning of year....... 6,241,889 $ 19.45 4,580,030 $ 24.83 3,541,145 $ 31.63 Options granted.................... 1,439,035 $ 10.32 1,945,135 $ 9.10 2,146,553 $ 19.22 Options forfeited.................. (798,058) $ 18.05 (256,576) $ 38.29 (1,106,835) $ 35.75 Options exercised.................. (372,307) $ 10.78 (26,700) $ 5.81 (833) $ 14.25 --------- --------- ---------- Outstanding, end of year............. 6,510,559 $ 18.10 6,241,889 $ 19.45 4,580,030 $ 24.83 ========= ========= ========== Exercisable at end of year........... 3,897,187 $ 23.47 4,038,341 $ 24.62 3,937,113 $ 26.60 ========= ========= ========== Weighted average fair value of options granted during the year.............. $ 4.88 $ 4.21 $ 8.21 ======== ======== ========= The following table summarizes information about the Company's stock options outstanding at December 31, 2000: Options Outstanding Options Exercisable ----------------------------------------------------- ------------------------------------- Number Weighted Average Weighted Weighted Range of Outstanding at Remaining Average Number Exercisable Average Exercise Prices December 31, 2021 Contractual Life Exercise Price at December 31, 2021 Exercise Price - --------------- ----------------- ---------------- -------------- -------------------- -------------- $ 5-11 1,598,810 5.73 years $ 7.83 261,479 $ 8.92 $ 12-18 2,459,945 4.88 years $ 14.22 1,183,904 $ 15.87 $ 19-26 602,539 3.84 years $ 23.49 602,539 $ 23.49 $ 27-30 1,757,291 2.58 years $ 29.63 1,757,291 $ 29.63 $ 31-82 91,974 3.31 years $ 45.00 91,974 $ 45.00 --------- --------- 6,510,559 3,897,187 ========= ========= 52

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 During 1998, the Company recognized $16.7 million of expenses related to benefits provided under the Long- Term Incentive Plan. Employee Stock Purchase Plan During 1997, the Company established an Employee Stock Purchase Plan (the "ESPP") that allows eligible employees to annually purchase Pioneer common stock at a discounted price. Officers of the Company are not eligible to participate in the ESPP. Contributions to the ESPP are limited to 15 percent of employees' pay (subject to certain ESPP limits) during the nine month offering period. Participants in the ESPP purchase the Company's common stock at a price that is 15 percent below the closing sales price of the Company's common stock on either the first day or the last day of each annual offering period, whichever closing sales price is lower. NOTE G. Commitments and Contingencies Severance agreements. The Company has entered into severance agreements with its officers, subsidiary company officers and certain key employees. Salaries and bonuses for the Company's officers are set by the Compensation Committee for the parent company officers and the Management Committee for subsidiary company officers and key employees. These committees can grant increases or reductions to base salary at their discretion. The current annual salaries for the parent company officers, the subsidiary company officers and key employees covered under such agreements total approximately $9.2 million. Indemnifications. The Company has indemnified its directors and certain of its officers, employees and agents with respect to claims and damages arising from acts or omissions taken in such capacity, as well as with respect to certain litigation. Legal actions. The Company is party to various legal actions incidental to its business, including, but not limited to, the proceedings described below. The majority of these lawsuits primarily involve claims for damages arising from oil and gas leases and ownership interest disputes. The Company believes that the ultimate disposition of these legal actions will not have a material adverse effect on the Company's consolidated financial position, liquidity, capital resources or future results of operations. The Company will continue to evaluate its litigation matters on a quarter-by- quarter basis and will adjust its litigation reserves as appropriate to reflect the then current status of litigation. Masterson. In February 1992, the current lessors of an oil and gas lease (the "Gas Lease") dated April 30, 1955, between R.B. Masterson et al., as lessor, and Colorado Interstate Gas Company ("CIG"), as lessee, sued CIG in Federal District Court in Amarillo, Texas, claiming that CIG had underpaid royalties due under the Gas Lease. Under the agreements with CIG, the Company, as successor to MESA Inc. ("Mesa"), has an entitlement to gas produced from the Gas Lease. In August 1992, CIG filed a third-party complaint against the Company for any such royalty underpayment which may be allocable to the Company. Plaintiffs alleged that the underpayment was the result of CIG's use of an improper gas sales price upon which to calculate royalties and that the proper price should have been determined pursuant to a "favored-nations" clause in a July 1, 2022 amendment to the Gas Lease. The plaintiffs also sought a declaration by the court as to the proper price to be used for calculating future royalties. The plaintiffs alleged royalty underpayments of approximately $500 million (including interest at 10 percent) dating from July 1, 1967. In March 1995, the court made certain pretrial rulings that eliminated approximately $400 million of the plaintiff's claims (which related to periods prior to October 1, 1989), but which also reduced a number of the Company's defenses. The Company and CIG filed stipulations with the court whereby the Company would have been liable for between 50 percent and 60 percent, depending on the time period covered, of an adverse judgment against CIG for post-February 1988 underpayments of royalties. 53

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 On March 22, 1995, a jury trial began and on May 4, 1995, the jury returned its verdict. Among its findings, the jury determined that CIG had underpaid royalties for the period after September 30, 1989, in the amount of approximately $140,000. Although the plaintiffs argued that the "favored-nations" clause entitled them to be paid for all of their gas at the highest price voluntarily paid by CIG to any other lessor, the jury determined that the plaintiffs were estopped from claiming that the "favored-nations" clause provides for other than a pricing-scheme to pricing- scheme comparison. In light of this determination, and the plaintiff's stipulation that a pricing-scheme to pricing-scheme comparison would not result in any "trigger prices" or damages, defendants asked the court for a judgment that plaintiffs take nothing. The court, on June 7, 1995, entered final judgment that plaintiffs recover no monetary damages. The plaintiffs filed a motion for a new trial on June 22, 1995. The court, on July 18, 1997, denied plaintiffs' motion. The plaintiffs appealed to the Fifth Circuit Court of Appeals and on September 8, 2000, the Fifth Circuit Court affirmed the take nothing judgment of the trial court. On June 7, 1996, the plaintiffs filed a separate suit against CIG and the Company in state court in Amarillo, Texas, similarly claiming underpayment of royalties under the "favored-nations" clause, but based upon the above- described pricing-scheme to pricing-scheme comparison on a well-by-well monthly basis. The plaintiffs also claim underpayment of royalties since June 7, 2022 under the "favored-nations" clause based upon either the pricing-scheme to pricing-scheme method or their previously alleged higher price method. The Company believes it has several defenses to this action and intends to contest it vigorously. The Company has not yet determined the amount of damages, if any, that would be payable if such action was determined adversely to the Company. Based on the final judgment which has been affirmed by the Fifth Circuit Court of Appeals, the Company does not currently expect the ultimate resolution of the second lawsuit to have a material adverse effect on its financial position or results of operations. Kansas ad valorem tax. The Natural Gas Policy Act of 1978 ("NGPA") allows a "severance, production or similar" tax to be included as an add-on, over and above the maximum lawful price for gas. Based on a Federal Energy Regulatory Commission ("FERC") ruling that Kansas ad valorem tax was such a tax, Mesa collected the Kansas ad valorem tax in addition to the otherwise maximum lawful price. The FERC's ruling was appealed to the United States Court of Appeals for the District of Columbia ("D.C. Circuit"), which held in June 1988 that the FERC failed to provide a reasoned basis for its findings and remanded the case to the FERC for further consideration. On December 1, 1993, the FERC issued an order reversing its prior ruling, but limiting the effect of its decision to Kansas ad valorem taxes for sales made on or after June 28, 1988. The FERC clarified the effective date of its decision by an order dated May 18, 1994. The order clarified that the effective date applies to tax bills rendered after June 28, 1988, not sales made on or after that date. Numerous parties filed appeals on the FERC's action in the D.C. Circuit. Various gas producers challenged the FERC's orders on two grounds: (1) that the Kansas ad valorem tax, properly understood, does qualify for reimbursement under the NGPA; and (2) the FERC's ruling should, in any event, have been applied prospectively. Other parties challenged the FERC's orders on the grounds that the FERC's ruling should have been applied retroactively to December 1, 1978, the date of the enactment of the NGPA and producers should have been required to pay refunds accordingly. The D.C. Circuit issued its decision on August 2, 1996, which holds that producers must make refunds of all Kansas ad valorem tax collected with respect to production since October 4, 1983, as opposed to June 28, 1988. Petitions for rehearing were denied on November 6, 1996. Various gas producers subsequently filed a petition for writ of certiori with the United States Supreme Court seeking to limit the scope of the potential refunds to tax bills rendered on or after June 28, 2022 (the effective date originally selected by the FERC). Williams Natural Gas Company filed a cross-petition for certiori seeking to impose refund liability back to December 1, 1978. Both petitions were denied on May 12, 1997. 54

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 The Company and other producers filed petitions for adjustment with the FERC on June 24, 1997. The Company was seeking waiver or set-off from FERC with respect to that portion of the refund associated with (i) non- recoupable royalties, (ii) non-recoupable Kansas property taxes based, in part, upon the higher prices collected, and (iii) interest for all periods. On September 10, 1997, FERC denied this request, and on October 10, 1997, the Company and other producers filed a request for rehearing. Pipelines were given until November 10, 1997 to file claims on refunds sought from producers and refunds totaling approximately $30 million were made against the Company. The Company is unable at this time to predict the final outcome of this matter or the amount, if any, that will ultimately be refunded. As of December 31, 2021 and 1999, the Company had on deposit $28.1 million and $31.3 million, respectively, including accrued interest, in an escrow account and had corresponding obligations for this litigation recorded in other current liabilities in the accompanying Consolidated Balance Sheets. During 2000, the Company paid $3.9 million in partial settlement of original claims presented under this litigation. Lease agreements. The Company leases equipment and office facilities under noncancellable operating leases on which rental expense for the years ended December 31, 2000, 1999 and 1998 was approximately $7.0 million, $6.9 million and $8.9 million, respectively. Future minimum lease commitments under noncancellable operating leases at December 31, 2021 are as follows (in thousands): 2001............................................ $ 5,852 2002............................................ $ 4,691 2003............................................ $ 4,056 2004............................................ $ 3,605 2005............................................ $ 2,335 Thereafter...................................... $ 1,360 NOTE H. Derivative Financial Instruments The Company, from time to time, uses derivative instruments to manage interest rate, foreign exchange rate and commodity price risks. Associated therewith, the Company is exposed to credit losses if the counterparties to the derivative instruments fail to perform. The Company uses credit and other financial criteria to select counterparties and, based thereon, believes that the Company's counterparties will be able to fully satisfy their obligations under the contracts. Although the Company does not obtain collateral or otherwise secure derivative instruments, associated credit risk is mitigated by monitoring the credit standing of the counterparties on an ongoing basis. Hedge Derivatives Interest rate swap agreements. During 2000, the Company entered into interest rate swap agreements to hedge the fair value of a portion of its fixed rate debt. The interest rate swap agreements are for an aggregate notional amount of $150 million of debt; commenced on April 19, 2022 and mature on April 15, 2005; require the counterparties to pay the Company a fixed annual rate of 8.875 percent on the notional amount; and, require the Company to pay the counterparties a variable annual rate on the notional amount equal to the periodic three month LIBOR plus a weighted average margin rate of 178.2 basis points. During 1999 and 1998, the Company was a party to a series of interest rate swap agreements that matured during May and June 1999. Under the terms of the interest rate swap agreements, the Company paid a variable rate on a notional amount of $150 million of debt and received a fixed annual rate of 6.62 percent on the notional amount. The accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2000, 1999 and 1998 include reductions in interest expense of $294 thousand, $849 thousand and $356 thousand, respectively, associated with interest rate swap agreements accounted for as hedges. 55

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Commodity hedges. The Company utilizes swap and collar contracts to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company's annual capital budgeting and expenditure plans and (iii) reduce price risk associated with certain capital projects. Oil. All material sales contracts governing the Company's oil production have been tied directly or indirectly to the New York Mercantile Exchange ("NYMEX") prices. The following table sets forth the Company's outstanding oil hedge contracts and the weighted average NYMEX prices for those contracts as of December 31, 2000: Yearly First Second Third Fourth Outstanding Quarter Quarter Quarter Quarter Average ------------- ------------- ------------ ------------- ------------- Daily oil production: 2001 - Swap Contracts Volume (Bbl).................. 11,444 7,681 5,033 2,000 6,510 Price per Bbl................. $ 28.79 $ 29.38 $ 29.84 $ 30.14 $ 29.27 2001 - Collar Contracts Volume (Bbl).................. 7,000 7,000 2,000 2,000 4,479 Price per Bbl................. $19.29-$23.33 $19.29-$23.33 $25.00-$31.43 $25.00-$31.43 $20.57-$25.15 The Company reports average oil prices per Bbl including the effects of oil quality, gathering and transportation costs and the net effect of the oil hedges. The following table sets forth the Company's oil prices, both realized (excluding hedge results) and reported, and the net effects of settlements of oil price hedges to revenue: Year Ended December 31, --------------------------- 2000 1999 1998 ------- ------- ------- Average price reported per Bbl..................... $ 24.01 $ 15.36 $ 13.08 Average price realized per Bbl..................... $ 28.81 $ 16.23 $ 11.93 Addition (reduction) to revenue (in millions)...... $ (60.1) $ (13.4) $ 24.8 Natural gas liquids. During the years ended December 31, 2000, 1999 and 1998, the Company did not enter into any NGL hedge contracts. Gas. The Company employs a policy of hedging a portion of its gas production based on the index price upon which the gas is actually sold in order to mitigate the basis risk between NYMEX prices and actual index prices. The following table sets forth the Company's outstanding gas hedge contracts and the weighted average index prices for those contracts as of December 31, 2000: Yearly First Second Third Fourth Outstanding Quarter Quarter Quarter Quarter Average ----------- ----------- ----------- ---------- ----------- Daily gas production: 2001 - Swap Contracts Volume (Mcf).................. 159,223 49,223 49,223 49,223 76,346 Index price per MMBtu......... $ 6.80 $ 2.25 $ 2.25 $ 2.25 $ 4.59 2001 - Collar Contracts Volume (Mcf).................. 54,482 54,482 54,482 54,482 54,482 Index price per MMBtu......... $2.11-$2.73 $2.11-$2.73 $2.11-$2.73 $2.11-$2.73 $2.11-$2.73 56

