PIONEER NATURAL RESOURCES CO (Form: 10-Q, Received: 05/07/2012 14:06:22)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

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 incorporation or organization)		(I.R.S. Employer Identification No.)

5205 N. O’Connor Blvd., Suite 200, Irving, Texas		75039
(Address of principal executive offices)		(Zip Code)

(972) 444-9001

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Number of shares of Common Stock outstanding as of May 1, 2012 123,024,218

PIONEER NATURAL RESOURCES COMPANY

TABLE OF CONTENTS


		Page
Cautionary Statement Concerning Forward-Looking Statements			3

Definitions of Certain Terms and Conventions Used Herein			4

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011		5

	Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011		7

	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2012 and 2011		8

	Consolidated Statement of Equity for the three months ended March 31, 2012		9

	Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011		10

	Notes to Consolidated Financial Statements		11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		42

Item 4.	Controls and Procedures		46

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		47

Item 1A.	Risk Factors		47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		50

Item 4.	Mine Safety Disclosures		50

Item 6.	Exhibits		51

Signatures			52

Exhibit Index			53

PIONEER NATURAL RESOURCES COMPANY

Cautionary Statement Concerning Forward-Looking Statements

The information in this Quarterly Report on Form 10-Q (the “Report”) contains forward-looking statements that involve risks and uncertainties. When used in this document, the words “believes,” “plans,” “expects,” “anticipates,” “forecasts,” “intends,” “continue,” “may,” “will,” “could,” “should,” “future,” “potential,” “estimate” or the negative of such terms and similar expressions as they relate to Pioneer Natural Resources Company (“Pioneer” or the “Company”) are intended to identify forward-looking statements. The forward-looking statements are based on the Company’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company’s control.

These risks and uncertainties include, among other things, volatility of commodity prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services and personnel required to complete the Company’s operating activities, access to and availability of transportation, processing and refining facilities, Pioneer’s ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to Pioneer’s credit facility and derivative contracts and the purchasers of Pioneer’s oil, NGL and gas production, uncertainties about estimates of reserves and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, including the possible impacts of climate change, the risks associated with the ownership and operation of an industrial sand mining business, international operations and acts of war or terrorism. These and other risks are described in the Company’s Annual Report on Form 10-K, this and other Quarterly Reports on Form 10-Q and other filings with the United States Securities and Exchange Commission (the “SEC”). In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse effect on it. 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 “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Part 1, Item 3. Quantitative and Qualitative Disclosures About Market Risk” and “Part II, Item 1A. Risk Factors” in this Report and “Part I, Item 1. Business — Competition, Markets and Regulations,” “Part I, Item 1A. Risk Factors,” “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 for a description of various factors that could materially affect the ability of Pioneer to achieve the anticipated results described in the forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no duty to publicly update these statements except as required by law.

PIONEER NATURAL RESOURCES COMPANY

Definitions of Certain Terms and Conventions Used Herein

Within this Report, the following terms and conventions have specific meanings:

•

“AOCI—Hedging” means accumulated other comprehensive loss – net deferred hedge losses, net of tax, a component of the Company’s consolidated equity in the accompanying consolidated balance sheets.

•

“Bbl” means a standard barrel containing 42 United States gallons.

•

“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. Gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feet of gas to one Bbl of oil or natural gas liquid.

•

“BOEPD” means BOE per day.

•

“Btu” means British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.

•

“Conway” means the daily average natural gas liquids components as priced in Oil Price Information Service (“OPIS”) in the table “U.S. and Canada LP – Gas Weekly Averages” at Conway, Kansas.

•

“DD&A” means depletion, depreciation and amortization.

•

“GAAP” means accounting principles that are generally accepted in the United States of America.

•

“LIBOR” means London Interbank Offered Rate, which is a market rate of interest.

•

“MBbl” means one thousand Bbls.

•

“MBOE” means one thousand BOEs.

•

“Mcf” means one thousand cubic feet and is a measure of gas volume.

•

“MMBtu” means one million Btus.

•

“Mont Belvieu–posted-price” means the daily average natural gas liquids components as priced in OPIS in the table “U.S. and Canada LP – Gas Weekly Averages” at Mont Belvieu, Texas.

•

“NGL” means natural gas liquid.

•

“NYMEX” means the New York Mercantile Exchange.

•

“Pioneer” or the “Company” means Pioneer Natural Resources Company and its subsidiaries.

•

“Pioneer Southwest” means Pioneer Southwest Energy Partners L.P. and its subsidiaries.

•

“Proved reserves” mean the quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (“LKH”) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (“HKO”) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

•

“U.S.” means United States.

•

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 the 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.

•

Unless otherwise indicated, all currency amounts are expressed in U.S. dollars.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands)


	March 31, 2012			December 31, 2011
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	316,918		$	537,484
Accounts receivable:
Trade, net of allowance for doubtful accounts of $689 and $806 as of March 31, 2012 and December 31, 2011, respectively		297,700			275,991
Due from affiliates		1,354			7,822
Income taxes receivable		3			3
Inventories		281,890			241,609
Prepaid expenses		13,152			14,263
Deferred income taxes		87,362			77,005
Discontinued operations held for sale		78,643			73,349
Other current assets:
Derivatives		279,919			238,835
Other		10,168			12,936

Total current assets		1,367,109			1,479,297

Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts method of accounting:
Proved properties		12,722,856			12,013,805
Unproved properties		252,435			235,527
Accumulated depletion, depreciation and amortization		(3,821,083	)		(3,648,465	)

Total property, plant and equipment		9,154,208			8,600,867

Goodwill		298,142			298,142
Other property and equipment, net		613,834			573,075
Other assets:
Investment in unconsolidated affiliate		176,513			169,532
Derivatives		264,362			243,240
Other, net of allowance for doubtful accounts of $332 and $340 as of March 31, 2012 and December 31, 2011, respectively		151,391			160,008

	$	12,025,559		$	11,524,161

The financial information included as of March 31, 2012 has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED BALANCE SHEETS (continued)

(in thousands, except share data)


	March 31, 2012			December 31, 2011
	(Unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable:
Trade	$	790,679		$	647,455
Due to affiliates		26,798			68,756
Interest payable		35,323			57,240
Income taxes payable		22,017			9,788
Discontinued operations held for sale		84,146			75,901
Other current liabilities:
Derivatives		83,952			74,415
Deferred revenue		31,610			42,069
Other		35,597			36,174

Total current liabilities		1,110,122			1,011,798

Long-term debt		2,620,615			2,528,905
Derivatives		58,176			33,561
Deferred income taxes		2,181,381			2,077,164
Other liabilities		222,594			221,595
Stockholders’ equity:
Common stock, $.01 par value; 500,000,000 shares authorized; 134,751,627 and 133,121,092 shares issued at March 31, 2012 and December 31, 2011, respectively		1,348			1,331
Additional paid-in capital		3,640,595			3,613,808
Treasury stock, at cost: 11,727,409 and 11,264,936 at March 31, 2012 and December 31, 2011, respectively		(511,630	)		(458,281	)
Retained earnings		2,543,873			2,335,066
Accumulated other comprehensive loss - net deferred hedge losses, net of tax		(1,550	)		(3,130	)

Total equity attributable to common stockholders		5,672,636			5,488,794
Noncontrolling interests in consolidating subsidiaries		160,035			162,344

Total equity		5,832,671			5,651,138

	$	12,025,559		$	11,524,161

The financial information included as of March 31, 2012 has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2012			2011
Revenues and other income:
Oil and gas	$	718,956		$	475,728
Interest and other		28,448			32,320
Derivative gains (losses), net		91,750			(244,432	)
Gain (loss) on disposition of assets, net		43,596			(2,191	)

		882,750			261,425

Costs and expenses:
Oil and gas production		138,321			98,835
Production and ad valorem taxes		45,796			33,296
Depletion, depreciation and amortization		181,418			126,681
Exploration and abandonments		53,287			17,484
General and administrative		63,067			43,911
Accretion of discount on asset retirement obligations		2,430			2,044
Interest		46,858			45,227
Hurricane activity, net		—			71
Other		23,607			17,861

