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Pioneer to Sell Argentina Oil Operations: Apache of Houston to Pay Dallas Company $675 Million in Cash

Posted on: Wednesday, 18 January 2006, 18:02 CST

By Elizabeth Souder, The Dallas Morning News

Jan. 18--Pioneer Natural Resources Co. of Dallas agreed Tuesday to sell its operations in Argentina to Apache Corp. of Houston for $675 million in cash.

The deal allows Apache to expand its presence in the South American country.

For Pioneer, the sale helps it reduce some short-term debt and focus on North American and African operations.

"We're relatively small" in Argentina, said Apache spokesman Tony Lentini. "This will give us a bigger footprint in the country and a platform from which we can grow further."

Apache produces 19,050 barrels of oil equivalent a day in Argentina, made up of oil and natural gas, Mr. Lentini said. The company aims to boost that production.

Pioneer produced about 32,500 barrels of oil equivalent a day in Argentina. As of Jan. 1, the properties' net proved reserves were estimated to be 101 million barrels of oil equivalent.

"The sale of our Argentina assets is consistent with the strategic initiatives announced last September to deliver enhanced value to our shareholders," said Scott D. Sheffield, chairman and chief executive. "It will allow us to reallocate capital to high-return North America development opportunities."

In September, Pioneer announced it would sell the Argentina operations, as well as deepwater Gulf of Mexico operations, and cut its exploration budget.

Apache said a "significant portion" of the area it purchased is nonoperated properties, which are subject to preferential rights to purchase by existing owners.

Apache didn't explain how those rights might impact its business but said once the rights are settled, the company can offer more information.

Pioneer and Apache Argentine operations are near Tierra del Fuego in southern Argentina, in the Neuquen Basin.

Pioneer said it expects the deal to close in the first quarter or early in the second quarter.

Pioneer shares gained $1.35 to close at $52.96 Tuesday.

Apache shares rose $1.98, closing at $73.35.

Email esouder@dallasnews.com

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Copyright (c) 2006, The Dallas Morning News

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NYSE:PXD, NYSE:APA,

Source: The Dallas Morning News

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