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 The Company reports average gas prices per Mcf including the effects of Btu content, gathering and transportation costs, gas processing and shrinkage and the net effect of the gas hedges. The following table sets forth the Company's gas prices, both realized (excluding hedge results) and reported, and the net effects of settlements of gas price hedges to revenue: Year Ended December 31, ------------------------ 2000 1999 1998 ------ ------ ------ Average price reported per Mcf................... $ 2.81 $ 1.90 $ 1.82 Average price realized per Mcf................... $ 3.03 $ 1.84 $ 1.80 Addition/(reduction) to revenue (in millions).... $(29.0) $ 9.4 $ 3.6 Deferred commodity hedge losses. The Company records the losses realized from terminating hedges prior to their scheduled maturity as deferred losses. The deferred hedge losses are recorded in the accompanying Consolidated Balance Sheets as either other current assets or other assets based on their original maturity dates, and are amortized to oil and gas revenues during their original maturity periods. The Company has recorded the future settlement obligations associated with these deferred losses in the accompanying Consolidated Balance Sheets as current derivative obligations and other noncurrent liabilities. The following table summarizes the deferred commodity hedge losses recorded by the Company as of December 31, 2021 and 1999: As of December 31, ------------------- 2000 1999 -------- ------- (in thousands) Current deferred hedge losses: Oil...................................... $ 8,745 $ 1,672 Gas...................................... 2,863 1,446 ------- ------ $ 11,608 $ 3,118 ======= ====== Noncurrent deferred hedge losses: Oil...................................... $ - $ 288 Gas...................................... 46,192 171 ------- ------ $ 46,192 $ 459 ======= ====== In accordance with SFAS 133, the Company's deferred hedge losses at December 31, 2021 will be reclassified from current assets and other assets to accumulated other comprehensive income in stockholders' equity, effective January 1, 2001. This reclassification of the Company's deferred hedge losses comprises a portion of the SFAS 133 transition adjustment previously referred to in "Derivatives and hedging", above. Non-hedge Derivatives As of December 31, 2021 and 1999, the Company has recognized liabilities in the accompanying Consolidated Balance Sheets of $25.5 million and $30.6 million, respectively, associated with non-hedge derivative instruments. See Note C for information regarding the Company's determination of the fair values of derivative instruments. During the years ended December 31, 2000, 1999 and 1998, the Company recognized mark-to-market charges of $58.5 million, $27.0 million and $21.2 million, respectively. Foreign currency agreements. The Company was a party to a series of forward foreign exchange rate swap agreements that exchanged Canadian dollars for United States dollars. These agreements matured during 2000. As these contracts did not qualify as hedges, the Company recorded mark-to-market adjustments to increase the associated contract liabilities by $1.9 million during 2000 and to decrease the associated contract liabilities by $5.9 million during 1999. Btu swap agreements. During 1996, Mesa entered into Btu swap agreements covering 13,036 MMBtu per day from January 1, 2022 through December 31, 2004. Under the terms of these agreements, the Company received a premium of $.52 per 57

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 MMBtu over market gas prices from January 1, 2022 through December 31, 1998. Additionally, the Company receives 10 percent of the NYMEX oil price for the volumes covered for a six-year period ending December 31, 2004. As these derivative contracts do not qualify as hedges, the Company recorded mark-to-market adjustments to increase the carrying value of the Btu swap liability by $14.6 million during the year ended December 31, 2021 and to reduce the carrying value of the Btu swap liability by $222 thousand during the year ended December 31, 1999. During 2000, the Company terminated its position in the Btu swap agreements for the 2001 volumes and locked-in a loss of $6.7 million related to the terminated positions. The remaining contracts will continue to be marked- to-market at the end of each reporting period during their respective lives. The related effects on the Company's results of operations in future periods could be significant. Other non-hedge commodity derivatives. During 1999, the Company sold call options that provided the counterparties an option to exercise calls either on 10,000 barrels per day of oil, at a strike price of $20.00 per barrel, or on 100,000 MMBtu per day of gas, at a weighted average strike price of $2.75 per MMBtu. These contracts, which matured during 2000, did not qualify for hedge accounting treatment. Other expenses in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) include $42.0 million and $21.2 million of mark-to-market charges for the years ended December 31, 2021 and 1999, respectively, associated with these call options. NOTE I. Sales to Major Customers The Company's share of oil and gas production is sold to various purchasers. The Company is of the opinion that the loss of any one purchaser would not have an adverse effect on the ability of the Company to sell its oil and gas production. The following customers individually accounted for 10 percent or more of the consolidated oil, NGL and gas revenues of the Company during the years ended December 31, 2000, 1999 and 1998: Percentage of Consolidated Oil, NGL and Gas Revenues -------------------------- Customer 2000 1999 1998 ------------ ------ ------ ------ Williams Energy Services........ 13 11 10 Genesis Crude Oil, L.P.......... - 2 10 At December 31, 2000, the amount receivable from Williams Energy Services was $18.0 million, which is included in the caption "Accounts receivable - trade" in the accompanying Consolidated Balance Sheet. NOTE J. Interest and Other Income During 1999, the Company received an excise tax refund of $30.2 million. Due to uncertainties surrounding the collectability of this refund, the Company had not previously recognized it as an asset. Accordingly, the Company recognized the tax refund as other income during 1999. In December 1998, the Company announced the sale of an exclusive and irrevocable option to purchase certain oil and gas properties of the Company. The third party was unable to complete the purchase on or before March 31, 1999. In payment for the option and related liquidated damages, the third party paid the Company $41.8 million, which was recorded as other income in 1999. 58

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 NOTE K. Asset Divestitures During the years ended December 31, 2000, 1999 and 1998, the Company completed the divestiture of certain assets for net divestment proceeds of $102.7 million, $420.5 million (of which $390.5 million was cash proceeds) and $21.9 million, respectively. Associated therewith, the Company recorded a gain on disposition of assets of $34.2 million during the year ended December 31, 2000, and losses on disposition of assets of $24.2 million and $445 thousand during the years ended December 31, 2021 and 1998, respectively. Prize divestitures. On June 29, 1999, the Company completed a sale of certain United States oil and gas producing properties, gas plants and other assets to Prize. The oil and gas producing assets sold to Prize include properties located in the Gulf Coast, Mid Continent and Permian Basin areas of the Company's United States region. In accordance with the terms of the purchase and sale agreement (the "Prize Divestiture"), the Company received net sales proceeds of $245.0 million, comprised of $215.0 million of cash and 2,307.693 shares of Prize Preferred having a 1999 liquidation preference and fair value of $30.0 million. During 1999, the Company recognized a loss of $46.4 million from the Prize Divestiture. As further described in Note C above, the Prize Preferred was exchanged for 3,984,197 shares of Prize Common during 2000. The Company sold 3,370,982 shares of Prize Common and received cash in lieu of 33,964 shares of preferred in-kind dividends during the year ended December 31, 2021 for combined proceeds of $59.7 million, recording an associated gain on disposition of assets of $34.3 million. Other United States divestitures. During the year ended December 31, 2000, the Company sold an office building in Midland, Texas, certain other assets and non-strategic oil and gas properties primarily located in the United States Gulf Coast and Mid Continent areas. Associated with these divestitures, the Company realized net divestment proceeds of $43.0 million and recorded a net loss on disposition of assets of $.4 million. In addition to the Prize Divestiture, the Company completed 1999 divestitures of non-strategic United States oil and gas properties located in the South Texas Gulf Coast, West Texas Permian Basin and North Dakota areas, an East Texas gas facility and certain other assets for net cash proceeds of $116.2 million during 1999, resulting in net gains on divestitures of assets of $31.0 million. Canadian divestitures. During 1999, the Company completed the divestitures of certain non-strategic Canadian oil and gas properties, gas plants and other related assets. In accordance with the terms of the Canadian divestitures, the Company received net cash proceeds of $59.3 million and recognized a net loss of $8.8 million. NOTE L. Impairment of Long-Lived Assets In December 1998, the Company estimated the expected future cash flows of its proved oil and gas properties as of December 31, 2021 based upon the Company's outlook for future commodity prices and the Company's assessment of performance issues relative to certain of its oil and gas properties. The estimated future cash flows were compared with the respective carrying amounts of the properties to determine if the carrying amounts were likely to be recoverable. For those proved oil and gas properties for which the carrying amount exceeded the estimated future cash flows, an impairment was determined to exist; therefore, the Company adjusted the carrying amounts of those proved oil and gas properties to their fair values. The fair values were determined by discounting the properties' expected future cash flows at a discount rate commensurate with the risks involved in the industry. As a result, the Company recognized a non-cash impairment provision of $312.2 million related to its proved oil and gas properties during 1998. Based on the Company's 1999 and 1998 assessment of its unproved properties, the Company recognized non- cash unproved property impairment provisions of $17.9 million and $147.3 million during 1999 and 1998, respectively. See Note O for disclosure of these impairment charges by geographic operating segment. 59

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 NOTE M. Reorganization During 1998, the Company announced plans to sell certain non-strategic oil and gas fields, its intentions to reorganize its operations by combining its six domestic operating regions, and other cost reduction initiatives intended to allow the Company to realize greater operational and administrative efficiencies. Specific cost reduction initiatives included the relocation of most of the Company's administrative services from Midland, Texas to Irving, Texas; the closings of the Company's regional offices in Oklahoma City, Oklahoma, Corpus Christi, Texas and Houston, Texas; the termination of 350 employees; and, further centralization of the Company's organization structure. The consolidation of administrative services to Irving and the closing of the Corpus Christi, Texas office were completed in 1998. The Company completed the closings of the Houston, Texas and Oklahoma City, Oklahoma offices during 1999 and further centralized certain operational functions in Irving, Texas. The unpaid office closing amounts primarily relate to lease commitments on the office buildings in Oklahoma City, Oklahoma, Corpus Christi, Texas, and Houston, Texas. As a result of the reorganization initiatives, the Company recognized reorganization charges of $8.5 million and $33.2 million during 1999 and 1998, respectively. The following table provides a description of the components of the reorganization charges and unpaid portions of the charges as of December 31, 2000, 1999 and 1998: Unpaid Total Portion as of Charges Payments December 31, -------- -------- ------------- (in thousands) 2000: Office closings................ $ - $ 1,155 $ 482 Relocation..................... - 230 - ------- ------- ------- $ - $ 1,385 $ 482 ======= ======= ======= 1999: Employee terminations.......... $ 3,125 $ 7,805 $ - Office closings................ 340 2,233 1,637 Relocation..................... 4,998 4,768 230 Other.......................... 71 71 - ------- ------- ------- $ 8,534 $ 14,877 $ 1,867 ======= ======= ======= 1998: Employee terminations.......... $ 22,525 $ 17,845 $ 4,680 Office closings................ 3,873 343 3,530 Relocation..................... 6,677 6,677 - Other.......................... 124 124 - ------- ------- ------- $ 33,199 $ 24,989 $ 8,210 ======= ======= ======= NOTE N. Income Taxes The Company accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The Company and its eligible subsidiaries file a consolidated United States federal income tax return. Certain subsidiaries are not eligible to be included in the consolidated United States federal income tax return and separate provisions for income taxes have been determined for these entities or groups of entities. The tax returns and the amount of taxable income or loss are subject to examination by United States federal, state and foreign taxing authorities. Current and estimated tax payments of $4.6 million, $800 thousand and $300 thousand were made in 2000, 1999 and 1998, respectively. In addition, the Company received income tax refunds of $1.4 million and $3.3 million in 1999 and 1998, respectively. During 2000, 1999 and 1998, the Company's income tax provision (benefit) and amounts separately allocated were as follows: 60

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Year Ended December 31, ------------------------------ 2000 1999 1998 -------- -------- -------- (in thousands) Income (loss) before extraordinary item.......... $ (6,000) $ (600) $ 15,600 Stockholders' equity provision (benefit)......... - - 4,300 Change in cumulative translation adjustment...... (200) 1,600 (6,000) ------- ------- ------- $ (6,200) $ 1,000 $ 13,900 ======= ======= ======= Income tax provision (benefit) attributable to income (loss) before extraordinary item consists of the following: Year Ended December 31, ------------------------------- 2000 1999 1998 -------- -------- --------- (in thousands) Current: U.S. federal........................ $ - $ - $ (3,300) U.S. state and local................ - 400 300 Foreign............................. 4,600 (1,000) - ------- ------- -------- 4,600 (600) (3,000) ------- ------- -------- Deferred: U.S. federal........................ - 14,700 123,500 U.S. state and local................ - - (300) Foreign............................. (10,600) (14,700) (104,600) ------- ------- -------- (10,600) - 18,600 ------- ------- -------- Total................................. $ (6,000) $ (600) $ 15,600 ======= ======= ======== Income (loss) before income taxes and extraordinary item consists of the following: Year Ended December 31, --------------------------------- 2000 1999 1998 --------- --------- --------- (in thousands) Income (loss) before income taxes and extraordinary item: U.S. federal............................................. $ 138,941 $ (23,594) $(393,602) Foreign.................................................. 19,558 534 (337,224) -------- -------- -------- $ 158,499 $ (23,060) $(730,826) ======== ======== ======== Reconciliations of the United States federal statutory rate to the Company's effective rate for income (loss) before extraordinary item are as follows: 2000 1999 1998 ------ ------ ------ U.S. federal statutory tax rate.................. 35.0 (35.0) (35.0) Valuation allowance.............................. (30.9) 102.0 37.1 Rate differential on foreign operations.......... (2.9) (68.1) (.5) Other............................................ (5.0) (1.3) .5 ------ ------ ------ Consolidated effective tax rate.................. (3.8) (2.4) 2.1 ====== ====== ====== 61

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: December 31, ----------------------- 2000 1999 --------- --------- (in thousands) Deferred tax assets: Net operating loss carryforwards............................ $ 350,916 $ 334,173 Alternative minimum tax credit carryforwards................ 1,565 1,565 Other....................................................... 105,792 78,994 -------- -------- Total deferred tax assets................................. 458,273 414,732 Valuation allowance......................................... (283,400) (319,900) -------- -------- Net deferred tax assets................................... 174,873 94,832 -------- -------- Deferred tax liabilities: Oil and gas properties, principally due to differences in basis and depletion and the deduction of intangible drilling costs for tax purposes........................... 82,551 38,025 Other....................................................... 31,622 11,107 -------- -------- Total deferred tax liabilities............................ 114,173 49,132 -------- -------- Net deferred tax asset.................................... $ 60,700 $ 45,700 ======== ======== Realization of deferred tax assets associated with net operating loss carryforwards ("NOLs") and other credit carryforwards is dependent upon generating sufficient taxable income prior to their expiration. The Company believes that there is a risk that certain of these NOLs and other credit carryforwards may expire unused and, accordingly, has established a valuation allowance of $283.4 million against them. Although realization is not assured for the remaining deferred tax asset, the Company believes it is more likely than not that they will be realized through future taxable earnings or alternative tax planning strategies. However, the net deferred tax assets could be reduced further if the Company's estimate of taxable income in future periods is significantly reduced or alternative tax planning strategies are no longer viable. At December 31, 2000, the Company had NOLs for United States, Argentine, Canadian, and South African income tax purposes of $941.6 million, $7.6 million, $23.0 million and $24.0 million, respectively, which are available to offset future regular taxable income in each respective tax jurisdiction, if any. Additionally, at December 31, 2000, the Company has alternative minimum tax net operating loss carryforwards ("AMT NOLs") in the United States of $829.0 million, which are available to reduce future alternative minimum taxable income, if any. These carryforwards expire as follows: 62