		554,784			385,410

Income (loss) from continuing operations before income taxes		327,966			(123,985	)
Income tax benefit (provision)		(117,703	)		47,907

Income (loss) from continuing operations		210,263			(76,078	)
Income from discontinued operations, net of tax		10,695			419,882

Net income		220,958			343,804
Net (income) loss attributable to the noncontrolling interests		(6,339	)		4,790

Net income attributable to common stockholders	$	214,619		$	348,594

Basic earnings per share:
Income (loss) from continuing operations attributable to common stockholders	$	1.65		$	(0.62	)
Income from discontinued operations attributable to common stockholders		0.08			3.58

Net income attributable to common stockholders	$	1.73		$	2.96

Diluted earnings per share:
Income (loss) from continuing operations attributable to common stockholders	$	1.60		$	(0.62	)
Income from discontinued operations attributable to common stockholders		0.08			3.58

Net income attributable to common stockholders	$	1.68		$	2.96

Weighted average shares outstanding:
Basic		122,480			115,869

Diluted		126,247			115,869

Dividends declared per share	$	0.04		$	0.04

Amounts attributable to common stockholders:
Income (loss) from continuing operations	$	203,924		$	(71,288	)
Income from discontinued operations, net of tax		10,695			419,882

Net income	$	214,619		$	348,594

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2012			2011
Net income	$	220,958		$	343,804

Other comprehensive activity:
Net hedge (gains) losses included in continuing operations		2,508			(8,056	)
Income tax (benefit) provision		(928	)		748

Other comprehensive activity		1,580			(7,308	)

Comprehensive income		222,538			336,496

Comprehensive (income) loss attributable to the noncontrolling interests		(6,339	)		8,176

Comprehensive income attributable to common stockholders	$	216,199		$	344,672

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENT OF EQUITY

(in thousands, except dividends per share)

(Unaudited)


				Equity Attributable To Common Stockholders
	Shares Outstanding			Common Stock		Additional Paid-in Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
Balance as of December 31, 2011		121,856		$	1,331	$	3,613,808		$	(458,281	)	$	2,335,066		$	(3,130	)	$	162,344		$	5,651,138
Dividends declared ($0.04 per share)		—			—		—			—			(5,005	)		—			—			(5,005	)
Exercise of long-term incentive plan stock options and employee stock purchases		65			—		(965	)		2,780			(807	)		—			—			1,008
Treasury stock purchases		(528	)		—		—			(56,129	)		—			—			—			(56,129	)
Tax benefit related to stock-based compensation		—			—		12,938			—			—			—			—			12,938
Compensation costs:
Vested compensation awards, net		1,631			17		(17	)		—			—			—			—			—
Compensation costs included in net income		—			—		14,831			—			—			—			309			15,140
Cash distributions to noncontrolling interests		—			—		—			—			—			—			(8,957	)		(8,957	)
Net income		—			—		—			—			214,619			—			6,339			220,958
Other comprehensive activity:
Deferred hedging activity, net of tax:
Net hedge losses included in continuing operations		—			—		—			—			—			1,580			—			1,580

Balance as of March 31, 2012		123,024		$	1,348	$	3,640,595		$	(511,630	)	$	2,543,873		$	(1,550	)	$	160,035		$	5,832,671

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2012			2011
Cash flows from operating activities:
Net income	$	220,958		$	343,804
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation and amortization		181,418			126,681
Exploration expenses, including dry holes		27,163			1,481
Deferred income taxes		105,871			(50,305	)
(Gain) loss on disposition of assets, net		(43,596	)		2,191
Accretion of discount on asset retirement obligations		2,430			2,044
Discontinued operations		1,577			(399,689	)
Interest expense		9,870			7,637
Derivative related activity		(27,243	)		276,683
Amortization of stock-based compensation		15,086			10,174
Amortization of deferred revenue		(10,459	)		(11,083	)
Other noncash items		(9,516	)		(20,124	)
Change in operating assets and liabilities, net of effects from dispositions:
Accounts receivable, net		(20,663	)		(25,270	)
Income taxes receivable		1,407			1
Inventories		(31,027	)		(29,319	)
Prepaid expenses		1,413			1,342
Other current assets		2,488			3,305
Accounts payable		19,326			(89,980	)
Interest payable		(21,917	)		(25,066	)
Income taxes payable		16,941			15,354
Other current liabilities		(15,441	)		3,353

Net cash provided by operating activities		426,086			143,214

Cash flows from investing activities:
Proceeds from disposition of assets, net of cash sold		58,514			810,470
Investment in unconsolidated subsidiary		—			(37,048	)
Additions to oil and gas properties		(678,339	)		(309,974	)
Additions to other assets and other property and equipment, net		(59,841	)		(129,280	)

Net cash provided by (used in) investing activities		(679,666	)		334,168

Cash flows from financing activities:
Borrowings under long-term debt		134,000			60,610
Principal payments on long-term debt		(49,000	)		(105,810	)
Distributions to noncontrolling interests		(8,957	)		(6,664	)
Borrowings (payments) of other liabilities		458			(20	)
Exercise of long-term incentive plan stock options		1,008			337
Purchases of treasury stock		(56,129	)		(35,682	)
Excess tax benefits from share-based payment arrangements		12,938			28,083
Payment of financing fees		(1,261	)		(8,672	)
Dividends paid		(43	)		(73	)

Net cash provided by (used in) financing activities		33,014			(67,891	)

Net increase (decrease) in cash and cash equivalents		(220,566	)		409,491
Cash and cash equivalents, beginning of period		537,484			111,160

Cash and cash equivalents, end of period	$	316,918		$	520,651

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

NOTE A. Organization and Nature of Operations

Pioneer Natural Resources Company (“Pioneer” or the “Company”) is a Delaware corporation whose common stock is listed and traded on the New York Stock Exchange. The Company is a large independent oil and gas exploration and production company with continuing operations in the United States.

NOTE B. Basis of Presentation

Presentation. In the opinion of management, the consolidated financial statements of the Company as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 include all adjustments and accruals, consisting only of normal recurring accrual adjustments, which are necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted in this report pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). These consolidated financial statements should be read in connection with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Discontinued operations. During December 2011, the Company committed to a plan to exit South Africa and initiated a process to divest of its net assets in South Africa (“Pioneer South Africa”). In March 2012, the Company agreed to sell its net assets in Pioneer South Africa to an unaffiliated third party, using a January 1, 2012 effective date, for net cash proceeds of $52.0 million, before normal closing adjustments. The sale is subject to certain regulatory approvals and is expected to close in mid-2012. In accordance with GAAP, the Company has classified the Pioneer South Africa assets and liabilities as discontinued operations held for sale in the Company’s accompanying consolidated balance sheets as of March 31, 2012 and December 31, 2011, respectively, and Pioneer South Africa’s results of operations as income from discontinued operations, net of tax in the accompanying consolidated statements of operations (representing a recasting of Pioneer South Africa results of operations for the three months ended March 31, 2011, which were originally classified as continuing operations). See Note Q for more information regarding the sale of Pioneer South Africa.

During December 2010, the Company committed to a plan to divest 100 percent of the Company’s share holdings in Pioneer Natural Resources Tunisia Ltd. and Pioneer Natural Resources Anaguid Ltd. (referred to in the aggregate as “Pioneer Tunisia”). In February 2011, the Company completed the sale of Pioneer Tunisia to an unaffiliated third party. Accordingly, the Company has classified the results of operations of Pioneer Tunisia, prior to its sale, as discontinued operations, net of tax for the three months ended 2011 in the accompanying consolidated statements of operations. See Note Q for more information regarding the sale of Pioneer Tunisia.

