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Pioneer Natural Resources Company at Bear, Stearns & Co. Inc. Global Oil & Gas Conference - Final.

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Original Source: FD (FAIR DISCLOSURE) WIRE

ELLEN HANNAN, ANALYST, BEAR, STEARNS & CO.: Thank you. Keeping on schedule here, our next presenter is Pioneer Natural Resources. I have no disclosures here for you. And our speaker today is the Chairman and CEO, Scott Sheffield. And I'll turn it over to you. Thanks.

SCOTT SHEFFIELD, CHAIRMAN, CEO, PIONEER NATURAL RESOURCES COMPANY: Good morning. Thanks, Ellen. Let me give you an update about what Pioneer is doing. When we started out two years ago, moving the Company from a higher risk, high impact exploration Company to a low risk development Company, exploitation primarily, and I think we're seeing the fruits of our labor over the last two years come to truth in 2008, 2009, and beyond. Our expectations -- I don't think The Street believed that we could grow 10% plus two years ago. We've upped that target to 12% plus and I think you're going to see it start in 2008 and over through 2011.

We're target a greater than 20% cash flow growth over the next four years. It's a combination of growing 12% from production growth and underwater hedges coming off. Our 2009 cash flow will double from 2007. 2007, on a later slide, you'll see we were about $800 million cash flow. 2009, based on the current strip, we're almost $2 billion cash flow. That's after tax.

Positive free cash flow -- we've been criticized for overspending. We took part of the proceeds from asset sales in Argentina, Canada, and deep water Gulf of Mexico. We took about two-thirds and bought back 31 million shares of stock. We took the other third and overspent the last two years. Obviously, in oil and gas, the market doesn't like you overspending. This year we're positive free cash flow with $1 billion CapEx and about $1.4 billion in cash flow based on the current strip. A lot of excess cash flow being generated over the next four years.

Earnings will double in 2008 from 2007 and triple from 2007 to 2009. We're on track to deliver our 12% plus product growth being driven by four primary areas; Spraberry, Raton -- Spraberry in West Texas, Raton in Southeastern Colorado, the Edwards gas trend play in South Texas, then Tunisia. Just to show the last 12 months, those four areas are up 18%. So this doesn't include any increase from Alaska which will start up mid-summer this year. Over the next several years and also our bigger South Coast gas project. It's the biggest well which about 90% will be coming on later this year also.

Total resource play of about 1.75 billion barrels of oil and gas equivalent, close to a billion barrels of proved reserves. The rest of it is in the probable category primarily in our key areas. Attractive all-in finding costs for reserve of placement, we had about $15 for '07 and over 350% reserve of placement in 2007.

Here's our cash flow growth chart. You can see it took us a couple years to get going. Investing capital into a combination of our Alaska project, South Hills gas project, in addition to building up Spraberry, Raton -- we built Spraberry up to about 350 wells per year of drilling. We'll continue to increase that. Spent a lot of capital on seismic -- 3D seismic and land and built the Edwards play and Tunisia over the last two year. But you can see our cash flow -- fairly flat from '06 to '07. $750 million up to $800 million. We're seeing a big...

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