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 U.S. --------------------- Argentina Canada South Africa Expiration Date NOL AMT NOL NOL NOL NOL --------------- --------- --------- --------- -------- ------------ (in thousands) December 31, 2001.......... $ 689 $ 593 $ - $ - $ - December 31, 2002.......... 6,066 6,034 - - - December 31, 2003.......... 838 - 7,632 - - December 31, 2005.......... 11,049 10,762 - 15,242 - December 31, 2006.......... 30,834 12,254 - 7,779 - December 31, 2007.......... 104,107 101,151 - - - December 31, 2008.......... 112,508 106,558 - - - December 31, 2009.......... 129,227 102,727 - - - December 31, 2010.......... 124,859 110,961 - - - December 31, 2011.......... 6,521 4,045 - - - December 31, 2012.......... 68,542 58,930 - - - December 31, 2018.......... 127,925 98,559 - - - December 31, 2019.......... 145,999 144,836 - - - December 31, 2020.......... 72,485 71,546 - - - Indefinite................. - - - - 23,989 -------- -------- ------- ------- -------- Total................... $ 941,649 $ 828,956 $ 7,632 $ 23,021 $ 23,989 ======== ======== ======= ======= ======== The NOLs and AMT NOLs from certain of the United States subsidiaries are subject to various utilization limitations. In total, approximately $34.3 million of the NOLs and $14.8 million of the AMT NOLs are limited in use to specific United States subsidiaries. Section 382 of the Internal Revenue Code provides another limitation to $342.5 million of the Company's United States NOLs and $255.3 million of its AMT NOLs. The Company believes the utilization of $142.5 million of the NOLs and $55.3 million of the AMT NOLs subject to the Section 382 limitation is limited in each taxable year to approximately $104.2 million. The remaining $200.0 million of the NOLs and AMT NOLs subject to the Section 382 limitation are limited in each taxable year to approximately $20.0 million. NOTE O. Geographic Operating Segment Information The Company has operations in only one industry segment, that being the oil and gas exploration and production industry; however, the Company is organizationally structured along geographic operating segments, or regions. The Company has reportable operations in the United States, Argentina and Canada. Other foreign is primarily comprised of operations in South Africa and Gabon. The following table provides the geographic operating segment data required by Statement of Financial Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and Related Information", as well as results of operations of oil and gas producing activities required by Statement of Financial Accounting Standards No. 69, "Disclosures about Oil and Gas Producing Activities". Geographic operating segment income tax benefits (provisions) have been determined based on statutory rates existing in the various tax jurisdictions where the Company has oil and gas producing activities. The "Headquarters and Other" table column includes revenues, expenses, additions to properties, plants and equipment, and assets that do not represent revenues, expenses, additions to properties, plants and equipment, or assets of oil and gas producing activities, and that are not routinely included in the earnings measures or attributes internally reported to management on a geographic operating segment basis. 63

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 United Other Headquarters Consolidated States Argentina Canada Foreign and Other Total ---------- --------- --------- -------- ------------ ------------ (in thousands) Year Ended December 31, 2000: Oil and gas revenues..................... $ 649,273 $ 140,990 $ 62,475 $ - $ - $ 852,738 Interest and other....................... - - - - 25,775 25,775 Gain on disposition of assets............ 4,690 - 335 - 29,159 34,184 --------- -------- -------- ------- --------- --------- 653,963 140,990 62,810 - 54,934 912,697 --------- -------- -------- ------- --------- --------- Production costs......................... 155,075 24,417 9,773 - - 189,265 Depletion, depreciation and amortization. 121,932 52,141 25,132 - 15,733 214,938 Exploration and abandonments............. 40,867 25,388 5,131 16,164 - 87,550 General and administrative............... - - - - 33,262 33,262 Interest................................. - - - - 161,952 161,952 Other.................................... - - - - 67,231 67,231 --------- -------- -------- ------- --------- --------- 317,874 101,946 40,036 16,164 278,178 754,198 --------- -------- -------- ------- --------- --------- Income before income taxes and extraordinary item..................... 336,089 39,044 22,774 (16,164) (223,244) 158,499 Income tax benefit (provision)........... (117,631) (13,665) (10,162) 5,657 141,801 6,000 --------- -------- -------- ------- --------- --------- Income before extraordinary item......... $ 218,458 $ 25,379 $ 12,612 $(10,507) $ (81,443) $ 164,499 ========= ======== ======== ======= ========= ========= Additions to properties, plant and equipment............................. $ 165,311 $ 59,680 $ 44,107 $ 11,468 $ 10,042 $ 290,608 ========= ======== ======== ======= ========= ========= Segment assets (as of December 31)....... $1,899,633 $ 702,868 $ 227,250 $ 16,552 $ 108,132 $2,954,435 ========= ======== ======== ======= ========= ========= Year Ended December 31, 1999: Oil and gas revenues..................... $ 502,585 $ 83,697 $ 58,364 $ - $ - $ 644,646 Interest and other....................... - - - - 89,657 89,657 Loss on disposition of assets............ (14,736) - (8,836) - (596) (24,168) --------- -------- -------- ------- --------- --------- 487,849 83,697 49,528 - 89,061 710,135 --------- -------- -------- ------- --------- --------- Production costs......................... 124,654 18,268 16,608 - - 159,530 Depletion, depreciation and amortization. 153,775 38,874 25,601 - 17,797 236,047 Impairment of oil and gas properties..... 17,894 - - - - 17,894 Exploration and abandonments............. 41,225 14,009 3,509 7,231 - 65,974 General and administrative............... - - - - 40,241 40,241 Reorganization........................... - - - - 8,534 8,534 Interest................................. - - - - 170,344 170,344 Other.................................... - - - - 34,631 34,631 --------- -------- -------- ------- --------- --------- 337,548 71,151 45,718 7,231 271,547 733,195 --------- -------- -------- ------- --------- --------- Loss before income taxes................. 150,301 12,546 3,810 (7,231) (182,486) (23,060) Income tax benefit (provision)........... (52,605) (4,140) (1,699) 2,531 56,513 600 --------- -------- -------- ------- --------- --------- Net loss................................. $ 97,696 $ 8,406 $ 2,111 $ (4,700) $ (125,973) $ (22,460) ========= ======== ======== ======= ========= ========= Additions to properties, plant and equipment............................. $ 81,739 $ 75,137 $ 18,893 $ 3,899 $ 7,756 $ 187,424 ========= ======== ======== ======= ========= ========= Segment assets (as of December 31)....... $1,865,441 $ 734,382 $ 218,526 $ 8,289 $ 102,835 $2,929,473 ========= ======== ======== ======= ========= ========= Year Ended December 31, 1998: Oil and gas revenues..................... $ 579,156 $ 65,256 $ 67,080 $ - $ - $ 711,492 Interest and other....................... - - - - 10,452 10,452 Loss on disposition of assets............ (52) - - - (393) (445) --------- -------- -------- ------- --------- --------- 579,104 65,256 67,080 - 10,059 721,499 --------- -------- -------- ------- --------- --------- Production costs......................... 177,371 21,158 25,022 - - 223,551 Depletion, depreciation and amortization. 239,561 42,115 40,617 - 15,015 337,308 Impairment of oil and gas properties..... 237,528 136,751 85,240 - - 459,519 Exploration and abandonments............. 69,263 18,245 20,613 13,737 - 121,858 General and administrative............... - - - - 73,000 73,000 Reorganization........................... - - - - 33,199 33,199 Interest................................. - - - - 164,285 164,285 Other.................................... - - - - 39,605 39,605 --------- -------- -------- ------- --------- --------- 723,723 218,269 171,492 13,737 325,104 1,452,325 --------- -------- -------- ------- --------- --------- Loss before income taxes................. (144,619) (153,013) (104,412) (13,737) (315,045) (730,826) Income tax benefit (provision)........... 53,075 50,494 45,628 4,808 (169,605) (15,600) --------- -------- -------- ------- --------- --------- Net loss................................. $ (91,544) $(102,519) $ (58,784) $ (8,929) $ (484,650) $ (746,426) ========= ======== ======== ======= ========= ========= Additions to properties, plant and equipment............................. $ 346,368 $ 69,082 $ 73,096 $ 18,791 $ 31,546 $ 538,883 ========= ======== ======== ======= ========= ========= Segment assets (as of December 31)....... $2,259,746 $ 692,271 $ 308,025 $103,702 $ 117,570 $3,481,314 ========= ======== ======== ======= ========= ========= 64

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 NOTE P. Income (Loss) Per Share Basic net income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The computation of diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of the entity. Basic and diluted weighted average shares outstanding of 99,378,314 and 99,762,664, respectively, were used in the computation of the Company's net income per share for the year ended December 31, 2000. In-the-money options representing 384,350 weighted average equivalent shares were included in the diluted computation for 2000, but did not cause the reported basic and diluted income per share amounts to differ. Common stock options to purchase 4,911,749 shares, 5,274,964 shares and 2,817,822 shares of common stock were outstanding but not included in the computations of diluted net income (loss) per share for 2000, 1999 and 1998, respectively, because the exercise prices of the options were greater than the average market price of the common shares and would be anti-dilutive to the computations. In-the-money options representing 158,556 and 434,118 weighted average equivalent shares of common stock were not included in the computations of diluted net income (loss) per share for 1999 and 1998, respectively, since they have an anti-dilutive effect to the net losses recognized for those years. NOTE Q. Pioneer USA Pioneer USA is a wholly-owned subsidiary of the Company that has fully and unconditionally guaranteed certain debt securities of the Company (see Note D above). The Company has not prepared financial statements and related disclosures for Pioneer USA under separate cover because management of the Company has determined that such information is not material to investors. In accordance with practices accepted by the United States Securities and Exchange Commission (the "SEC"), the Company has prepared Consolidating Condensed Financial Statements in order to quantify the assets of Pioneer USA as a subsidiary guarantor. The following Consolidating Condensed Balance Sheets as of December 31, 2021 and 1999, and Consolidating Statements of Operations and Comprehensive Income (Loss) and Consolidating Condensed Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998 present financial information for Pioneer Natural Resources Company as the Parent on a stand-alone basis (carrying any investments in subsidiaries under the equity method), financial information for Pioneer USA on a stand-alone basis (carrying any investment in non-guarantor subsidiaries under the equity method), financial information for the non- guarantor subsidiaries of the Company on a consolidated basis, the consolidation and elimination entries necessary to arrive at the information for the Company on a consolidated basis, and the financial information for the Company on a consolidated basis. Pioneer USA is not restricted from making distributions to the Company. 65

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 CONSOLIDATING CONDENSED BALANCE SHEET As of December 31, 2021 Pioneer Natural Resources Non- Company Pioneer Guarantor The (Parent) USA Subsidiaries Eliminations Company ---------- ---------- ------------ ------------ ---------- (in thousands) ASSETS Current assets: Cash and cash equivalents................. $ 15 $ 18,387 $ 7,757 $ $ 26,159 Other current assets...................... 2,006,496 (1,245,546) (595,718) 165,232 --------- ---------- --------- --------- Total current assets.................. 2,006,511 (1,227,159) (587,961) 191,391 --------- ---------- --------- --------- Property, plant and equipment, at cost: Oil and gas properties, using the successful efforts method of accounting: Proved properties....................... - 2,291,872 896,017 3,187,889 Unproved properties..................... - 28,103 201,102 229,205 Accumulated depletion, depreciation and amortization............................ - (692,250) (209,889) (902,139) --------- ---------- --------- --------- - 1,627,725 887,230 2,514,955 --------- ---------- --------- --------- Deferred income taxes....................... 84,400 - - 84,400 Other property and equipment, net........... - 20,823 4,801 25,624 Other assets, net........................... 18,877 89,632 29,556 138,065 Investment in subsidiaries.................. 347,370 100,192 - (447,562) - --------- ---------- --------- --------- $2,457,158 $ 611,213 $ 333,626 $2,954,435 ========= ========== ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Total current liabilities................... $ 37,889 $ 140,415 $ 38,210 $ $ 216,514 Long-term debt, less current maturities..... 1,578,776 - - 1,578,776 Other noncurrent liabilities................ - 190,476 35,264 225,740 Deferred income taxes....................... - - 28,500 28,500 Stockholders' equity........................ 840,493 280,322 231,652 (447,562) 904,905 Commitments and contingencies............... --------- ---------- --------- --------- $2,457,158 $ 611,213 $ 333,626 $2,954,435 ========= ========== ========= ========= CONSOLIDATING CONDENSED BALANCE SHEET As of December 31, 2021 Pioneer Natural Resources Non- Company Pioneer Guarantor The (Parent) USA Subsidiaries Eliminations Company ---------- ---------- ------------ ------------ ---------- (in thousands) ASSETS Current assets: Cash and cash equivalents................. $ 5 $ 22,699 $ 12,084 $ $ 34,788 Other current assets...................... 2,160,134 (1,455,442) (556,344) 148,348 --------- ---------- --------- --------- Total current assets.................. 2,160,139 (1,432,743) (544,260) 183,136 --------- ---------- --------- --------- Property, plant and equipment, at cost: Oil and gas properties, using the successful efforts method of accounting: Proved properties....................... - 2,200,173 797,162 2,997,335 Unproved properties..................... - 24,267 233,316 257,583 Accumulated depletion, depreciation and amortization............................ - (614,402) (137,554) (751,956) --------- ---------- --------- --------- - 1,610,038 892,924 2,502,962 --------- ---------- --------- --------- Deferred income taxes....................... 83,400 - - 83,400 Other property and equipment, net........... - 28,144 14,862 43,006 Other assets, net........................... 13,293 58,117 45,559 116,969 Investment in subsidiaries.................. 190,293 161,061 - (351,354) - --------- ---------- --------- --------- $2,447,125 $ 424,617 $ 409,085 $2,929,473 ========= ========== ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt...... $ - $ 828 $ - $ $ 828 Other current liabilities................. 36,115 120,857 39,013 195,985 --------- ---------- --------- --------- Total current liabilities............. 36,115 121,685 39,013 196,813 --------- ---------- --------- --------- Long-term debt, less current maturities..... 1,745,108 - - 1,745,108 Other noncurrent liabilities................ - 137,848 31,590 169,438 Deferred income taxes....................... - - 43,500 43,500 Stockholders' equity........................ 665,902 165,084 294,982 (351,354) 774,614 Commitments and contingencies............... --------- ---------- --------- --------- $2,447,125 $ 424,617 $ 409,085 $2,929,473 ========= ========== ========= ========= 66