Allowances for doubtful accounts. As of March 31, 2012 and December 31, 2011, the Company’s allowances for doubtful accounts totaled $1.0 million and $1.1 million, respectively. Changes in the Company’s allowance for doubtful accounts during the three months ended March 31, 2012 are summarized in the following table:


	Three Months Ended March 31, 2012
	(in thousands)
Beginning allowance for doubtful accounts balance	$	1,146
Bad debt expense recoveries		(116	)
Other write offs and decreases		(9	)

Ending allowance for doubtful accounts balance	$	1,021

Inventories. Inventories held for use in continuing operations consisted of $321.9 million and $297.9 million of materials and supplies and $4.2 million and $4.5 million of commodities as of March 31, 2012 and December 31, 2011, respectively. As of March 31, 2012 and December 31, 2011, the Company’s materials and supplies inventory was net of $6.1 million and $0.9 million, respectively, of valuation reserve allowances. As of March 31, 2012 and

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

December 31, 2011, the Company estimated that $44.2 million and $60.8 million, respectively, of its materials and supplies inventory would not be utilized or sold within one year. Accordingly, those inventory values have been classified as other noncurrent assets in the accompanying consolidated balance sheets.

Derivatives and hedging. All derivatives are recorded in the accompanying consolidated balance sheets at estimated fair value. See Note D for further information regarding the fair value of the Company’s derivatives. Effective February 1, 2009, the Company discontinued hedge accounting on all of its then-existing hedge contracts. Changes in the fair value of effective cash flow hedges prior to the Company’s discontinuance of hedge accounting were recorded as a component of accumulated other comprehensive loss – net deferred hedge losses, net of tax (“AOCI – Hedging”), in the equity section of the accompanying consolidated balance sheets, and are being transferred to earnings during the same periods in which the hedged transactions are recognized in the Company’s earnings. Since February 1, 2009, the Company has recognized all changes in the fair values of its derivative contracts as gains or losses in the earnings of the periods in which they occur.

The Company classifies the fair value amounts of derivative assets and liabilities executed under master netting arrangements as net current or noncurrent derivative assets or net current or noncurrent derivative liabilities, whichever the case may be, by commodity and counterparty. Net derivative asset values are determined, in part, by utilization of the derivative counterparties’ credit-adjusted risk-free rate curves and net derivative liabilities are determined, in part, by utilization of the Company’s and Pioneer Southwest Energy Partners L.P.’s (“Pioneer Southwest,” a majority-owned and consolidated subsidiary) credit-adjusted risk-free rate curves. The credit-adjusted risk-free rate curves for the Company and most of its counterparties are based on their independent market-quoted credit default swap rate curves plus the United States Treasury Bill yield curve as of the valuation date. Pioneer Southwest’s credit-adjusted risk-free rate curve is based on independent market-quoted forward London Interbank Offered Rate (“LIBOR”) curves plus 162.5 basis points, representing Pioneer Southwest’s borrowing rate.

Impairment of long-lived assets. The Company reviews its long-lived assets for impairment, including oil and gas properties, whenever events or circumstances indicate that their carrying values may not be fully recoverable.

It is reasonably possible that the estimate of undiscounted future net cash flows attributable to these or other properties may change in the future resulting in the need to impair their carrying values. The primary factors that may affect estimates of futures cash flows are (i) future reserve adjustments, both positive and negative, to proved reserves and appropriate risk-adjusted probable and possible reserves, (ii) results of future drilling activities, (iii) management’s commodity price outlooks and (iv) increases or decreases in production and capital costs associated with the fields.

Goodwill. Goodwill is assessed for impairment whenever events or circumstances indicate that impairment of the carrying value of goodwill is likely, but no less often than annually. If the carrying value of goodwill is determined to be impaired, it is reduced for the impaired value with a corresponding charge to pretax earnings in the period in which it is determined to be impaired. During the third quarter of 2011, the Company performed its annual assessment of goodwill impairment and determined that there was no impairment.

Noncontrolling interest in consolidated subsidiaries. The Company owns a 0.1 percent general partner interest and a 52.4 percent limited partner interest in Pioneer Southwest. Pioneer Southwest owns interests in certain oil and gas properties in the Spraberry field in the Permian Basin of West Texas. The financial position, results of operations and cash flows of Pioneer Southwest are consolidated with those of the Company.

The Company also owns a majority interest in Sendero Drilling Company, LLC (“Sendero”), which owns and operates land-based drilling rigs in the United States. In addition, the Company owns the majority interests in certain other subsidiaries with operations in the United States.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

Noncontrolling interest in the net assets of consolidated subsidiaries totaled $160.0 million and $162.3 million as of March 31, 2012 and December 31, 2011, respectively. The Company recorded net income attributable to the noncontrolling interests of $6.3 million for the three months ended March 31, 2012 (principally related to Pioneer Southwest), compared to a net loss attributable to the noncontrolling interests of $4.8 million for the three months ended March 31, 2011.

Investment in unconsolidated affiliate. The Company owns a 50.1 percent interest in EFS Midstream LLC (“EFS Midstream”), which owns and operates natural gas and liquids gathering, treating and transportation assets in the Eagle Ford Shale area of South Texas.

The Company accounts for the EFS Midstream investment under the equity method of accounting for investments in unconsolidated affiliates. Under the equity method, the Company’s investment in unconsolidated affiliates is increased for investments made and the investor’s share of the investee’s net income, and decreased for distributions received, the carrying value of investor’s interests sold and the investor’s share of the investee’s net losses. The Company’s equity interest in the net income of EFS Midstream of $7.0 million and $298 thousand for the three months ended March 31, 2012 and 2011, respectively, is recorded in interest and other income in the Company’s accompanying consolidated statements of operations.

Revenue recognition. The Company does not recognize revenues until they are realized or realizable and earned. Revenues are considered realized or realizable and earned when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable and (iv) collectability is reasonably assured.

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.

Stock-based compensation. For stock-based compensation equity awards granted or modified, compensation expense is being recognized in the Company’s financial statements on a straight line basis over the awards’ vesting periods based on their fair values on the dates of grant. The stock-based compensation awards vest over periods ranging from 18 months to five years. The amount of compensation expense recognized at any date is at least equal to the portion of the grant date value of the award that is vested at that date. The Company utilizes (i) the Black-Scholes option pricing model to measure the fair value of stock options, (ii) the prior day’s closing stock price on the date of grant for the fair value of restricted stock, restricted stock units, partnership unit awards or phantom unit awards that are expected to be settled wholly in the Company’s common stock or Pioneer Southwest common units (“Equity Awards”), (iii) the Monte Carlo simulation method for the fair value of performance unit awards and (iv) a probabilistic forecasted fair value method for series B unit awards issued by Sendero.

Stock-based compensation liability awards are awards that are expected to be settled in cash on their vesting dates, rather than in equity shares or units (“Liability Awards”). Stock-based Liability Awards are recorded as accounts payable – due to affiliates based on the vested portion of the fair value of the awards on the balance sheet date. The fair values of Liability Awards are updated at each balance sheet date and changes in the fair values of the unvested portions of the awards for which services have been rendered are recorded as increases or decreases to compensation expense. As of March 31, 2012 and December 31, 2011, accounts payable – due to affiliates includes $2.9 million and $9.2 million, respectively, of liabilities attributable to Liability Awards.

For the three months ended March 31, 2012, the Company recorded $21.3 million of stock-based compensation expense for all plans, as compared to $13.0 million for the same period of 2011. As of March 31, 2012, there was $96.0 million of unrecognized compensation expense related to unvested share- and unit-based compensation plan awards, including $44.3 million attributable to Liability Awards. This compensation will be recognized over the remaining vesting periods of the awards, which is a period of less than three years on a weighted average basis.