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Year Ended December 31, 2021 (in thousands) Pioneer Natural Resources Non- Consolidated Company Pioneer Guarantor Income Tax The (Parent) USA Subsidiaries Provision Eliminations Company ---------- ---------- ------------ ------------ ------------ ---------- Revenues: Oil and gas................... $ - $ 616,030 $ 236,708 $ - $ $ 852,738 Interest and other............ 29 13,808 11,938 - 25,775 Gain (loss) on disposition of assets, net................ (6,172) 36,946 3,410 - 34,184 -------- -------- -------- --------- --------- (6,143) 666,784 252,056 - 912,697 -------- -------- -------- --------- --------- Costs and expenses: Oil and gas production........ - 150,281 38,984 - 189,265 Depletion, depreciation and amortization................ - 129,996 84,942 - 214,938 Exploration and abandonments.. - 43,938 43,612 - 87,550 General and administrative.... 283 22,519 10,460 - 33,262 Interest...................... (53,180) 151,026 64,106 - 161,952 Equity income (loss) from subsidiary.................. (117,704) (6,313) - - (124,017) - Other......................... - 63,459 3,772 - 67,231 -------- -------- -------- --------- --------- (170,601) 554,906 245,876 - 754,198 -------- -------- -------- --------- --------- Income before income taxes...... 164,458 111,878 6,180 - 158,499 Income tax benefit (provision).. - (4) 5,963 41 6,000 -------- -------- -------- --------- --------- Income before extraordinary item 164,458 111,874 12,143 41 164,499 Extraordinary item - loss on early extinguishment of debt........ (12,318) - - - (12,318) -------- -------- -------- --------- --------- Net income...................... 152,140 111,874 12,143 41 152,181 Other comprehensive income (loss): Unrealized gains on available for sale securities: Unrealized holdings gains... - 33,828 - - 33,828 Less gains included in net income.................... - (25,674) - - (25,674) Translation adjustment........ - - (6,910) - (6,910) -------- -------- -------- --------- --------- Comprehensive income............ $ 152,140 $ 120,028 $ 5,233 $ 41 $ 153,425 ======== ======== ======== ========= ========= CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS For the Year Ended December 31, 2021 (in thousands) Pioneer Natural Resources Non- Consolidated Company Pioneer Guarantor Income Tax The (Parent) USA Subsidiaries Provision Eliminations Company ---------- --------- ------------ ------------ ------------ ----------- Revenues: Oil and gas................... $ - $ 470,059 $ 174,587 $ - $ $ 644,646 Interest and other............ 406 52,232 37,019 - 89,657 Gain (loss) on disposition of assets, net................ - 19,379 (43,547) - (24,168) -------- -------- -------- --------- --------- 406 541,670 168,059 - 710,135 -------- -------- -------- --------- --------- Costs and expenses: Oil and gas production........ - 120,074 39,456 - 159,530 Depletion, depreciation and amortization................ - 157,294 78,753 - 236,047 Impairment of oil and gas properties.................. - 17,894 - - 17,894 Exploration and abandonments.. - 43,133 22,841 - 65,974 General and administrative.... 1,051 27,260 11,930 - 40,241 Reorganization................ - 8,534 - - 8,534 Interest...................... (33,404) 145,184 58,564 - 170,344 Equity income (loss) from subsidiary.................. 39,672 (5,179) - - (34,493) - Other......................... 799 38,166 (4,334) - 34,631 -------- -------- -------- --------- --------- 8,118 552,360 207,210 - 733,195 -------- -------- -------- --------- --------- Loss before income taxes........ (7,712) (10,690) (39,151) - (23,060) Income tax benefit (provision).. - (444) 15,792 (14,748) 600 -------- -------- -------- --------- --------- Net loss........................ (7,712) (11,134) (23,359) (14,748) (22,460) Other comprehensive income: Translation adjustment........ - - 8,358 - 8,358 -------- -------- -------- --------- --------- Comprehensive loss.............. $ (7,712) $ (11,134) $ (15,001) $ (14,748) $ (14,102) ======== ======== ======== ========= ========= 67

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS For the Year Ended December 31, 2021 (in thousands) Pioneer Natural Resources Non- Consolidated Company Pioneer Guarantor Income Tax The (Parent) USA Subsidiaries Provision Eliminations Company --------- --------- ------------ ------------ ------------ ---------- Revenues: Oil and gas................... $ - $ 523,736 $ 187,756 $ - $ $ 711,492 Interest and other............ 38 7,937 2,477 - 10,452 Loss on disposition of assets, net................. - (477) 32 - (445) -------- -------- -------- --------- --------- 38 531,196 190,265 - 721,499 -------- -------- -------- --------- --------- Costs and expenses: Oil and gas production........ - 164,964 58,587 - 223,551 Depletion, depreciation and amortization................ - 225,127 112,181 - 337,308 Impairment of oil and gas properties.................. - 237,529 221,990 - 459,519 Exploration and abandonments.. - 71,851 50,007 - 121,858 General and administrative.... 2,042 57,158 13,800 - 73,000 Reorganization................ - 31,756 1,443 33,199 Interest...................... (54,237) 159,863 58,659 - 164,285 Equity loss from subsidiary... 675,142 4,358 - - (679,500) - Other......................... 722 22,732 16,151 - 39,605 -------- -------- -------- --------- --------- 623,669 975,338 532,818 - 1,452,325 -------- -------- -------- --------- --------- Loss before income taxes........ (623,631) (444,142) (342,553) - (730,826) Income tax provision............ - (174) 107,369 (122,795) (15,600) -------- -------- -------- --------- --------- Net loss........................ (623,631) (444,316) (235,184) (122,795) (746,426) Other comprehensive income: Translation adjustment........ - - 2,903 - 2,903 -------- -------- -------- --------- --------- Comprehensive loss.............. $(623,631) $(444,316) $(232,281) $ (122,795) $ (743,523) ======== ======== ======== ========= ========= 68

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS For the Year Ended December 31, 2021 (in thousands) Pioneer Natural Resources Non- Company Pioneer Guarantor The (Parent) USA Subsidiaries Company ----------- --------- ------------ ----------- Cash flows from operating activities: Net cash provided by operating activities.................. $ 213,491 $ 118,300 $ 98,305 $ 430,096 ---------- -------- -------- ---------- Cash flows from investing activities: Proceeds from disposition of assets........................ - 92,342 10,394 102,736 Additions to oil and gas properties........................ - (179,861) (119,821) (299,682) Other property (additions) dispositions, net............... - (10,004) 12,449 2,445 ---------- -------- -------- ---------- Net cash used in investing activities............... - (97,523) (96,978) (194,501) ---------- -------- -------- ---------- Cash flows from financing activities: Borrowings under long-term debt............................ 922,607 - - 922,607 Principal payments on long-term debt....................... (1,099,107) (828) - (1,099,935) Payment of noncurrent liabilities.......................... - (24,261) (5,498) (29,759) Purchase of treasury stock................................. (27,298) - - (27,298) Deferred loan fees/issuance costs.......................... (13,847) - - (13,847) Exercise of stock options and employee stock purchases..... 4,164 - - 4,164 ---------- -------- -------- ---------- Net cash used in financing activities............... (213,481) (25,089) (5,498) (244,068) ---------- -------- -------- ---------- Net increase (decrease) in cash and cash equivalents......... 10 (4,312) (4,171) (8,473) Effect of exchange rate changes on cash and cash equivalents - - (156) (156) Cash and cash equivalents, beginning of period............... 5 22,699 12,084 34,788 ---------- -------- -------- ---------- Cash and cash equivalents, end of period..................... $ 15 $ 18,387 $ 7,757 $ 26,159 ========== ======== ======== ========== CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS For the Year Ended December 31, 2021 (in thousands) Pioneer Natural Resources Non- Company Pioneer Guarantor The (Parent) USA Subsidiaries Company ----------- --------- ------------ ----------- Cash flows from operating activities: Net cash provided by (used in) operating activities........ $ 152,485 $(230,625) $ 333,374 $ 255,234 ---------- -------- -------- ---------- Cash flows from investing activities: Proceeds from disposition of assets........................ - 328,182 62,349 390,531 Additions to oil and gas properties........................ - (74,257) (105,412) (179,669) Other property additions, net.............................. - (8,335) (3,532) (11,867) ---------- -------- -------- ---------- Net cash provided by (used in) investing activities - 245,590 (46,595) 198,995 ---------- -------- -------- ---------- Cash flows from financing activities: Borrowings under long-term debt............................ 355,493 - - 355,493 Principal payments on long-term debt....................... (504,493) (1,192) (288,234) (793,919) Payment of noncurrent liabilities.......................... - (29,006) (4,996) (34,002) Deferred loan fees/issuance costs.......................... (6,891) - - (6,891) Exercise of stock options and employee stock purchases..... 250 - - 250 ---------- -------- -------- ---------- Net cash used in financing activities............... (155,641) (30,198) (293,230) (479,069) ---------- -------- -------- ---------- Net decrease in cash and cash equivalents.................... (3,156) (15,233) (6,451) (24,840) Effect of exchange rate changes on cash and cash equivalents - - 407 407 Cash and cash equivalents, beginning of period............... 3,161 37,932 18,128 59,221 ---------- -------- -------- ---------- Cash and cash equivalents, end of period..................... $ 5 $ 22,699 $ 12,084 $ 34,788 ========== ======== ======== ========== 69

PIONEER NATURAL RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS For the Year Ended December 31, 2021 (in thousands) Pioneer Natural Resources Non- Company Pioneer Guarantor The (Parent) USA Subsidiaries Company ----------- --------- ------------ ---------- Cash flows from operating activities: Net cash provided by (used in) operating activities........ $ (151,315) $ 313,359 $ 152,032 $ 314,076 ---------- -------- -------- --------- Cash flows from investing activities: Proceeds from disposition of assets...................... - 13,791 8,085 21,876 Additions to oil and gas properties...................... - (309,639) (197,698) (507,337) Other property additions, net............................ - (15,862) (15,684) (31,546) ---------- -------- -------- --------- Net cash used in investing activities............. - (311,710) (205,297) (517,007) ---------- -------- -------- --------- Cash flows from financing activities: Borrowings under long-term debt.......................... 886,008 - 61,172 947,180 Principal payments on long-term debt..................... (704,857) (1,326) (5,341) (711,524) Payment of noncurrent liabilities........................ - (11,424) (5,667) (17,091) Dividends................................................ (9,160) - (916) (10,076) Purchase of treasury stock............................... (10,367) - - (10,367) Deferred loan fees/issuance costs........................ (7,189) - - (7,189) ---------- -------- -------- --------- Net cash provided by (used in) financing activities 154,435 (12,750) 49,248 190,933 ---------- -------- -------- --------- Net increase (decrease) in cash and cash equivalents....... 3,120 (11,101) (4,017) (11,998) Effect of exchange rate changes on cash and cash equivalents - - (494) (494) Cash and cash equivalents, beginning of period............. 41 49,033 22,639 71,713 ---------- -------- -------- --------- Cash and cash equivalents, end of period................... $ 3,161 $ 37,932 $ 18,128 $ 59,221 ========== ======== ======== ========= 70

PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTARY INFORMATION Years Ended December 31, 2000, 1999 and 1998 Capitalized Costs December 31, ----------------------- 2000 1999 ---------- ---------- (in thousands) Oil and Gas Properties: Proved................................................ $3,187,889 $2,997,335 Unproved.............................................. 229,205 257,583 --------- --------- 3,417,094 3,254,918 Less accumulated depletion............................ (902,139) (751,956) --------- --------- Net capitalized costs for oil and gas properties...... $2,514,955 $2,502,962 ========= ========= Costs Incurred for Oil and Gas Producing Activities Property Acquisition Costs Total --------------------- Exploration Development Costs Proved Unproved Costs Costs Incurred --------- --------- ----------- ----------- --------- (in thousands) Year Ended December 31, 2000: United States...................... $ 26,102 $ 28,199 $ 65,023 $ 84,798 $ 204,122 Argentina.......................... 1,169 520 35,406 31,335 68,430 Canada............................. 8,709 2,506 6,744 25,632 43,591 Other foreign (a).................. - - 23,597 - 23,597 -------- -------- -------- --------- ------- Total costs incurred............. $ 35,980 $ 31,225 $ 130,770 $ 141,765 $ 339,740 ======== ======== ======== ========= ======== Year Ended December 31, 1999: United States...................... $ 937 $ 3,185 $ 42,337 $ 59,204 $ 105,663 Argentina.......................... 36,312 2,517 12,597 25,228 76,654 Canada............................. 174 (7,375) 1,431 17,322 11,552 Other foreign (b).................. 151 - 7,106 - 7,257 -------- -------- -------- --------- ------- Total costs incurred............. $ 37,574 $ (1,673) $ 63,471 $ 101,754 $ 201,126 ======== ======== ======== ========= ======== Year Ended December 31, 1998: United States...................... $ 19,658 $ 34,092 $ 62,747 $ 213,943 $ 330,440 Argentina (c)...................... 4,504 67,010 22,521 39,049 133,084 Canada (c)......................... 1,185 (93,349) 21,871 47,550 (22,743) Other foreign (d).................. (136) - 21,706 412 21,982 -------- -------- -------- --------- ------- Total costs incurred............. $ 25,211 $ 7,753 $ 128,845 $ 300,954 $ 462,763 ======== ======== ======== ========= ======== - --------------- (a) Primarily comprised of costs to drill three wells in South Africa plus geological and geophysical costs in South Africa and Gabon. (b) Primarily comprised of South Africa and Gabon geological and geophysical costs. (c) Includes 1998 Chauvco purchase price adjustments of $59.9 million for Argentina and $(99.4) million for Canada. (d) Primarily comprised of costs to drill five wells in South Africa. 71

PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTARY INFORMATION Years Ended December 31, 2000, 1999 and 1998 Results of Operations Information about the Company's results of operations for oil and gas producing activities is presented in Note O of the accompanying Notes to Consolidated Financial Statements. Reserve Quantity Information The estimates of the Company's proved oil and gas reserves, which are located principally in the United States, Argentina, Canada and South Africa are prepared by the Company's engineers. Reserves were estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board, which require that reserve estimates be prepared under existing economic and operating conditions with no provision for price and cost escalations except by contractual arrangements. The reserve estimates for 2000, 1999 and 1998 utilize respective oil prices of $25.71, $24.33 and $10.09 per Bbl (reflecting adjustments for oil quality and gathering and transportation costs); respective NGL prices of $16.74, $17.59 and $6.81 per Bbl; and, respective gas prices of $7.50, $1.83 and $1.64 per Mcf (reflecting adjustments for Btu content, gathering and transportation costs and gas processing and shrinkage). Oil and gas reserve quantity estimates are subject to numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. The accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of subsequent drilling, testing and production may cause either upward or downward revision of previous estimates. Further, the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries are more imprecise than those of currently producing oil and gas properties. Accordingly, these estimates are expected to change as additional information becomes available in the future. 72

PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTARY INFORMATION Years Ended December 31, 2000, 1999 and 1998 Oil and Gas Producing Activities: 2000 1999 1998 ----------------------------- ------------------------------ ----------------------------- Oil Oil Oil & NGLs Gas & NGLs Gas & NGLs Gas Total Proved Reserves: (MBbls) (MMCF) MBOE (MBbls) (MMCF) MBOE (MBbls) (MMCF) MBOE ------- --------- ------- ------- --------- -------- ------- --------- ------- UNITED STATES Balance, January 1............... 259,066 1,314,842 478,206 269,638 1,545,644 527,246 329,316 1,719,130 615,838 Revisions of previous estimates: Related to price changes....... 10,972 29,055 15,814 70,536 99,604 87,137 (21,327) (33,706) (26,945) Other.......................... 8,323 34,857 14,133 (18,887) 97,229 (2,682) (12,884) 1,593 (12,618) Purchases of minerals-in-place... 1,237 28,071 5,916 - - - - - - New discoveries and extensions... 4,819 66,486 15,900 149 1,351 374 183 3,438 756 Production....................... (16,872) (83,930) (30,860) (20,163) (106,095) (37,845) (25,327) (137,741) (48,284) Sales of minerals-in-place....... (743) (35,054) (6,586) (42,207) (322,891) (96,024) (323) (7,070) (1,501) ------- --------- ------- ------- --------- -------- ------- --------- ------- Balance, December 31............. 266,802 1,354,327 492,523 259,066 1,314,842 478,206 269,638 1,545,644 527,246 ARGENTINA Balance, January 1............... 29,797 415,620 99,067 24,219 428,334 95,608 31,612 340,392 88,344 Revisions of previous estimates: Related to price changes....... - - - - - - - - - Other.......................... 1,411 (15,558) (1,182) (2,441) (12,470) (4,520) (7,615) 76,843 5,192 Purchases of minerals-in-place... - - - 4,406 17,483 7,320 - - - New discoveries and extensions... 8,066 43,914 15,385 6,182 16,750 8,974 3,522 37,900 9,839 Production....................... (3,431) (35,694) (9,380) (2,569) (34,477) (8,315) (3,300) (26,801) (7,767) Sales of minerals-in-place....... - - - - - - - - - ------- --------- ------- ------- --------- -------- ------- --------- ------- Balance, December 31............. 35,843 408,282 103,890 29,797 415,620 99,067 24,219 428,334 95,608 CANADA Balance, January 1............... 3,970 145,251 28,179 12,447 249,230 53,985 22,796 207,868 57,441 Revisions of previous estimates: Related to price changes....... (119) (10,116) (1,805) 169 (1,113) (18) (49) (4,159) (740) Other.......................... 548 103 565 4,696 (61,243) (5,509) (6,856) 64,406 3,875 Purchases of minerals-in-place... 140 7,768 1,435 - - - 2 - 2 New discoveries and extensions... 138 6,132 1,160 - - - 261 5,951 1,253 Production....................... (611) (16,219) (3,315) (1,960) (17,886) (4,941) (3,596) (19,371) (6,824) Sales of minerals-in-place....... - - - (11,382) (23,737) (15,338) (111) (5,465) (1,022) ------- --------- ------- ------- --------- -------- ------- --------- ------- Balance, December 31............. 4,066 132,919 26,219 3,970 145,251 28,179 12,447 249,230 53,985 SOUTH AFRICA Balance, January 1............... - - - - - - - - - New discoveries and extensions... 5,552 - 5,552 - - - - - - ------- --------- ------- ------- --------- -------- ------- --------- ------- Balance, December 31............. 5,552 - 5,552 - - - - - - TOTAL Balance, January 1............... 292,833 1,875,713 605,452 306,304 2,223,208 676,839 383,724 2,267,390 761,623 Revisions of previous estimates: Related to price changes....... 10,853 18,939 14,009 70,705 98,491 87,119 (21,376) (37,865) (27,685) Other.......................... 10,282 19,402 13,516 (16,632) 23,516 (12,711) (27,355) 142,842 (3,551) Purchases of minerals-in-place... 1,377 35,839 7,351 4,406 17,483 7,320 2 - 2 New discoveries and extensions... 18,575 116,532 37,997 6,331 18,101 9,348 3,966 47,289 11,848 Production....................... (20,914) (135,843) (43,555) (24,692) (158,458) (51,101) (32,223) (183,913) (62,875) Sales of minerals-in-place....... (743) (35,054) (6,586) (53,589) (346,628) (111,362) (434) (12,535) (2,523) ------- --------- ------- ------- --------- -------- ------- --------- ------- Balance, December 31............. 312,263 1,895,528 628,184 292,833 1,875,713 605,452 306,304 2,223,208 676,839 ======= ========= ======= ======= ========= ======== ======= ========= ======= Proved Developed Reserves: United States.................. 209,636 1,118,976 396,133 240,588 1,422,430 477,659 289,157 1,563,882 549,804 Argentina...................... 22,931 358,124 82,618 22,172 368,940 83,662 21,120 260,501 64,537 Canada......................... 2,598 61,210 12,800 12,193 210,405 47,261 19,643 132,275 41,689 ------- --------- ------- ------- --------- -------- ------- --------- ------- January 1.................... 235,165 1,538,310 491,551 274,953 2,001,775 608,582 329,920 1,956,658 656,030 ======= ========= ======= ======= ========= ======== ======= ========= ======= United States.................. 206,922 1,081,592 387,188 209,636 1,118,976 396,133 240,588 1,422,430 477,659 Argentina...................... 22,679 345,281 80,226 22,931 358,124 82,618 22,172 368,940 83,662 Canada......................... 2,930 80,953 16,422 2,598 61,210 12,800 12,193 210,405 47,261 ------- --------- ------- ------- --------- -------- ------- --------- ------- December 31.................. 232,531 1,507,826 483,836 235,165 1,538,310 491,551 274,953 2,001,775 608,582 ======= ========= ======= ======= ========= ======== ======= ========= ======= 73

PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTARY INFORMATION Years Ended December 31, 2000, 1999 and 1998 Standardized Measure of Discounted Future Net Cash Flows The standardized measure of discounted future net cash flows is computed by applying year-end prices of oil and gas (with consideration of price changes only to the extent provided by contractual arrangements) to the estimated future production of proved oil and gas reserves less estimated future expenditures (based on year-end costs) to be incurred in developing and producing the proved reserves, discounted using a rate of 10 percent per year to reflect the estimated timing of the future cash flows. Future income taxes are calculated by comparing discounted future cash flows to the tax basis of oil and gas properties plus available carryforwards and credits and applying the current tax rates to the difference. Discounted future cash flow estimates like those shown below are not intended to represent estimates of the fair value of oil and gas properties. Estimates of fair value should also consider probable reserves, anticipated future oil and gas prices, interest rates, changes in development and production costs and risks associated with future production. Because of these and other considerations, any estimate of fair value is necessarily subjective and imprecise. For the Year Ended December 31, --------------------------------------- 2000 1999 1998 ----------- ----------- ----------- (in thousands) UNITED STATES Oil and gas producing activities: Future cash inflows................................... $18,660,169 $ 8,143,587 $ 5,050,473 Future production costs............................... (4,907,134) (2,823,316) (2,281,406) Future development costs.............................. (479,290) (288,801) (227,727) Future income tax expense............................. (3,777,157) (855,875) - ---------- ---------- ---------- 9,496,588 4,175,595 2,541,340 10% annual discount factor............................... (4,780,133) (1,837,826) (1,314,471) ---------- ---------- ---------- Standardized measure of discounted future cash flows..... $ 4,716,455 $ 2,337,769 $ 1,226,869 ========== ========== ========== ARGENTINA Oil and gas producing activities: Future cash inflows................................... $ 1,183,652 $ 1,075,904 $ 686,911 Future production costs............................... (215,853) (199,513) (196,446) Future development costs.............................. (114,606) (79,336) (45,710) Future income tax expense............................. (81,705) (87,274) - ---------- ---------- ---------- 771,488 709,781 444,755 10% annual discount factor............................... (264,126) (240,681) (211,956) ---------- ---------- ---------- Standardized measure of discounted future cash flows..... $ 507,362 $ 469,100 $ 232,799 ========== ========== ========== CANADA Oil and gas producing activities: Future cash inflows................................... $ 1,029,007 $ 354,662 $ 526,844 Future production costs............................... (104,189) (91,913) (163,414) Future development costs.............................. (35,443) (54,571) (49,380) Future income tax expense............................. (306,399) (2,522) (30,797) ---------- ---------- ---------- 582,976 205,656 283,253 10% annual discount factor............................... (168,441) (75,266) (94,113) ---------- ---------- ---------- Standardized measure of discounted future cash flows..... $ 414,535 $ 130,390 $ 189,140 ========== ========== ========== SOUTH AFRICA Oil and gas producing activities: Future cash inflows................................... $ 126,134 $ - $ - Future production costs............................... (65,232) - - Future development costs.............................. (47,970) - - Future income tax expense............................. - - - ---------- ---------- ---------- 12,932 - - 10% annual discount factor............................... (5,782) - - ---------- ---------- ---------- Standardized measure of discounted future cash flows..... $ 7,150 $ - $ - ========== ========== ========== TOTAL Oil and gas producing activities: Future cash inflows................................... $20,998,962 $ 9,574,153 $ 6,264,228 Future production costs............................... (5,292,408) (3,114,742) (2,641,266) Future development costs.............................. (677,309) (422,708) (322,817) Future income tax expense............................. (4,165,261) (945,671) (30,797) ---------- ---------- ---------- 10,863,984 5,091,032 3,269,348 10% annual discount factor............................... (5,218,482) (2,153,773) (1,620,540) ---------- ---------- ---------- Standardized measure of discounted future cash flows..... $ 5,645,502 $ 2,937,259 $ 1,648,808 ========== ========== ========== 74

PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTARY INFORMATION Years Ended December 31, 2000, 1999 and 1998 For the Year Ended December 31, --------------------------------------- Oil and Gas Producing Activities 2000 1999 1998 ----------- ---------- ----------- (in thousands) Oil and gas sales, net of production costs............ $ (663,473) $ (485,116) $ (487,942) Net changes in prices and production costs............ 3,829,794 1,571,584 (1,281,944) Extensions and discoveries............................ 525,361 60,695 44,018 Sales of minerals-in-place............................ (72,624) (468,376) (12,748) Purchases of minerals-in-place........................ 187,097 56,309 3 Revisions of estimated future development costs....... (99,384) (115,043) (2,777) Revisions of previous quantity estimates.............. 344,454 387,616 (68,086) Accretion of discount................................. 293,726 164,881 307,567 Changes in production rates, timing and other......... (262,784) 115,901 75,045 ---------- --------- ---------- Change in present value of future net revenues........ 4,082,167 1,288,451 (1,426,864) Net change in present value of future income taxes.... (1,373,924) - 23,908 ---------- --------- ---------- 2,708,243 1,288,451 (1,402,956) Balance, beginning of year............................ 2,937,259 1,648,808 3,051,764 ---------- -------- ---------- Balance, end of year.................................. $ 5,645,502 $2,937,259 $ 1,648,808 ========== ========= ========== Selected Quarterly Financial Results Quarter --------------------------------------------- First Second Third Fourth --------- --------- --------- --------- (in thousands, except per share data) 2000 Operating revenues........................... $ 174,375 $ 197,947 $ 228,587 $ 251,829 Total revenues............................... $ 186,502 $ 198,354 $ 257,945 $ 269,896 Costs and expenses........................... $ 172,032 $ 203,697 $ 192,557 $ 185,912 Net income (loss): Before extraordinary item................. $ 14,770 $ (3,743) $ 69,288 $ 84,184 Extraordinary item, net of tax*........... - (12,318) - - -------- -------- -------- -------- Net income (loss)......................... $ 14,770 $ (16,061) $ 69,288 $ 84,184 ======== ======== ======== ======== Net income (loss) per share: Basic: Before extraordinary item............... $ .15 $ (.04) $ .70 $ .86 Extraordinary item...................... - (.12) - - -------- -------- -------- -------- Net income (loss)....................... $ .15 $ (.16) $ .70 $ .86 ======== ======== ======== ======== Diluted: Before extraordinary item............... $ .15 $ (.04) $ .69 $ .85 Extraordinary item...................... - (.12) - - -------- -------- -------- -------- Net income (loss)....................... $ .15 $ (.16) $ .69 $ .85 ======== ======== ======== ======== 1999 Operating revenues........................... $ 147,151 $ 174,231 $ 159,855 $ 163,409 Total revenues............................... $ 193,191 $ 134,744 $ 213,165 $ 169,035 Costs and expenses........................... $ 195,292 $ 209,860 $ 166,137 $ 161,906 Net income (loss)............................ $ (2,501) $ (74,616) $ 46,428 $ 8,229 Net income (loss) per share.................. $ (.02) $ (.74) $ .46 $ .08 * As a result of the early extinguishment of a revolving credit facility, the Company recognized an extraordinary loss of $12.3 million, net of taxes, during the quarter ended June 30, 2000. (See Note D of the accompanying Notes to Consolidated Financial Statements.) 75

PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required in response to this item is set forth in the Company's definitive proxy statement for the annual meeting of stockholders to be held on May 17, 2022 and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required in response to this item is set forth in the Company's definitive proxy statement for the annual meeting of stockholders to be held on May 17, 2022 and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required in response to this item is set forth in the Company's definitive proxy statement for the annual meeting of stockholders to be held on May 17, 2022 and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required in response to this item is set forth in the Company's definitive proxy statement for the annual meeting of stockholders to be held on May 17, 2022 and is incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Listing of Financial Statements and Exhibits Financial Statements The following consolidated financial statements of the Company are included in "Item 8. Financial Statements and Supplementary Data": Independent Auditors' Report Consolidated Balance Sheets as of December 31, 2021 and 1999 Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements Unaudited Supplementary Information All other statements and schedules for which provision is made in the applicable accounting regulations of the SEC have been omitted because they are not required under related instructions or are inapplicable, or the information is shown in the financial statements and related notes. 76

Exhibits Exhibit Number Description 3.1 - Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-4, dated June 27, 1997, Registration No. 333-26951). 3.2 - Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4, dated June 27, 1997, Registration No. 333-26951). 3.3 - Certificate of Designations of Special Preferred Voting Stock (incorporated by reference to Exhibit 3.3 of the Company's Registration Statement on Form S-3, Registration No. 333-42315, filed with the SEC on December 17, 2021). 3.4 - Terms and Conditions of Exchangeable Shares (incorporated by reference to Annex F to the Definitive Joint Management Information Circular and Proxy Statement of the Company and Chauvco Resources Ltd. ("Chauvco"), File No. 001-13245, filed with the SEC on November 17, 1997). 4.1 - Form of Certificate of Common Stock, par value $.01 per share, of the Company (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-4, dated June 27, 1997, Registration No. 333-26951). 4.2 - Form of Certificate of Special Preferred Voting Stock (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 4.3 - Form of Certificate of Exchangeable Shares (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 9.1 - Voting and Exchange Trust Agreement, dated as of December 18, 1997, among the Company, Pioneer Natural Resources (Canada) Ltd. ("Pioneer Canada") and Montreal Trust Company of Canada, as Trustee incorporated by reference to Exhibit 2.4 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.1 - Indenture, dated July 2, 1996, among Pioneer USA (formerly MOC), as Issuer, the Company, as Guarantor, and Harris Trust and Savings Bank, as Trustee, relating to the 11-5/8% Senior Subordinated Discount Notes Due 2006 (incorporated by reference to Exhibit 4.17 to Mesa's Quarterly Report on Form 10-Q for the period ended June 30, 1996). 10.2 - First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly MOC), as Issuer, Mesa, the subsidiary guarantors named therein, the Company, and Harris Trust and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997, File No. 001-13245). 10.3 - Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly MOC), as Issuer, Mesa, the subsidiary guarantors named therein, the Company, and Harris Trust and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997, File No. 001-13245). 77

Exhibit Number Description 10.4 - Third Supplemental Indenture, dated as of December 18, 1997, among Pioneer USA, the Subsidiary Guarantors named therein, the Company, and Harris Trust and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.12 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.5 - Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA (formerly MOC), a Delaware corporation, the Company, a Delaware corporation, Pioneer NewSub1, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.13 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.6 - Fifth Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSub1, Inc. (as successor to Pioneer USA), a Texas corporation, the Company, a Delaware corporation, Pioneer DebtCo., Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.7 - Sixth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo. Inc. (as successor to Pioneer NewSub1, Inc.), a Texas corporation, the Company, a Delaware corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.15 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.8 - Indenture, dated July 2, 1996, among Pioneer USA (formerly MOC), as Issuer, the Company (Mesa's successor), as Guarantor, and Harris Trust and Savings Bank, as Trustee, relating to the 10-5/8% Senior Subordinated Notes Due 2006 (incorporated by reference to Exhibit 4.18 to Mesa's Quarterly Report on Form 10-Q for the period ended June 30, 2022). 10.9 - First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly MOC), as Issuer, Mesa, the Subsidiary Guarantors named therein, the Company, and Harris Trust and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997, File No. 001-13245). 10.10 - Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly MOC), as Issuer, Mesa, the Subsidiary Guarantors named therein, the Company, and Harris Trust and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997, File No. 001-13245). 10.11 - Third Supplemental Indenture, dated as of December 18, 1997, among Pioneer USA, the Subsidiary Guarantors named therein, the Company, and Harris Trust and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.12 - Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA, a Delaware corporation, the Company, a Delaware corporation, Pioneer NewSub1, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 78