The Company’s issued shares, as reflected in the consolidated balance sheets at March 31, 2012 and December 31, 2011, do not include 304,260 and 533,125 common shares, respectively, associated with unvested stock-based compensation awards that have voting rights.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table summarizes the activity that occurred during the three months ended March 31, 2012, for each type of share-based incentive award issued by Pioneer:


	Restricted Stock Equity Awards			Restricted Stock Liability Awards			Performance Units		Stock Options			Pioneer Southwest LTIP Restricted Units		Pioneer Southwest LTIP Phantom Units
Outstanding at December 31, 2011		1,857,612			322,925			114,128		564,044			7,492		65,157
Awards granted		834,210			216,964			47,875		98,819			—		37,487
Awards vested		(1,184,811	)		(115,245	)		—		—			—		—
Options exercised		—			—			—		(64,509	)		—		—
Awards forfeited		(2,575	)		(2,383	)		—		—			—		—

Outstanding at March 31, 2012		1,504,436			422,261			162,003		598,354			7,492		102,644

New accounting pronouncements. In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, “Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU 2011-04 amended Accounting Standards Codification (“ASC”) 820 to converge the fair value measurement guidance in GAAP and International Financial Reporting Standards. Certain of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires additional fair value disclosures. The amendments are applied prospectively and became effective and were adopted by the Company on January 1, 2012. The adoption of this guidance did not impact the Company’s financial position, results of operation or liquidity.

In September 2011, the FASB issued ASU No. 2011-08 “Intangibles—Goodwill and Other (Topic 350).” ASU 2011-08 amended ASC 350 to permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. ASU 2011-08 became effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 did not impact the carrying value of the Company’s goodwill. See “Goodwill” above for more information about the Company’s policy for assessing goodwill for impairment.

In December 2011, the FASB issued ASU 2011-11, “Disclosures about offsetting Assets and Liabilities” requiring additional disclosure about offsetting and related arrangements. ASU 2011-11 is effective retrospectively for annual reporting periods beginning on or after January 1, 2013. The adoption of ASU 2011-11 will not impact the Company’s future financial position, results of operation or liquidity.

NOTE C. Exploratory Costs

The Company capitalizes exploratory well and project costs until a determination is made that the well or project has either found proved reserves, is impaired or is sold. The Company’s capitalized exploratory well and project costs are presented in proved properties in the accompanying consolidated balance sheets. If the exploratory well or project is determined to be impaired, the impaired costs are charged to exploration and abandonments expense.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table reflects the Company’s capitalized exploratory well and project activity during the three months ended March 31, 2012:


	Three Months Ended March 31, 2012
	(in thousands)
Beginning capitalized exploratory costs	$	107,596
Additions to exploratory costs pending the determination of proved reserves		174,894
Reclassification due to determination of proved reserves		(117,610	)
Exploratory well costs charged to exploration expense		(26,878	)

Ending capitalized exploratory costs	$	138,002

As of March 31, 2012 and December 31, 2011, the Company had no exploratory projects for which exploratory costs have been capitalized for a period greater than one year from the date drilling was completed.

NOTE D. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The three input levels of the fair value hierarchy are as follows:

•

Level 1 – quoted prices for identical assets or liabilities in active markets.

•

Level 2 – quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means.

•

Level 3 – unobservable inputs for the asset or liability.

The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table presents the Company’s assets and liabilities that are measured at fair value as of March 31, 2012:


			Fair Value Measurement at the End of the Reporting Period Using
	Fair Value at March 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(in thousands)
Recurring fair value measurements
Assets:
Trading securities	$	419	$	251	$	168	$	—
Commodity derivatives		544,281		—		544,281		—
Deferred compensation plan assets		44,718		44,718		—		—

Total assets	$	589,418	$	44,969	$	544,449	$	—

Liabilities:
Commodity derivatives	$	130,094	$	—	$	130,094	$	—
Interest rate derivatives		12,034		—		12,034		—

Total liabilities	$	142,128	$	—	$	142,128	$	—

Total recurring fair value measurements	$	447,290	$	44,969	$	402,321	$	—

Trading securities and deferred compensation plan assets. The Company’s trading securities are comprised of securities that are both actively traded and not actively traded on major exchanges. The Company’s deferred compensation plan assets represent investments in equity and mutual fund securities that are actively traded on major exchanges. These investments are measured based on directly observable prices on major exchanges. As of March 31, 2012, all significant inputs to these asset exchange values represented Level 1 independent active exchange market price inputs. Inputs for certain trading securities that are not actively traded on major exchanges were classified as Level 2 inputs.

Interest rate derivatives. The Company’s interest rate derivative liabilities as of March 31, 2012 represent interest rate swap contracts that, at their inception, locked in a fixed forward annual interest rate of 3.06 percent, for a 10-year period ending August 2022, on a notional amount of $200 million. These derivative contracts mature and settle by their terms during August 2012. The Company utilizes discounted cash flow models for valuing its interest rate derivatives. The net derivative values attributable to the Company’s interest rate derivative contracts as of March 31, 2012 are based on (i) the contracted notional amounts, (ii) LIBOR rate yield curves provided by counterparties and corroborated with forward active market-quoted LIBOR rate yield curves and (iii) the applicable credit-adjusted risk-free rate yield curve. The Company’s interest rate derivative liability measurements represent Level 2 inputs in the hierarchy priority.

Commodity derivatives. The Company’s commodity derivatives represent oil, NGL, gas and diesel swap contracts, collar contracts and collar contracts with short puts (which are also known as three-way collar contracts). The Company’s oil, gas, NGL and diesel swap, collar and three-way collar derivative contract asset and liability measurements represent Level 2 inputs in the hierarchy priority. The Company utilizes discounted cash flow and option-pricing models for valuing its commodity derivatives.

Oil derivatives. The Company’s oil derivatives are swap, collar and three-way collar contracts for notional barrels (“Bbls”) of oil at fixed (in the case of swap contracts) or interval (in the case of collar and three-way collar contracts) New York Mercantile Exchange (“NYMEX”) West Texas Intermediate (“WTI”) oil prices. The asset and liability values attributable to the Company’s oil derivatives were determined based on (i) the contracted notional volumes, (ii) independent active NYMEX futures price quotes for WTI oil, (iii) the applicable estimated credit-adjusted risk-free rate yield curve and (iv) the implied rate of volatility inherent in the collar and three-way collar contracts. The implied rates of volatility inherent in the Company’s collar and three-way collar contracts were determined based on active and independent market-quoted volatility factors.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

As of March 31, 2012, the Company is also party to “roll adjustment” swap derivatives to mitigate the timing risk associated with the sales price of oil in the Permian Basin. The $213 thousand asset value attributable to the Company’s roll adjustment swaps as of March 31, 2012 was determined based on (i) the contracted notional volumes, (ii) independent active NYMEX futures price quotes for WTI oil and (iii) the applicable estimated credit-adjusted risk-free rate yield curve.

NGL derivatives. The Company’s NGL derivatives include swap and three-way collar contracts for notional blended Bbls of Mont Belvieu-posted-price NGLs, Conway-posted-price NGLs or NGL component prices per Bbl. The asset and liability values attributable to the Company’s NGL derivatives were determined based on (i) the contracted notional volumes, (ii) independent active market-quoted commodity and NGL component prices, (iii) independent active NYMEX futures price quotes for WTI oil, (iv) the applicable credit-adjusted risk-free rate yield curve and (v) the implied rate of volatility inherent in the three-way collar contracts. The implied rates of volatility inherent in the Company’s three-way collar contracts were determined based on active and independent market-quoted volatility factors.

Gas derivatives. The Company’s gas derivatives are swap, collar and three-way collar contracts for notional volumes of gas (expressed in millions of British thermal units “MMBtus”) contracted at various posted price indexes, including NYMEX Henry Hub (“HH”) contracts coupled with basis swap contracts that convert the HH price index point to other price indexes. The asset and liability values attributable to the Company’s gas derivative contracts were determined based on (i) the contracted notional volumes, (ii) independent active NYMEX futures price quotes for HH gas, (iii) independent market-quoted forward index prices, (iv) the applicable credit-adjusted risk-free rate yield curve and (v) the implied rate of volatility inherent in the collar and three-way collar contracts. The implied rates of volatility inherent in the Company’s collar and three-way collar contracts were determined based on active and independent market-quoted volatility factors.