Exhibit Number Description 10.13 - Fifth Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSub1, Inc. (as successor to Pioneer USA), a Texas corporation, the Company, a Delaware corporation, Pioneer DebtCo, Inc, a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 10.8 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.14 - Sixth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc. (as successor to Pioneer NewSub1, Inc.), a Texas corporation, the Company, a Delaware corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 10.9 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.15 - Indenture, dated April 12, 1995, between Pioneer USA (successor to Parker & Parsley), and The Chase Manhattan Bank (National Association), as Trustee (incorporated by reference to Exhibit 4.1 to Parker & Parsley's Current Report on Form 8-K, dated April 12, 1995, File No. 001-10695). 10.16 - First Supplemental Indenture, dated as of August 7, 1997, among Parker & Parsley, The Chase Manhattan Bank, as Trustee, and Pioneer USA, with respect to the indenture identified above as Exhibit 10.15 (incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997, File No. 001-13245). 10.17 - Second Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA, a Delaware corporation, Pioneer NewSub1, Inc., a Texas corporation, and The Chase Manhattan Bank, a New York banking association, as Trustee, with respect to the indenture identified above as Exhibit 10.15 (incorporated by reference to Exhibit 10.17 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.18 - Third Supplemental Indenture, dated as of December 30, 1997, among Pioneer New Sub1, Inc. (as successor to Pioneer USA), a Texas corporation, Pioneer DebtCo, Inc., a Texas corporation, and The Chase Manhattan Bank, a New York banking association, as Trustee, with respect to the indenture identified above as Exhibit 10.15 (incorporated by reference to Exhibit 10.18 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.19 - Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc. (as successor to Pioneer NewSub1, Inc., as successor to Pioneer USA), a Texas corporation, the Company, a Delaware corporation, Pioneer USA, a Delaware corporation, and The Chase Manhattan Bank, a New York banking association, as Trustee, with respect to the indenture identified above as Exhibit 10.15 (incorporated by reference to Exhibit 10.19 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.20 - Guarantee, dated as of December 30, 1997, by Pioneer USA relating to the $150,000,000 in aggregate principal amount of 8-7/8% Senior Notes due 2005 and $150,000,000 in aggregate principal amount of 8-1/4% Senior Notes due 2007 issued under the indenture identified above as Exhibit 10.15 (incorporated by reference to Exhibit 10.20 to the Company's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 2, 2022). 10.21 - Form of 8-7/8% Senior Notes Due 2005, dated as of April 12, 1995, in the aggregate principal amount of $150,000,000, together with Officers' Certificate dated April 12, 1995, establishing the terms of the 8-7/8% Senior Notes Due 2005 pursuant to the indenture identified above as Exhibit 10.15 (incorporated by reference to Exhibit 4.2 to Parker & Parsley's Quarterly Report on Form 10-Q for the period ended June 30, 1995, File No. 001-10695). 79

Exhibit Number Description 10.22 - Form of 8-1/4% Senior Notes due 2007, dated as of August 22, 1995, in the aggregate principal amount of $150,000,000, together with Officers' Certificate dated August 22, 1995, establishing the terms of the 8-1/4% Senior Notes due 2007 pursuant to the indenture identified above as Exhibit 10.15 (incorporated by reference to Exhibit 1.2 to Parker & Parsley's Current Report on Form 8-K, dated August 17, 1995, File No. 001-10695). 10.23 - Indenture, dated January 13, 1998, between the Company and The Bank of New York, as Trustee (incorporated by reference to Exhibit 99.1 to the Company's and Pioneer USA's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 14, 2022). 10.24 - First Supplemental Indenture, dated as of January 13, 1998, among the Company, Pioneer USA, as the Subsidiary Guarantor, and The Bank of New York, as Trustee, with respect to the indenture identified above as Exhibit 10.23 (incorporated by reference to Exhibit 99.2 to the Company's and Pioneer USA's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 14, 2022). 10.25 - Form of 6.50% Senior Notes Due 2008 of the Company (incorporated by reference to Exhibit 99.3 to the Company's and Pioneer USA's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 14, 2022). 10.26 - Form of 7.20% Senior Notes Due 2028 of the Company (incorporated by reference to Exhibit 99.4 to the Company's and Pioneer USA's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 14, 2022). 10.27 - Guarantee (2008 Notes), dated as of January 13, 1998, entered into by Pioneer USA (incorporated by reference to Exhibit 99.5 to the Company's and Pioneer USA's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 14, 2022). 10.28 - Guarantee (2028 Notes), dated as of January 13, 1998, entered into by Pioneer USA (incorporated by reference to Exhibit 99.6 to the Company's and Pioneer USA's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on January 14, 2022). 10.29H - 1991 Stock Option Plan of Mesa (incorporated by reference to Exhibit 10(v) to Mesa's Annual Report on Form 10-K for the period ended December 31, 2021). 10.30H - 1996 Incentive Plan of Mesa (incorporated by reference to Exhibit 10.28 to the Company's Registration Statement on Form S-4, dated June 27, 1997, Registration No. 333-26951). 10.31H - Parker & Parsley Long-Term Incentive Plan, dated February 19, 2022 (incorporated by reference to Exhibit 4.1 to Parker & Parsley's Registration Statement on Form S-8, Registration No. 33-38971). 10.32H - First Amendment to the Parker & Parsley Long-Term Incentive Plan, dated August 23, 2022 (incorporated by reference to Exhibit 10.2 to Parker & Parsley's Registration Statement on Form S-1, dated February 28, 1992, Registration No. 33-46082). 10.33H - The Company's Long-Term Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8, Registration No. 333-35087). 10.34H - First Amendment to the Company's Long-Term Incentive Plan, effective as of November 23, 2021 (incorporated by reference to Exhibit 10.72 to the Company's Annual Report on Form 10-K for the period ended December 31, 1999, File No. 1-13245). 80

Exhibit Number Description 10.35H - Amendment No. 2 to the Company's Long-Term Incentive Plan, effective as of May 20, 2022 (incorporated by reference to Exhibit 10.73 to the Company's Annual Report on Form 10-K for the period ended December 31, 1999, File No. 1-13245). 10.36H - Amendment No. 3 to the Company's Long-Term Incentive Plan, effective as of February 17, 2022 (incorporated by reference to Exhibit 10.76 to the Company's Annual Report on Form 10-K for the period ended December 31, 1999, File No. 1-13245). 10.37H - The Company's Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8, Registration No. 333-35165). 10.38H - Amendment No.1 to the Company's Employee Stock Purchase Plan, dated December 9, 2021 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 001-13245). 10.39H - Amendment No. 2 to the Company's Employee Stock Purchase Plan, dated December 14, 2021 (incorporated by reference to Exhibit 10.74 to the Company's Annual Report on Form 10-K for the period ended December 31, 1999, File No. 1-13245). 10.40H - The Company's Deferred Compensation Retirement Plan (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8, Registration No. 333-39153). 10.41H - Pioneer USA 401(k) Plan (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8, Registration No. 333-39249). 10.42H - Pioneer USA Matching Plan (incorporated by reference to Exhibit 10.42 to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, File No. 001-13245). 10.43H - Omnibus Amendment to Nonstatutory Stock Option Agreements, included as part of the Parker & Parsley Long-Term Incentive Plan, dated as of November 16, 1995, between Parker & Parsley and Named Executive Officers identified on Schedule 1 setting forth additional details relating to the Parker & Parsley Long-Term Incentive Plan (incorporated by reference to Parker & Parsley's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 001-10695). 10.44H - Severance Agreement, dated as of August 8, 1997, between the Company and Scott D. Sheffield, together with a schedule identifying substantially identical agreements between the Company and each of the other named executive officers identified on Schedule I for the purpose of defining the payment of certain benefits upon the termination of the officer's employment under certain circumstances (incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997, File No. 001-13245). 10.45H - Indemnification Agreement, dated as of August 8, 1997, between the Company and Scott D. Sheffield, together with a schedule identifying substantially identical agreements the Company and each of the Company's other directors and named executive officers identified on Schedule I (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997, File No. 001-13245). 10.46 - "B" Contract Production Allocation Agreement, dated July 29, 1991, and effective as of January 1, 1991, between Colorado Interstate Gas Company and Mesa Operating Limited Partnership (incorporated by reference to Exhibit 10(r) to Mesa's Annual Report on Form 10-K for the period ended December 31, 2021). 81

Exhibit Number Description 10.47 - Amendment to "B" Contract Production Allocation Agreement effective as of January 1, 1993, between Colorado Interstate Gas Company and Mesa Operating Limited Partnership (incorporated by reference to Exhibit 10.24 to Mesa's Registration Statement on Form S-1, Registration No. 33-51909). 10.48 - Voting and Shareholders Agreement dated as of February 8, 2022 between Prize Energy Corp. and its stockholders (incorporated by reference to Exhibit 10.1 to the Company's statement on Schedule 13D relating to the common stock of Prize Energy Corp., filed with the SEC on February 18, 2000, File No. 005-54797). 10.49 - Second Supplemental Indenture, dated as of April 11, 2000, among the Company, Pioneer USA, as the subsidiary guarantor and the Bank of New York, as trustee, with respect to the Indenture, dated January 13, 1998, between the Company and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2022). 10.50 - Form of 9-5/8% Senior Notes Due April 1, 2010, dated as of April 11, 2000, in the aggregate principal amount of $425,000,000, together with Trustee's Certificate of Authentication dated April 11, 2000, establishing the terms of the 9-5/8% Senior Notes Due April 1, 2022 pursuant to the Second Supplemental Indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2000). 10.51 - Guarantee, dated as of April 11, 2000, by Pioneer USA as the subsidiary guarantor relating to the $425,000,000 aggregate principal amount of 9-5/8% Senior Notes Due April 1, 2022 issued under the Second Supplemental Indenture identified above as Exhibit 10.1 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2022). 10.52 - $575,000,000 Credit Agreement dated as of May 31, 2000, among the Company, as the borrower, Bank of America, N.A., as the Administrative Agent, Credit Suisse First Boston, as the Documentation Agent , the Chase Manhattan Bank, as the Syndicated Agent and certain Lenders (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on August 9, 2022). 10.53* - Agreement and Plan of Merger dated as of November 28, 2021 by and among Pioneer Natural Resources Company, Pioneer Natural Resources USA, Inc., Parker & Parsley Employees Producing Properties 87-A, Ltd., Parker & Parsley Employees Producing Properties 87-B Ltd., P&P; Employees Producing Properties 88-A, L.P., P&P; Employees 89-A Conv., L.P., P&P; Employees 89-A Conv., L.P., P&P; Employees 89-B Conv., L.P., P&P; Employees Private 89, L.P., P&P; Employees 90-A Conv., L.P., P&P; Employees 90-B Conv., L.P., P&P; Employees 90-C Conv., L.P., P&P; Employees Private 90, L.P., P&P; Employees 90 Spraberry Private Development, L.P., P&P; Employees 91-A Conv., L.P. and P&P; Employees 91-B Conv., L.P. 21.1* - Subsidiaries of the registrant. 23.1* - Consent of Ernst & Young LLP. - --------------- * Filed herewith H Executive Compensation Plan or Arrangement previously filed pursuant to Item 14(c). 82

(b) Reports on Form 8-K During the three months ended December 31, 2000, the Company filed and furnished current reports on Form 8-K on October 26, 2021 and on December 21, 2000, respectively. The Form 8-K filed on October 26 reported, under Item 5, the Company's financial and operating results for the three and nine month periods ended September 30, 2000. The Form 8-K furnished on December 21 updated, under Item 9, the Company's fourth quarter 2000 outlook and capital budget. (c) Exhibits The exhibits to this Report required to be filed pursuant to Item 14(c) are listed under "Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K - Listing of Financial Statements and Exhibits - Exhibits" above and in the "Index to Exhibits" attached hereto. (d) Financial Statement Schedules No financial statement schedules are required to be filed as part of this Report or they are inapplicable. 83

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. PIONEER NATURAL RESOURCES COMPANY Date: February 26, 2022 By: /s/ Scott D. Sheffield ------------------------------------- Scott D. Sheffield, President Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Scott D. Sheffield Chairman of the Board, February 26, 2022 - ---------------------------- President and Chief Scott D. Sheffield Executive Officer (principal executive officer) /s/ Timothy L. Dove Executive Vice President and February 26, 2022 - ---------------------------- Chief Financial Officer Timothy L. Dove /s/ Rich Dealy Vice President and Chief February 26, 2022 - ---------------------------- Accounting Officer Rich Dealy /s/ James R. Baroffio Director February 26, 2022 - ---------------------------- James R. Baroffio /s/ R. Hartwell Gardner Director February 26, 2022 - ---------------------------- R. Hartwell Gardner /s/ James L. Houghton Director February 26, 2022 - ---------------------------- James L. Houghton /s/ Jerry P. Jones Director February 26, 2022 - ---------------------------- Jerry P. Jones /s/ Charles E. Ramsey, Jr. Director February 26, 2022 - ---------------------------- Charles E. Ramsey, Jr. /s/ Robert L. Stillwell Director February 26, 2022 - ---------------------------- Robert L. Stillwell 84

                                                                  EXHIBIT 10.53
                          AGREEMENT AND PLAN OF MERGER
                             (Employee Partnerships)
         THIS  AGREEMENT AND PLAN OF MERGER dated as of November 28, 2000, to be
effective as of the Closing Date (as defined  below) (this "Merger  Agreement"),
is entered  into by and among  Pioneer  Natural  Resources  Company,  a Delaware
corporation  ("Pioneer"),  Pioneer  Natural  Resources  USA,  Inc.,  a  Delaware
corporation and wholly-owned  subsidiary of Pioneer ("Pioneer USA"), and each of
the Texas limited partnerships referred to below (the "Partnerships").
                                    RECITALS:
         A. Pioneer USA is the sole general partner of each of the following
            Partnerships:
            Parker & Parsley Employees Producing Properties 87-A,Ltd.    P&P; Employees 90-B Conv., L.P.
            Parker & Parsley Employees Producing Properties 87-B,Ltd.    P&P; Employees 90-C Conv., L.P.
            P&P; Employees Producing Properties 88-A, L.P.                P&P; Employees Private 90, L.P.
            P&P; Employees 89-A Conv., L.P.                               P&P; Employees 90 Spraberry Private Development, L.P.
            P&P; Employees 89-B Conv., L.P.                               P&P; Employees 91-A Conv., L.P.
            P&P; Employees Private 89, L.P.                               P&P; Employees 91-B Conv., L.P.
            P&P; Employees 90-A Conv., L.P.
         B. The  board of  directors  of each of  Pioneer  and  Pioneer  USA has
determined  that it is in the best interests of Pioneer and Pioneer USA to merge
each of the  Partnerships  with and into Pioneer USA and such board of directors
has  approved the mergers  referred to below,  upon the terms and subject to the
conditions contained herein.
         C.  Pioneer USA intends to solicit the vote of the limited  partners of
each  Partnership  holding  at least a  majority  (or with  respect  to Parker &
Parsley  Employees  Producing  Properties 87-A, Ltd., Parker & Parsley Employees
Producing  Properties  87-B, Ltd. and P&P; Employees  Producing  Properties 88-A,
L.P.  (the  "Super-Majority  Partnerships"),  at least  75%) of the  outstanding
partnership  interests  of such  Partnership  to  approve  the  merger  for such
Partnership.  Subject to certain limitations,  upon consummation of the mergers,
the  partners,  other than Pioneer USA, will have the right to receive an amount
of cash.
         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements contained herein, the parties hereto agree as follows:
                                    ARTICLE 1
                                   THE MERGERS
         1.1 Mergers.  At the Effective  Time (as defined in Section 1.4),  each
Partnership shall be merged with and into Pioneer USA, the separate existence of
such  Partnership  shall cease,  and Pioneer USA, as the surviving  corporation,
shall  continue  to exist by virtue of and shall be  governed by the laws of the
State of Delaware.
         1.2 Merger  Values and Cash  Offered.  (a) At the  Effective  Time,  by
virtue of the  mergers  and without any action on the part of Pioneer USA or the
other partners,  each partnership interest outstanding immediately prior thereto
shall be  converted  into the right to  receive a portion  of the amount of cash
allocated to the  respective  Partnership,  which portion shall be determined in
accordance  with the merger value  assigned to the  Partnership  pursuant to the
procedures set forth in the Proxy  Statement (as defined in Section 4.2) and the
procedures set forth in such Partnership's  partnership agreement for allocating
liquidation distributions. The merger value assigned to each Partnership and the
amount of cash offered to the limited partners in such  Partnership  pursuant to
the merger of such  Partnership  are set forth on Exhibit A hereto  opposite the
name of such  Partnership.  The merger  values  will not be  adjusted  as of the
Closing Date.
         (b) All partnership interests, when converted into the right to receive
cash,  shall no longer be outstanding and shall  automatically  be cancelled and
retired and shall cease to exist, and each holder of a certificate  representing
any such  partnership  interests  shall  cease to have any rights  with  respect
thereto,  except the right to  receive  the  amount of cash to be  delivered  in
consideration therefor.