Marketing and basis transfer derivative activities. Periodically, the Company enters into gas buy and sell marketing arrangements to fulfill firm pipeline transportation commitments. Associated with these marketing arrangements, the Company may enter into gas index swaps to mitigate price risk. From time to time, the Company also enters into long and short gas swap contracts that transfer gas basis risk on notional gas volumes from one sales index to another sales index. The liability values attributable to the Company’s marketing and basis transfer derivative contracts were determined based on (i) the contracted notional volumes, (ii) independent active NYMEX futures price quotes, (iii) independent market-quoted forward index prices and (iv) the applicable credit-adjusted risk-free rate yield curve.

Financial instruments not carried at fair value. Carrying values and fair values of financial instruments that are not carried at fair value in the consolidated balance sheet as of March 31, 2012 and December 31, 2011 are as follows:


	March 31, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
	(in thousands)
Long-term debt	$	2,620,615	$	3,485,767	$	2,528,905	$	3,105,585

Long term debt includes the Company’s credit facility, the Pioneer Southwest credit facility and the Company’s senior notes. The fair value of debt is characterized as Level 2 measurements in the fair value hierarchy.

Credit facility . The fair values of the Company’s and Pioneer Southwest’s credit facilities are calculated using a discounted cash flow model based on (i) forecasted contractual interest and fee payments, (ii) forward active market-quoted United States Treasury Bill (in the case of the Company’s credit facility) or LIBOR (in the case of the Pioneer Southwest credit facility) rate yield curves and (iii) the applicable credit-adjustments.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

Senior notes . The Company’s senior notes represent debt securities that are not actively traded on major exchanges. The fair values of the Company’s senior notes are based on their periodic values as quoted on the major exchanges.

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable reported in the accompanying consolidated balance sheets approximate their fair values. Non-financial assets and liabilities initially measured at fair value include certain assets and liabilities acquired in a business combination, goodwill and asset retirement obligations.

NOTE E. Income Taxes

The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that deferred tax assets can be realized prior to their expiration. Pioneer monitors Company-specific, oil and gas industry and worldwide economic factors to assess the likelihood that the Company’s deferred tax attributes in the U.S., state, local and foreign tax jurisdictions will be utilized prior to their expiration.

Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement methodology for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of March 31, 2012, the Company had no significant unrecognized tax benefits. The Company’s policy is to account for interest charges with respect to income taxes as interest expense and any penalties, with respect to income taxes, as other expense in the consolidated statements of operations. The Company files income tax returns in the U.S. federal and various state and foreign jurisdictions. With few exceptions, the Company believes that it is no longer subject to examinations by tax authorities for years before 2006. As of March 31, 2012, no adjustments had been proposed in any jurisdiction that would have a significant effect on the Company’s liquidity, future results of operations or financial position.

Income tax (provisions) benefits. The Company’s income tax (provisions) benefits attributable to income from continuing operations consisted of the following for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012			2011
	(in thousands)
Current:
U.S. federal	$	(8,158	)	$	—
U.S. state		(3,674	)		(2,398	)

		(11,832	)		(2,398	)

Deferred:
U.S. federal		(105,865	)		39,880
U.S. state		(6	)		10,425

		(105,871	)		50,305

Income tax (provision) benefit	$	(117,703	)	$	47,907

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

Discontinued operations. The Company’s income tax provisions attributable to income from discontinued operations consisted of the following for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012			2011
	(in thousands)
Current:
U.S. state	$	72		$	(5,725	)
Foreign		(5,477	)		(8,167	)

		(5,405	)		(13,892	)

Deferred:
U.S. federal		(1,779	)		(226,414	)
U.S. state		(6	)		(2,148	)
Foreign		470			(7,667	)

		(1,315	)		(236,229	)

Income tax provision	$	(6,720	)	$	(250,121	)

See Note Q for additional information regarding discontinued operations.

NOTE F. Long-term Debt

The Company’s long-term debt consists of senior notes and revolving credit facilities, including the effects of net deferred fair value hedge losses and issuance discounts and premiums.

Credit Facility. During March 2011, the Company entered into a Second Amended and Restated 5-Year Revolving Credit Agreement (the “Credit Facility”) with a syndicate of financial institutions that matures in March 2016, unless extended in accordance with the terms of the Credit Facility. As of March 31, 2012, the Company had $67.0 million of outstanding borrowings under the Credit Facility and $65.1 million of undrawn letters of credit, all of which were commitments under the Credit Facility, leaving the Company with $1.1 billion of unused borrowing capacity under the Credit Facility.

Pioneer Southwest Credit Facility. During March 2012, Pioneer entered into an Amended and Restated 5-Year Revolving Credit Agreement (the “Pioneer Southwest Credit Facility”) with a syndicate of financial institutions that matures in March 2017, unless extended in accordance with the terms of the Pioneer Southwest Credit Facility. The Pioneer Southwest Credit Facility replaced Pioneer Southwest’s 5-Year Revolving Credit Agreement entered into in May 2008 and provides for aggregate loan commitments of $300 million. As of March 31, 2012, the Pioneer Southwest had $50.0 million of outstanding borrowings and $250.0 million of unused borrowing capacity under the Pioneer Southwest Credit Facility.

The Pioneer Southwest Credit Facility is available for general partnership purposes, including working capital, capital expenditures and distributions. Borrowings under the Pioneer Southwest Credit Facility may be in the form of Eurodollar rate loans, base rate committed loans or swing line loans. The Pioneer Southwest Credit Facility contains certain financial covenants, including (i) the maintenance of a quarter end maximum leverage ratio of not more than 3.5 to 1.00 and (ii) the maintenance of a ratio of the net present value of Pioneer Southwest’s projected future cash flows from its oil and gas properties to total debt of at least 1.75 to 1.0.

Total borrowings may not exceed $300 million, subject to the Pioneer Southwest’s right to increase the borrowing commitments by an additional maximum amount of $100 million if the lenders increase their commitments or if commitments of new lenders are added.

As of March 31, 2012, the Company and Pioneer Southwest were in compliance with all of their debt covenants.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

Convertible senior notes. As of March 31, 2012 and December 31, 2011, the Company had $479.9 million of 2.875% Convertible Senior Notes outstanding. The 2.875% Convertible Senior Notes are convertible under certain circumstances, using a net share settlement process, into a combination of cash and the Company’s common stock pursuant to a formula set forth in the indenture supplement pursuant to which the 2.875% Convertible Senior Notes were issued.

The Company’s stock prices during each of March 2012 and March 2011 met the average price threshold that causes the Company’s 2.875% Convertible Senior Notes to become convertible at the option of the holders during the following three month period. Associated therewith, certain holders of the 2.875% Convertible Senior Notes tendered $70 thousand principal amount of the notes for conversion during the three months ended June 30, 2011. During July and August 2011, the Company paid the tendering holders a total of $71 thousand cash and issued to the tendering holders 340 shares of the Company’s common stock in accordance with the terms of the 2.875% Convertible Senior Notes indenture supplement.

Effective April 1, 2012, the Company’s 2.875% Convertible Senior Notes are convertible at the option of the holders for the three months ended June 30, 2012 and may become convertible in future quarters depending on the Company’s stock price or other conditions. If the 2.875% Convertible Senior Notes had qualified for and been converted as of March 31, 2012, the note holders would have received $479.9 million of cash and approximately 3.5 million shares of the Company’s common stock, which was valued at $386.1 million at March 31, 2012.

On January 15, 2013, the 2.875% Convertible Senior Notes become redeemable at the option of the Company and on January 15, 2013, January 15, 2018, January 15, 2023, January 15, 2028 and January 15, 2033 the holders my require the Company to repurchase the notes for cash. The Company has the intent and ability to fund cash payments that may be required upon the conversion, redemption or repurchase of the 2.875% Convertible Senior Notes with borrowing capacity under the Credit Facility. Accordingly, the 2.875% Convertible Senior Notes are classified as long-term debt in the accompanying balance sheets.