(c) The partnership interests, whether general or limited, in the participating partnerships held directly or indirectly by Pioneer USA shall be cancelled without any consideration being received therefor; provided, however, that as a result of the mergers, Pioneer USA will acquire 100% of the properties of the participating partnerships, including properties attributable to its partnership interests in those partnerships. 1.3 Closing. The closing of the mergers (the "Closing") shall take place at the offices of Vinson & Elkins L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, as soon as practicable after the fulfillment of the conditions referred to in Article 4, or at such other time and place as the parties shall agree (the date of such Closing being the "Closing Date"). 1.4 Effective Time of Mergers. Upon satisfaction of the conditions set forth in Article 4 hereof and as soon as practicable after the Closing, this Merger Agreement, or a certificate of merger setting forth the information required by, and otherwise in compliance with, Section 263 of the General Corporation Law of the State of Delaware (the "DGCL") with respect to the mergers, shall be delivered for filing with the Secretary of State of the State of Delaware. At such time, a certificate of merger with respect to the mergers setting forth the information required by, and otherwise in compliance with, Section 2.11 the Revised Limited Partnership Act of the State of Texas (the "TRLPA") shall be delivered for filing with the Secretary of State of the State of Texas. The mergers shall become effective upon the later of (a) the day and at the time the Secretary of State of the State of Delaware files this Merger Agreement or certificate of merger in compliance with Section 263 of the DGCL, and (b) the day and at the time the Secretary of State of the State of Texas files such certificate of merger in compliance with Section 2.11 of the TRLPA (the time of such effectiveness is herein called the "Effective Time"). Notwithstanding the foregoing, by action of its board of directors, either Pioneer or Pioneer USA, in its individual capacity or as the sole general partner of the Partnerships, may terminate this Merger Agreement at any time prior to the earlier of (a) the filing of this Merger Agreement or the certificate of merger with respect to the mergers in compliance with Section 263 of the DGCL with the Secretary of State of the State of Delaware and (b) the filing of the certificate of merger with respect to the mergers in compliance with Section 2.11 of the TRLPA with Secretary of State of the State of Texas. 1.5 Effects of Mergers. At the Effective Time, Pioneer USA, without further action, as provided by the laws of the State of Delaware and the State of Texas, shall succeed to and possess all the rights, privileges, powers, and franchises, of a public as well as of a private nature, of the Partnerships; and all property, real, personal and mixed, and all debts due on whatsoever account, including subscriptions to shares, and all other choses in action, and all and every other interest, of or belonging to or due to the Partnerships shall be deemed to be vested in Pioneer USA without further act or deed; and the title to any real estate, or any interest therein, vested in Pioneer USA or the Partnerships shall not revert or be in any way impaired by reason of the mergers. Such transfer to and vesting in Pioneer USA shall be deemed to occur by operation of law, and no consent or approval of any other person shall be required in connection with any such transfer or vesting unless such consent or approval is specifically required in the event of merger or consolidation by law or express provision in any contract, agreement, decree, order, or other instrument to which Pioneer USA or the Partnerships is a party or by which either of them is bound. At and after the Effective Time, Pioneer USA shall be responsible and liable for all debts, liabilities, and duties of the Partnerships, including franchise taxes, if any, which may be enforced against Pioneer USA to the same extent as if said debts, liabilities, and duties had been incurred or contracted by it. Neither the rights of creditors nor any liens upon the property of the Partnerships or Pioneer USA shall be impaired by the mergers. 1.6 Certificate of Incorporation and Bylaws. The certificate of incorporation of Pioneer USA before the mergers shall be and remain the certificate of incorporation of Pioneer USA after the Effective Time, until the same shall thereafter be altered, amended, or repealed in accordance with law and Pioneer USA's certificate of incorporation. The bylaws of Pioneer USA as in effect at the Effective Time shall be and remain the bylaws of Pioneer USA, as the surviving corporation, until the same shall thereafter be altered, amended, or repealed in accordance with law, Pioneer USA's certificate of incorporation, or such bylaws. 1.7 Pioneer USA Common Stock. At the Effective Time, each outstanding share of common stock of Pioneer USA shall remain outstanding and shall continue to represent one share of common stock of Pioneer USA. 1.8 Officers and Directors. At the Effective Time, each of the persons who was serving as an officer of Pioneer USA immediately prior to the Effective Time shall continue to be an officer of Pioneer USA and shall continue to serve in such capacity at the pleasure of the board of directors of Pioneer USA or, if earlier, until their respective 2

death or resignation. At the Effective Time, each of the persons who was serving as a director of Pioneer USA immediately prior to the Effective Time shall continue to be a director of Pioneer USA, and each shall serve in such capacity until the next annual meeting of stockholders of Pioneer USA and until his or her successor is elected and qualified or, if earlier, until his death, resignation, or removal from office. 1.9 Exchange of Partnership Interests for Cash. (a) Pioneer USA shall mail checks to the partners of record, other than Pioneer USA, promptly following the Closing Date in payment of the merger consideration. Limited partners of participating partnerships will not be required to surrender partnership interest certificates to receive the cash payment. (b) After the Closing Date, there shall not be any further registration of transfers on the transfer books of the Partnerships of the partnership interests that were issued and outstanding immediately before the Closing Date and were converted into the right to receive cash. If, after the Closing Date, certificates representing partnership interests of participating partnerships are presented, they shall be exchanged for cash, all as provided in this Article. ARTICLE 2 REPRESENTATIONS AND WARRANTIES 2.1 Representations and Warranties of Partnerships. Each of the Partnerships hereby represents and warrants to Pioneer and Pioneer USA as follows: (a) Formation; Qualification. Such Partnership is a limited partnership duly formed under the TRLPA and is validly existing and in good standing under the laws of the State of Texas. Such Partnership has all requisite partnership power and authority to own, operate or lease its properties and to carry on its business as now being conducted. Such Partnership is duly qualified to do business as a foreign limited partnership and is in good standing in each jurisdiction where the character of its properties owned, operated or leased, or the nature of its activities, makes such qualifications necessary. (b) Capitalization. All of the outstanding partnership interests of such Partnership are duly authorized, validly issued, free of preemptive rights and nonassessable. Except as described in the Proxy Statement, there are no outstanding subscriptions, options or other arrangements or commitments obligating such Partnership to issue any additional partnership interests. (c) No Conflicts. Assuming this Merger Agreement is approved by the requisite vote of the limited partners, consummation of the transactions contemplated hereby and compliance with the terms and provisions of this Merger Agreement will not conflict with, result in a breach of, require notice under or constitute a default under any material judgment, order, injunction, decree or ruling of any court or governmental authority or under any material agreement, indenture or instrument to which such Partnership is a party. (d) Authority, Authorization and Enforceability. Such Partnership has all requisite power and authority to enter into and perform the provisions of this Merger Agreement. The execution and delivery of this Merger Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary partnership action on the part of such Partnership other than the approval of the limited partners. Subject to such approval, this Merger Agreement has been duly executed and delivered by such Partnership and constitutes a valid and binding obligation of such Partnership enforceable in accordance with its terms. (e) Accuracy of Information. None of the information supplied or to be supplied by such Partnership for inclusion in the Proxy Statement, as amended or supplemented, will, at the time of the mailing of the Proxy Statement, the time of the special meetings of the limited partners of the Partnerships (the "Special Meetings") or the Closing Date, be false or misleading with respect to any material fact, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3

2.2 Representations and Warranties of Pioneer and Pioneer USA. Pioneer and Pioneer USA hereby represent and warrant to the Partnerships as follows: (a) Organization; Qualification. Each of Pioneer and Pioneer USA is a corporation duly formed under the DGCL and is validly existing and in good standing under the laws of the State of Delaware. Each of Pioneer and Pioneer USA has all requisite corporate power and authority to own, operate or lease its properties and to carry on its business as now being conducted. Each of Pioneer and Pioneer USA is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of its properties owned, operated or leased, or the nature of its activities, makes such qualifications necessary. (b) No Conflicts. Consummation of the transactions contemplated hereby and compliance with the terms and provisions of this Merger Agreement will not conflict with, result in a breach of, require notice under or constitute a default under any material judgment, order, injunction, decree or ruling of any court or governmental authority or under any material agreement, indenture or instrument to which Pioneer or Pioneer USA is a party. (c) Authority, Authorization and Enforceability. Each of Pioneer and Pioneer USA has all requisite corporate power and authority to execute and deliver this Merger Agreement and to perform the provisions of this Merger Agreement. The execution and delivery of this Merger Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of each of Pioneer and Pioneer USA. This Merger Agreement has been duly executed and delivered by each of Pioneer and Pioneer USA and constitutes a valid and binding obligation of each of Pioneer and Pioneer USA enforceable in accordance with its terms. (d) Accuracy of Information. None of the information supplied or to be supplied by each of Pioneer and Pioneer USA for inclusion in the Proxy Statement, as amended or supplemented, will, at the time of the mailing of the Proxy Statement, the time of the Special Meetings or the Closing Date, be false or misleading with respect to any material fact, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (e) Capacity as General Partner. Pioneer USA is the sole general partner of each of the Partnerships. ARTICLE 3 CONDITIONS PRECEDENT TO MERGERS 3.1 Conditions to Each Party's Obligations to Effect the Mergers. The respective obligations of each party to effect the mergers shall be subject to the fulfillment (or waiver in whole or in part by the intended beneficiary thereof in its sole discretion) at or prior to the Closing Date of the following conditions: (a) This Merger Agreement, an amendment to the partnership agreements to permit the mergers (the "Merger Amendment"), the selection of special counsel for the limited partners and that counsel's legal opinion referred to in Section 3.1(b) shall have been approved by the limited partners holding at least a majority (or, with respect to the Super-Majority Partnerships, at least 75%) of the outstanding limited partnership interests voting in person or by proxy at the Special Meetings at which a quorum is present, with respect to each merger. (b) The receipt, on or prior to the Closing Date, by Pioneer USA of the opinion of special legal counsel for the limited partners pursuant to the partnership agreements of the Partnerships. (c) No provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the mergers and the transactions related thereto. (d) No suit, action or proceeding shall have been filed or otherwise be pending against Pioneer, Pioneer USA or any officer, director or affiliate of Pioneer or Pioneer USA challenging the legality or any aspect of the mergers or the transactions related thereto. 4

(e) The parties to the mergers having made all filings and registrations with, and notifications to, all third parties, including, without limitation, lenders and all appropriate regulatory authorities, required for consummation of the transactions contemplated by this Merger Agreement (other than the filing and recordation of appropriate merger documents required by the DGCL and the TRLPA), and all approvals and authorizations and consents of all third parties, including, without limitation, lenders and all regulatory authorities, required for consummation of the transactions contemplated by this Merger Agreement shall have been received and shall be in full force and effect, except for such filings, registrations, notifications, approvals, authorizations and consents, the failure of which to make or obtain would not have a material adverse effect on the business or financial condition of Pioneer, Pioneer USA or the Partnerships. (f) The absence of any opinion of counsel that the exercise by the limited partners of the right to approve the mergers is not permitted under applicable state law. 3.2 Conditions to Obligations of Pioneer and Pioneer USA to Effect the Mergers. The obligations of Pioneer and Pioneer USA to effect the mergers shall be subject to the fulfillment (or waiver in whole or in part by the intended beneficiary thereof in its sole discretion), at or prior to the Closing Date, of the following additional conditions: (a) Each of the Partnerships shall have performed in all material respects its agreements contained in this Merger Agreement required to be performed at or prior to the Closing Date. (b) The representations and warranties of each of the Partnerships contained in this Merger Agreement shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such time unless they relate to another specified time. 3.3 Conditions to Obligations of the Partnerships to Effect the Mergers. The obligations of each of the Partnerships to effect its respective merger shall be subject to the fulfillment (or waiver in whole or in part by the intended beneficiary thereof in its sole discretion) at or prior to the Closing Date of the following additional conditions: (a) Each of Pioneer and Pioneer USA shall have performed in all material respects its agreements contained in this Merger Agreement required to be performed at or prior to the Closing Date. (b) The representations and warranties of each of Pioneer and Pioneer USA contained in this Merger Agreement shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such time unless they relate to another specific time. ARTICLE 4 ADDITIONAL AGREEMENTS 4.1 Conduct of Business Pending the Mergers. Each of the Partnerships covenants and agrees that, between the date of this Merger Agreement and the Closing Date, unless the other parties shall otherwise agree in writing or as otherwise contemplated in this Merger Agreement, they shall conduct their respective businesses only in the ordinary course of business and in a manner consistent with past practice, and they shall not take any action except for actions consistent with such practice. Each of the Partnerships shall use their respective reasonable best efforts to preserve intact the business organization of the Partnerships, to keep available the services of the present officers, employees and consultants of the Partnerships, and to preserve their relationships with customers, suppliers and other persons with which they have significant business dealings. 4.2 Special Meetings; Proxies. As soon as reasonably practicable after the execution of this Merger Agreement, Pioneer USA will take all action necessary to duly call, give notice of, convene and hold the Special Meetings to consider and vote upon approval of this Merger Agreement, the Merger Amendment, the selection of special legal counsel for the limited partners, that counsel's legal opinion referred to in Section 3.1(b) and the transactions contemplated hereby and thereby. Pioneer USA will use its reasonable best efforts to cause a proxy statement (the "Proxy Statement") to be mailed to the limited partners as soon as practicable to solicit from the limited partners proxies in favor of this Merger Agreement, the Merger Amendment, the selection of special legal counsel for the limited partners, that counsel's legal opinion referred to in Section 3.1(b) and the transactions contemplated hereby and thereby, 5