NOTE G. Derivative Financial Instruments

The Company utilizes commodity swap contracts, collar contracts and collar contracts with short puts to (i) reduce the effect of price volatility on the commodities the Company produces and sells or consumes, (ii) support the Company’s annual capital budgeting and expenditure plans and (iii) reduce commodity price risk associated with certain capital projects. The Company also, from time to time, utilizes interest rate contracts to reduce the effect of interest rate volatility on the Company’s indebtedness and forward currency exchange rate agreements to reduce the effect of exchange rate volatility.

Oil production derivative activities. All material physical sales contracts governing the Company’s oil production are tied directly or indirectly to NYMEX WTI oil prices.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table sets forth the volumes in Bbls outstanding as of March 31, 2012 under the Company’s oil derivative contracts and the weighted average oil prices per Bbl for those contracts:


	2012			2013		2014
Collar contracts with short puts:
Volume (Bbl) (a)		48,301			67,290		30,000
Average price per Bbl:
Ceiling	$	118.51		$	120.61	$	123.39
Floor	$	83.72		$	88.88	$	90.33
Short put	$	67.97		$	71.72	$	73.17

Collar contracts:
Volume (Bbl)		2,000			—		—
Average price per Bbl:
Ceiling	$	127.00		$	—	$	—
Floor	$	90.00		$	—	$	—

Swap contracts:
Volume (Bbl)		3,000			3,000		—
Average price per Bbl	$	79.32		$	81.02	$	—

Rollfactor swap contracts:
Volume (Bbl)		665			6,000		—
NYMEX roll price (b)	$	0.28		$	0.43	$	—

Basis swap contracts:
Index swap volume (Bbl)		13,382			—		—
Average price per Bbl (c)	$	(1.15	)	$	—	$	—

(a)	Subsequent to March 31, 2012, the Company entered into additional collar contracts with short puts for 10,000 Bbls per day of the Company’s 2014 production with a ceiling price of $120.93 per Bbl, a floor price of $95.00 per Bbl and a short put price of $80.00 per Bbl.

(b)	Weighted average spread between the NYMEX price for that delivery month and (i) the next month and (ii) the following month during the period when the delivery month is prompt.

(c)	Basis differential between Midland WTI and Cushing WTI.

NGL production derivative activities. All material physical sales contracts governing the Company’s NGL production are tied directly or indirectly to either Mont Belvieu or Conway fractionation facilities’ NGL product component prices. As of March 31, 2012, the Company had NGL swap derivatives for 750 Bbls per day of 2012 NGL sales at an average price of $35.03 per Bbl and NGL collar contracts with short put derivatives for 3,000 Bbls per day of 2012 sales with a ceiling price of $79.99 per Bbl, a floor price of $67.70 per Bbl and a short put price of $55.76 per Bbl.

Gas production derivative activities. All material physical sales contracts governing the Company’s gas production are tied directly or indirectly to regional index prices where the gas is sold. The Company uses derivative contracts to manage gas price volatility and reduce basis risk between NYMEX HH prices and actual index prices at which the gas is sold.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table sets forth the volumes in MMBtus outstanding as of March 31, 2012 under the Company’s gas derivative contracts and the weighted average gas prices per MMBtu for those contracts:


	2012			2013			2014			2015
Collar contracts with short puts:
Volume (MMBtu)		—			—			60,000			30,000
Price per MMBtu:
Ceiling	$	—		$	—		$	7.80		$	7.11
Floor	$	—		$	—		$	5.83		$	5.00
Short put	$	—		$	—		$	4.42		$	4.00
Collar contracts:
Volume (MMBtu)		65,000			150,000			140,000			50,000
Price per MMBtu:
Ceiling	$	6.60		$	6.25		$	6.44		$	7.92
Floor	$	5.00		$	5.00		$	5.00		$	5.00
Swap contracts:
Volume (MMBtu)		275,000			112,500			50,000			—
Price per MMBtu	$	4.97		$	5.62		$	6.05		$	—
Basis swap contracts:
Volume (MMBtu)		136,000			142,500			115,000			—
Price per MMBtu	$	(0.34	)	$	(0.22	)	$	(0.23	)	$	—

From time to time, the Company also enters into long and short gas swap contracts that transfer gas basis risk from one sales index to another sales index. The following table sets forth the volumes in MMBtus outstanding as of March 31, 2012 under the Company’s marketing and basis transfer derivative contracts and the weighted average gas prices per MMBtu for those contracts:


	Three months ended June 30,
	2012
Average Daily Gas Production Associated with Marketing Derivatives (MMBtu):
Basis swap contracts:
Index swap volume (a)		13,297
Price differential ($/MMBtu)	$	0.15
Average Daily Gas Production Associated with Basis Transfer Derivatives (MMBtu):
Basis swap contracts:
Short index swap volume (b)		1,648
NGI-So Cal Border Monthly price differential to NYMEX HH ($/MMBtu)	$	0.13
Long index swap volume (b)		(1,648	)
IF-HSC price differential to NYMEX HH ($/MMBtu)	$	(0.06	)

(a)	Subsequent to March 31, 2012, the Company entered into additional marketing basis swap contracts for 30,000 MMBtus per day for May 2012 with a price of $0.28 and for 40,000 MMBtus per day for the period June through October 2012 with a price of $0.25 per MMBtu.

(b)

Subsequent to March 31, 2012, the Company entered into (i) additional basis transfer short index swap contracts for 5,000 MMBtus per day for the period May through October 2012 with a price differential of $0.12 per MMBtu between NGI-So Cal Border Monthly and NYMEX HH and (ii) additional basis transfer long index swap contracts for 5,000 MMBtus per day for the period May through October 2012 with a price differential of $0.05 between IF-HSC and NYMEX HH.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

Interest rates. As of March 31, 2012, the Company was a party to interest rate derivative contracts that lock in a fixed forward annual interest rate of 3.06 percent, for a 10-year period ending in August 2022, on a notional amount of $200 million. These derivative contracts mature and settle by their terms during August 2012.

During April 2012, the Company entered into interest rate derivative contracts that lock in a fixed forward annual interest rate of 3.21 percent, for a 10-year period ending in December 2025, on a notional amount of $250 million. These derivative contracts mature and settle by their terms during December 2015.

Tabular disclosure of derivative financial instruments . All of the Company’s derivatives are accounted for as non-hedge derivatives as of March 31, 2012 and December 31, 2011. The following tables provide disclosure of the Company’s derivative instruments:

Fair Value of Derivative Instruments as of March 31, 2012

Asset Derivatives (a)

Liability Derivatives (a)

Type

Balance Sheet

Location

Fair
Value

Balance Sheet

Location

Fair
Value

(in thousands)

Derivatives not designated as hedging instruments

Commodity price derivatives

Derivatives - current

290,366

Derivatives - current

82,365

Interest rate derivatives

Derivatives - current

—

Derivatives - current

12,034

Commodity price derivatives

Derivatives - noncurrent

273,843

Derivatives - noncurrent

67,657

564,209

162,056

Fair Value of Derivative Instruments as of December 31, 2011

Asset Derivatives (a)

Liability Derivatives (a)

Type

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

(in thousands)

Derivatives not designated as hedging instruments

Commodity price derivatives

Derivatives - current

248,809

Derivatives - current

68,735

Interest rate derivatives

Derivatives - current

—

Derivatives - current

15,654

Commodity price derivatives

Derivatives - noncurrent

257,368

Derivatives - noncurrent

47,689

506,177

132,078

(a)	Derivative assets and liabilities shown in the tables above are presented as gross assets and liabilities, without regard to master netting arrangements which are considered in the presentations of derivative assets and liabilities in the accompanying consolidated balance sheets.


Derivatives in Cash Flow Hedging	Location of Gain/(Loss) Reclassified from	Amount of Gain/(Loss) Reclassified from AOCI into Earnings
Derivatives in Cash Flow Hedging	Location of Gain/(Loss) Reclassified from	Three Months Ended March 31,
Relationships	AOCI into Earnings	2012			2011
		(in thousands)
Commodity price derivatives	Oil and gas revenue	$	(810	)	$	8,124
Interest rate derivatives	Interest expense		(1,698	)		(68	)

Total		$	(2,508	)	$	8,056

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)


		Amount of Gain (Loss) Recognized in Earnings on Derivatives
Derivatives Not Designated as Hedging	Location of Gain (Loss) Recognized in	Three Months Ended March 31,
Instruments	Earnings on Derivatives	2012		2011
		(in thousands)
Commodity price derivatives	Derivative gains, net	$	88,130	$	(242,280	)
Interest rate derivatives	Derivative gains, net		3,620		(2,152	)
Total		$	91,750	$	(244,432	)

AOCI - Hedging. As of March 31, 2012 AOCI—Hedging represented net deferred losses of $1.5 million compared to net deferred losses of $3.1 million as of December 31, 2011. The AOCI—Hedging balance as of March 31, 2012 was comprised of $2.3 million of net deferred losses on the effective portions of discontinued commodity hedges and $797 thousand of associated net deferred tax benefits.

During the nine months ending December 31, 2012, the Company expects to reclassify $2.3 million of AOCI – Hedging net deferred losses to oil revenues and $797 thousand of net deferred income tax benefits from AOCI—Hedging to income tax expense.

NOTE H. Asset Retirement Obligations

The Company’s asset retirement obligations primarily relate to the future plugging and abandonment of wells and related facilities. Market risk premiums associated with asset retirement obligations are estimated to represent a component of the Company’s credit-adjusted risk-free rate that is utilized in the calculations of asset retirement obligations. The following table summarizes the Company’s asset retirement obligation activity during the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012			2011
	(in thousands)
Beginning asset retirement obligations	$	136,742		$	152,291
Liabilities assumed in acquisitions		—			6
New wells placed on production		830			671
Changes in estimates		—			300
Disposition of wells		—			(81	)
Liabilities settled		(5,688	)		(1,234	)
Accretion of discount from continuing operations		2,430			2,044
Accretion of discount from discontinued operations		—			692

Ending asset retirement obligations	$	134,314		$	154,689

The Company records the current and noncurrent portions of asset retirement obligations in other current liabilities and other liabilities, respectively, in the accompanying consolidated balance sheets. As of March 31, 2012 and December 31, 2011, the current portions of the Company’s asset retirement obligations were $14.4 million and $14.2 million, respectively.

NOTE I. Postretirement Benefit Obligations

As of March 31, 2012 and December 31, 2011, the Company had $7.1 million and $7.5 million, respectively, of unfunded accumulated postretirement benefit obligations, the current and noncurrent portions of which are included in other current liabilities and other liabilities in the accompanying consolidated balance sheets. These obligations are comprised of five plans, of which four are predecessor plans of entities acquired by the Company. These plans had no assets as of March 31, 2012 or December 31, 2011. The participants of the predecessor plans are not current employees of the Company.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table reconciles changes in the Company’s unfunded accumulated postretirement benefit obligations during the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012			2011
	(in thousands)
Beginning accumulated postretirement benefit obligations	$	7,456		$	7,408
Net benefit payments		(520	)		(316	)
Service costs		85			61
Accretion of interest		64			78

Ending accumulated postretirement benefit obligations	$	7,085		$	7,231

NOTE J. Commitments and Contingencies

Legal actions. The Company is a party to various proceedings and claims incidental to its business. While many of these matters involve inherent uncertainty, the Company believes that the amount of the liability, if any, ultimately incurred with respect to such proceedings and claims will not have a material adverse effect on the Company’s consolidated financial position as a whole or on its liquidity, capital resources or future annual results of operations. The Company will continue to evaluate its litigation on a quarter-by-quarter basis and will establish and adjust any litigation reserves as appropriate to reflect its assessment of the then current status of litigation.

NOTE K. Net Income (Loss) Per Share

The Company uses the two-class method of calculating net income (loss) per share because certain of the Company’s and its consolidated subsidiaries’ unvested share-based awards qualify as participating securities. Participating securities participate in the Company’s dividend distributions and are assumed to participate in the Company’s undistributed income proportionate to weighted average outstanding common shares, but are not assumed to participate in the Company’s net losses because they are not contractually obligated to do so. Accordingly, allocations of earnings to participating securities are included in the Company’s calculations of basic and diluted earnings per share from continuing operations, discontinued operations and net income attributable to common stockholders.

During periods in which the Company realizes a loss from continuing operations attributable to common stockholders, securities or other contracts to issue common stock would be dilutive to loss per share from continuing operations; therefore, conversion into common stock is assumed not to occur.

The following tables reconcile the Company’s net income (loss) attributable to common stockholders to basic net income (loss) attributable to common stockholders and diluted net income (loss) attributable to common stockholders for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31, 2012
	Continuing Operations			Discontinued Operations			Total
	(in thousands)
Net income attributable to common stockholders	$	203,924		$	10,695		$	214,619
Participating basic earnings		(2,326	)		(122	)		(2,448	)

Basic income attributable to common stockholders		201,598			10,573			212,171
Reallocation of participating earnings		68			3			71

Diluted income attributable to common stockholders	$	201,666		$	10,576		$	212,242

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)


	Three Months Ended March 31, 2011
	Continuing Operations			Discontinued Operations			Total
	(in thousands)
Net income (loss) attributable to common stockholders	$	(71,288	)	$	419,882		$	348,594
Participating basic earnings		—			(6,140	)		(6,140	)

Basic net income (loss) attributable to common stockholders		(71,288	)		413,742			342,454
Reallocation of participating earnings		—			—			—

Diluted income (loss) attributable to common stockholders	$	(71,288	)	$	413,742		$	342,454

The following table is a reconciliation of basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012		2011
	(in thousands)
Weighted average common shares outstanding:
Basic		122,480		115,869
Dilutive common stock options (a)		150		—
Convertible senior notes dilution		3,460		—
Contingently issuable performance unit shares		157		—

Diluted		126,247		115,869

(a)	Options to purchase 98,819 shares of the Company’s common stock at $113.77 were excluded from the diluted income per share calculations for the three months ended March 31, 2012 because they would have been anti-dilutive to the calculation.

NOTE L. Geographic Operating Segment Information

The Company has determined that its business is comprised of only one geographic and business segment as the Company’s vertical integration services are ancillary to production operations and are not separately managed.

NOTE M. Deferred Revenue

The Company’s remaining volumetric production payment (“VPP”) represents a limited-term overriding royalty interest in oil reserves that: (i) entitles the purchaser to receive production volumes over a period of time from specific lease interests, (ii) is free and clear of all associated future production costs and capital expenditures associated with the reserves, (iii) is nonrecourse to the Company (i.e., the purchaser’s only recourse is to the reserves acquired), (iv) transferred title of the reserves to the purchaser and (v) allows the Company to retain the remaining reserves after the VPP’s volumetric quantities have been delivered.

At the inception of the VPP agreement, the Company (i) removed the proved reserves associated with the VPP, (ii) recognized VPP proceeds as deferred revenue which are being amortized on a unit-of-production basis to oil revenues over the remaining term of the VPP, (iii) retained responsibility for 100 percent of the production costs and capital costs related to VPP interests and (iv) no longer recognizes production associated with the VPP volumes.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table provides information about changes in the deferred revenue carrying value of the Company’s VPP (in thousands):


Deferred revenue at December 31, 2011	$	42,069
Less: 2012 amortization		(10,459	)

Deferred revenue at March 31, 2012	$	31,610

The remaining $31.6 million of deferred revenue will be recognized in oil revenues in the consolidated statements of operations in 2012, assuming the related VPP production volumes are delivered as scheduled.

NOTE N. Gain (Loss) on Disposition of Assets, Net

For the three months ended March 31, 2012, the Company recorded $43.6 million of net gain on disposition of assets from continuing operations, as compared to $2.2 million of net loss from continuing operations for the three months ended March 31, 2011.