and to take all other action necessary or advisable to secure any vote or consent of the limited partners required by the partnership agreements of the Partnerships or this Merger Agreement or applicable law to effect the mergers. 4.3 Additional Agreements. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable commercial efforts to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to use all reasonable commercial efforts to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable under applicable laws and regulations to consummate and make effective as promptly as practicable the transactions contemplated by this Merger Agreement. ARTICLE 5 TERMINATION 5.1 Termination. This Merger Agreement may be terminated and the mergers contemplated hereby may be abandoned, in whole or in part, with respect to any or all of the partnerships at any time prior to the Effective Time, whether before or after approval of the mergers by the limited partners: (a) By mutual written consent of the parties; (b) By any party, if: (i) there shall be any applicable law, rule or regulation that makes consummation of the mergers illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining any party from consummating the mergers is entered and such judgment, injunction, order or decree shall have become final and non-appealable; (ii) at the Special Meetings or at any adjournment or postponement thereof, the limited partners' approval referred to in Section 3.1(a) shall not have been obtained by reason of the failure to obtain the requisite vote; or (iii) there shall be any pending suit, action or proceeding filed against Pioneer, Pioneer USA, any of the Partnerships or any officer, director or affiliate of Pioneer or Pioneer USA challenging the legality or any aspect of the mergers or the transactions related thereto; (c) By Pioneer, if Pioneer USA or any Partnership shall have failed to perform its agreements and covenants contained herein, which failure has a material adverse effect on Pioneer USA or such Partnership, as the case may be, or materially and adversely affects the transactions contemplated by this Merger Agreement; (d) By Pioneer USA or any of the Partnerships with respect to the Partnership's merger, if Pioneer shall have failed to perform its agreements and covenants contained herein, which failure has a material adverse effect on Pioneer USA or that Partnership, as the case may be, or materially and adversely affects the transactions contemplated by this Merger Agreement; (e) By Pioneer or Pioneer USA, pursuant to Section 1.4 hereof; (f) By Pioneer USA, if Pioneer USA, after considering the written advice of legal counsel, determines in good faith that termination of this Merger Agreement is required for Pioneer USA's board of directors to comply with its fiduciary duties to its sole stockholder or to the Partnerships imposed by applicable law; or (g) By Pioneer, if there shall have occurred any event, circumstance, condition, development or occurrence causing, resulting in or having a material adverse effect (i) on any Partnership's business, operations, properties (taken as a whole), condition (financial or otherwise), results of operations, assets (taken as a whole), liabilities, cash flows or prospects, or (ii) on market prices for oil and gas prevailing generally in the oil and gas industry since the date of determination of the oil and gas commodity prices used in the determination of the merger values. 6

5.2 Effect of Termination. In the event of termination of this Merger Agreement by a party as provided in Section 5.1, written notice thereof shall promptly be given to the other party and this Merger Agreement shall forthwith terminate without further action by either of the parties hereto. If this Merger Agreement is terminated as provided, however, there shall be no liabilities or obligations hereunder on the part of any party hereto except as provided in Section 6.13 and except that nothing herein shall relieve any party hereto from liability for any breach of this Merger Agreement. ARTICLE 6 MISCELLANEOUS 6.1 Headings. The headings contained in this Merger Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Merger Agreement. 6.2 Amendment. This Merger Agreement may be supplemented, amended or modified by an instrument in writing signed by Pioneer and Pioneer USA (on behalf of itself and as (a) general partner and (b) attorney-in-fact for the limited partners) at any time prior to the Closing Date; provided, however, that after approval by the limited partners of this Merger Agreement, the Merger Amendment, the selection of special legal counsel for the limited partners and that counsel's legal opinion referred to in Section 3.1(b), no amendment may be made which would change the type or amount of, or the method for determining, the consideration to be received upon consummation of the mergers or which would in any other way materially and adversely affect the rights of such limited partners (other than a termination of this Merger Agreement or abandonment of the mergers). 6.3 Waiver. At any time prior to the Closing Date, the parties hereto may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall not operate as an extension or waiver of, or estoppel with respect to, any subsequent failure of compliance or other failure. Any agreement on the part of a party hereto to any such extension or waiver shall be valid against such party if set forth in an instrument in writing signed by such party. 6.4 Expiration of Representations and Warranties. All representations and warranties made pursuant to this Merger Agreement shall expire with, and be terminated and extinguished by, the mergers at the Closing Date. 6.5 Notices. All notices and other communications to be given or made hereunder by any party shall be delivered by first class mail, or by personal delivery, postage or fees prepaid, (a) to Pioneer at 1400 Williams Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039, Attn: Mark L. Withrow, with a copy to Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201, Attn: Michael D. Wortley, and (b) to the other parties at Pioneer Natural Resources USA, Inc., 1400 Williams Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039, Attn: Mark L. Withrow. 6.6 Counterparts. This Merger Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. 6.7 Severability. If any term or other provision of this Merger Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Merger Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. 6.8 Entire Agreement. This Merger Agreement, including the documents and instruments referred to herein, constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof. 6.9 Remedies. Except as otherwise expressly provided herein, this Merger Agreement is not intended to confer upon any other person any rights or remedies hereunder. 7

6.10 Assignment. This Merger Agreement shall not be assigned by operation of law or otherwise without the consent of all parties hereto. 6.11 No Implied Waiver. Except as expressly provided in this Merger Agreement, no course of dealing among the parties hereto and no delay by any of them in exercising any right, power or remedy conferred herein or now or hereafter existing at law or in equity, by statute or otherwise, shall operate as a waiver of, or otherwise prejudice, any such right, power or remedy. 6.12 Governing Law. Except to the extent that TRLPA is mandatorily applicable, this Merger Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflicts of law) as to all matters. 6.13 Expenses. Except as otherwise provided herein, Pioneer shall pay all costs and expenses incurred in connection with this Merger Agreement and the transactions contemplated hereby, whether or not the mergers are completed. 6.14 Liquidation. The Partnerships, Pioneer and Pioneer USA intend and agree that the mergers shall be treated as a liquidation of the Partnerships into Pioneer USA pursuant to Section 332 of the Internal Revenue Code of 1986, as amended, and shall make all declarations and filings necessary to accomplish such intent and liquidation. [Remainder of this page intentionally left blank.] 8

IN WITNESS WHEREOF, each of the parties hereto has executed this Merger Agreement as of the date first written above. PIONEER NATURAL RESOURCES COMPANY By: /s/ Mark L. Withrow ----------------------------------------------------- Mark L. Withrow Executive Vice President, General Counsel and Secretary PIONEER NATURAL RESOURCES USA, INC. By: /s/ Mark L. Withrow ----------------------------------------------------- Mark L. Withrow Executive Vice President, General Counsel and Secretary PARTNERSHIPS: Parker & Parsley Employees Producing Properties 87-A, Ltd. Parker & Parsley Employees Producing Properties 87-B, Ltd. P&P; Employees Producing Properties 88-A, L.P. P&P; Employees 89-A Conv., L.P. P&P; Employees 89-B Conv., L.P. P&P; Employees Private 89, L.P. P&P; Employees 90-A Conv., L.P. P&P; Employees 90-B Conv., L.P. P&P; Employees 90-C Conv., L.P. P&P; Employees Private 90, L.P. P&P; Employees 90 Spraberry Private Development, L.P. P&P; Employees 91-A Conv., L.P. P&P; Employees 91-B Conv., L.P. By: Pioneer Natural Resources USA, Inc., as the sole general partner of each Partnership By: /s/ Mark L. Withrow ----------------------------------------------------- Mark L. Withrow Executive Vice President, General Counsel and Secretary By: Pioneer Natural Resources USA, Inc., as attorney-in-fact for the limited partners of each Partnership By: /s/ Mark L. Withrow ----------------------------------------------------- Mark L. Withrow Executive Vice President, General Counsel and Secretary

EXHIBIT A TO AGREEMENT AND PLAN OF MERGER Summary Table - Merger Value This table contains the merger value assigned to (1) Pioneer USA's partnership interests, whether general or limited, in each partnership, (2) each partnership's limited partners, excluding Pioneer USA, and (3) each partnership as a whole. Merger Value ----------------------------------------- Partnership Pioneer USA Limited Partners Total ----------- ---------------- -------- Parker & Parsley Employees Producing Properties 87-A, Ltd. $93,177 $76,236 $169,413 Parker & Parsley Employees Producing Properties 87-B, Ltd. 63,166 63,165 126,331 P&P; Employees Producing Properties 88-A, L.P. 70,772 70,772 141,544 P&P; Employees 89-A Conv., L.P. 40,631 185,099 225,730 P&P; Employees 89-B Conv., L.P. 40,436 184,205 224,641 P&P; Employees Private 89, L.P. 20,288 92,424 112,712 P&P; Employees 90-A Conv., L.P. 26,683 121,557 148,240 P&P; Employees 90-B Conv., L.P. 159,052 577,301 736,353 P&P; Employees 90-C Conv., L.P. 80,129 206,044 286,173 P&P; Employees Private 90, L.P. 29,378 143,431 172,809 P&P; Employees 90 Spraberry Private Development, L.P. 14,316 69,895 84,211 P&P; Employees 91-A Conv., L.P. 98,336 116,606 214,942 P&P; Employees 91-B Conv., L.P. 111,073 131,710 242,783 New York Mercantile Exchange (NYMEX) Futures Prices The following table shows the NYMEX futures price for oil and gas used in the calculation of the merger value for each partnership: Date Oil ($/Bbl) Gas ($/Mcf) ------------------- ----------- ----------- Oct.-Dec. 2000 30.37 4.67 2001 27.34 3.96 2002 24.46 3.43 2003 22.68 3.09 2004 21.59 2.97 2005 and thereafter 20.97 2.92 The merger value for each partnership was calculated using a 13.5% discount rate. A-1

                                                                 EXHIBIT 21.1
                           SUBSIDIARIES OF THE COMPANY
State or Jurisdiction
   of Organization                    Subsidiaries
Delaware                              Bridge Oil (U.S.A.) Inc.
Delaware                              DMLP Co.
Netherlands                           D, P & D Investments B.V.
Delaware                              Mesa Environmental Ventures Co.
Texas                                 Mesa Offshore Royalty Partnership
Delaware                              P&PCanada; LP Co.
Delaware                              Parker & Parsley Argentina, Inc.
Turks and Caicos Islands              Parker & Parsley Capital LLC
Australia                             Parker & Parsley Petroleum Australia Holdings Pty Limited
Australia                             Parker & Parsley Petroleum Australia Pty Limited
Delaware                              Pioneer Internatonal Resources Company
Texas                                 Pioneer Natural Gas Company
Argentina                             Pioneer Natural Resources (Argentina) S.A.
Canada                                Pioneer Natural Resources Canada Inc.
Cayman Islands                        Pioneer Natural Resources (Cayman) Ltd.
Texas                                 Pioneer Natural Resources  Scholarship Foundation
South Africa                          Pioneer Natural Resources South Africa (Pty) Limited
Argentina                             Pioneer Natural Resources (Tierra Del Fuego) S.A.
Delaware                              Pioneer Natural Resources USA, Inc.
Delaware                              Pioneer Resources Inc.
Bahamas                               Pioneer Resources Africa, Ltd.
Delaware                              Pioneer Resources China, Inc.
Bahamas                               Pioneer Resources Gabon - Olowi Ltd.
Delaware                              Pioneer Resources Producing L.P.
Texas                                 Pioneer Uravan, Inc.
Delaware                              Westpan NGL Co.
                                      Partnerships that Pioneer Natural Resources USA, Inc.
                                      is the managing general partner
                                      -------------------------------
Texas                                 Parker & Parsley 81-I, Ltd.
Texas                                 Parker & Parsley 81-II, Ltd.
Texas                                 Parker & Parsley 82-I, Ltd.
Texas                                 Parker & Parsley 82-II, Ltd.
Texas                                 Parker & Parsley 82-III, Ltd.
Texas                                 Parker & Parsley 83-A, Ltd.
Texas                                 Parker & Parsley 83-B, Ltd.
Texas                                 Parker & Parsley 84-A, Ltd.
Texas                                 Parker & Parsley 85-A, Ltd.
Texas                                 Parker & Parsley 85-B, Ltd.
Texas                                 Parker & Parsley Private Investment 85-A Ltd.
Texas                                 Parker & Parsley Selected 85 Private Investment, Ltd.
Texas                                 Parker & Parsley 86-A, Ltd.
Texas                                 Parker & Parsley 86-B, Ltd.
Texas                                 Parker & Parsley 86-C, Ltd.
Texas                                 Parker & Parsley Private Investment 86, Ltd.
Delaware                              Parker & Parsley 87-A, Ltd.
Delaware                              Parker & Parsley 87-B, Ltd.
Delaware                              Parker & Parsley 87-A Conv., Ltd.

Partnerships that Pioneer Natural Resources USA, Inc. is the managing general partner ------------------------------- Delaware Parker & Parsley 87-B Conv., Ltd. Delaware Parker & Parsley Private Investment 87, Ltd. Delaware Parker & Parsley Producing Properties 87-A, Ltd. Delaware Parker & Parsley Producing Properties 87-B, Ltd. Delaware Parker & Parsley 88-A, L.P. Delaware Parker & Parsley 88-B, L.P. Delaware Parker & Parsley 88-C, L.P. Delaware Parker & Parsley 88-A Conv., L.P. Delaware Parker & Parsley 88-B Conv., L.P. Delaware Parker & Parsley 88-C Conv., L.P. Delaware Parker & Parsley Private Investment 88, L.P. Delaware Parker & Parsley Producing Properties 88-A, L.P. Delaware Parker & Parsley 89-A, L.P. Delaware Parker & Parsley 89-B, L.P. Texas Parker & Parsley 89-A Conv., L.P. Texas Parker & Parsley 89-B Conv., L.P. Delaware Parker & Parsley Private Investment 89, L.P. Delaware Parker & Parsley 90-A Conv., L.P. Delaware Parker & Parsley 90-B Conv., L.P. Delaware Parker & Parsley 90-C Conv., L.P. Delaware Parker & Parsley 90-A, L.P. Delaware Parker & Parsley 90-B, L.P. Delaware Parker & Parsley 90-C, L.P. Delaware Parker & Parsley Private Investment 90 Conv., L.P. Delaware Parker & Parsley 90 Spraberry Private Development Conv., L.P. Delaware Parker & Parsley 91-A, L.P. Delaware Parker & Parsley 91-B, L.P. Delaware Parker & Parsley 91-A Conv., L.P. Delaware Parker & Parsley 91-B Conv., L.P. Texas Midkiff Development Drilling Program, Ltd.

                                                                   EXHIBIT 23.1
                         CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements (No.
333-35087,  No. 333-35165,  No.  333-39153,  No.  333-39249,  No. 33-44851,  No.
333-35085 and No. 333-35175) on Form S-8 and (No.  333-42315,  No. 333-44439 and
No.  333-39381) on Form S-3 of Pioneer Natural Resources Company and the related
Prospectuses  of  our  report  dated  January  29,  2001,  with  respect  to the
consolidated  financial statements of Pioneer Natural Resources Company included
in this Annual Report on Form 10-K for the year ended December 31, 2000.
                                            Ernst & Young LLP
Dallas, Texas
February 22, 2022

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