The Company’s net gain for the three months ended March 31, 2012 was primarily associated with the sale of a portion of its interest in an unproved oil and gas property in the Eagle Ford Shale to unaffiliated third parties for proceeds of $55.2 million, including normal closing adjustments. Associated therewith, the Company recorded a pretax gain of $43.1 million.

During the three months ended March 31, 2011, the Company’s net loss was primarily associated with the sales of excess materials and supplies inventory.

See Note Q for information about the Company’s gain during the three months ended March 31, 2011 from the sale of its Tunisia subsidiaries that are included in discontinued operations.

NOTE O. Interest and Other Income

The following table provides the components of the Company’s interest and other income:


	Three Months Ended March 31,
	2012		2011
	(in thousands)
Alaskan Petroleum Production Tax credits and refunds (a)	$	11,846	$	27,452
Equity in income of unconsolidated affiliate		6,981		298
Third-party income from vertical integration services (b)		6,549		2,878
Other income		1,641		638
Deferred compensation plan income		1,374		867
Interest income		57		187

Total interest and other income	$	28,448	$	32,320

(a)	The Company earns Alaskan Petroleum Production Tax (“PPT”) credits on qualifying capital expenditures. The Company recognizes income from PPT credits when they are realized through cash refunds or as reductions in production and ad valorem taxes if realizable as offsets to PPT expense.

(b)	Third-party income from vertical integration services represents the third party working interests’ share of earnings associated with Company-provided fracture stimulation, drilling and related services.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

NOTE P. Other Expense

The following table provides the components of the Company’s other expense:


	Three Months Ended March 31,
	2012		2011
	(in thousands)
Transportation commitment charges (a)	$	8,453	$	5,272
Inventory valuation charges (b)		6,041		285
Above market drilling rig rates (c)		4,986		5,159
Other		2,714		3,483
Contingency and environmental accrual adjustments		1,216		1,295
Loss on extinguishment of debt		197		2,367

Total other expense	$	23,607	$	17,861

(a)	Primarily represents firm transportation payments on excess pipeline capacity commitments.

(b)	Represents valuation charges on excess materials and supplies inventories related to dry gas assets.

(c)	Primarily represents charges for the portion of Pioneer’s contracted drilling rig rates that are above current market rates and are not charged to joint operations.

NOTE Q. Discontinued Operations

During December 2011, the Company committed to a plan to divest Pioneer South Africa. In March 2012, the Company agreed to sell its net assets in Pioneer South Africa to an unaffiliated third party, using a January 1, 2012 effective date, for net cash proceeds of $52.0 million, before normal closing adjustments. The sale is subject to certain regulatory approvals and is expected to be completed in mid-2012. Accordingly, the historical results of operations of Pioneer South Africa have been classified as discontinued operations herein.

During December 2010, the Company committed to a plan to sell Pioneer Tunisia and in February 2011 completed a sale to an unaffiliated party for cash proceeds of $802.5 million, including normal post-closing adjustments and excluding cash and cash equivalents sold, resulting in a pretax gain of $645.2 million. The historical results of operations of Pioneer Tunisia have been classified as discontinued operations herein.

During the three months ended March 31, 2011, the Bureau of Ocean Energy Management, Regulation, and Enforcement (“BOEMRE”) paid the Company $2.0 million of interest on excess royalty payments associated with properties that were sold by the Company during 2006. Accordingly, the interest income is classified as income from discontinued operations.

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

The following table represents the components of the Company’s discontinued operations for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012			2011
	(in thousands)
Revenues and other income:
Oil and gas	$	19,592		$	43,531
Interest and other		20			4,935
Gain (loss) on disposition of assets, net (a)		(23	)		649,872

		19,589			698,338

Costs and expenses:
Oil and gas production		790			3,222
Depletion, depreciation and amortization (a)		—			13,692
Exploration and abandonments		84			2,712
General and administrative		1,120			6,815
Accretion of discount on asset retirement obligations (a)		652			692
Interest		(75	)		—
Other		(397	)		1,202

		2,174			28,335

Income from discontinued operations before income taxes		17,415			670,003
Current tax provision		(5,405	)		(13,892	)
Deferred tax provision (a)		(1,315	)		(236,229	)

Income from discontinued operations	$	10,695		$	419,882

(a)	Represents the significant noncash components of discontinued operations.

NOTE R. Subsequent Events

On April 2, 2012, the Company acquired 100 percent of the share capital of Carmeuse Industrial Sands, which is the producer of Hickory sand that is primarily used as proppant for fracture stimulating oil and gas wells in the United States. Upon acquisition, the Company changed the name of the acquired entity to Premier Silica LLC (“Premier Silica”). The aggregate purchase price of Premier Silica was approximately $297.0 million, before normal closing adjustments, and was funded from available cash and borrowings under the Company’s credit facility.

PIONEER NATURAL RESOURCES COMPANY

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial and Operating Performance

The Company’s financial and operating performance for the first quarter of 2012 included the following highlights:

•

Earnings attributable to common stockholders were $214.6 million ($1.68 per diluted share), as compared to $348.6 million ($2.96 per diluted share) for the first quarter of 2011. The decrease in earnings attributable to common stockholders is primarily comprised of a $409.2 million decrease in income attributable to discontinued operations (principally attributable to the 2011 sale of the Company’s Tunisian subsidiaries), partially offset by a $275.2 million increase in income from continuing operations, which includes:

•

a $243.2 million increase to oil and gas revenues as a result of increasing sales volumes and higher average oil sales prices;

•

a $336.2 million increase in gains from net derivative settlements and mark-to-market adjustments; and

•

a $45.8 million increase in net gains on asset divestitures, principally comprised of a gain on the sale of a portion of the Company’s working interest in an Eagle Ford Shale unproved prospect during the first quarter of 2012; offset by:

•

a $39.5 million increase in oil and gas production costs, primarily due to increases in lease operating expenses as a result of higher sales volumes;

•

a $54.7 million increase in DD&A, primarily due to increased sales volumes;

•

a $35.8 million increase in exploration and abandonments expense, primarily due to drilling an unsuccessful exploration well in Alaska during the first quarter of 2012 for $19.1 million and spending $9.5 million for seismic data related to the Company’s horizontal Wolfcamp play in the southern portion of the Spraberry field; and

•

a $165.6 million increase in income taxes attributable to the Company’s improved results;

•

During the first quarter of 2012, average daily sales volumes increased by 37 percent to 146,727 BOEPD, as compared to 106,766 BOEPD during the first quarter of 2011. The increase in first quarter 2012 average daily sales volumes, as compared to the first quarter of 2011, was primarily due to the Company’s successful drilling program during the last nine months of 2011 and the first quarter of 2012;

•

Average reported oil prices increased during the first quarter of 2012 to $100.99 per Bbl as compared to $95.46 per Bbl during the first quarter of 2011. Average reported NGL and gas prices decreased during the first quarter of 2012 to $41.81 per Bbl and $2.51 per Mcf, respectively, as compared to $42.17 per Bbl and $3.88 per Mcf, respectively, in the first quarter of 2011;

•

Net cash provided by operating activities increased to $426.1 million for the three months ended March 31, 2012, as compared to $143.2 million for the three months ended March 31, 2011. The $282.9 million increase in net cash provided by operating activities was primarily due to increases in oil and gas sales volumes, oil prices, realized derivative gains and working capital changes;

•

During April 2012, the Company acquired 100 percent of the share capital of Carmeuse Industrial Sands, which is a producer of Hickory sand that is primarily used as proppant for fracture stimulating oil and gas wells in the United States. The Company changed the name of the acquired entity to Premier Silica LLC (“Premier Silica”) during April 2012. The aggregate purchase price of Premier Silica was approximately $297.0 million, before normal closing adjustments, and was funded from available cash and borrowings under the Company’s credit facility.

PIONEER NATURAL RESOURCES COMPANY

Second Quarter 2012 Outlook

Based on current estimates, the Company expects the following operations and financial results for the quarter ending June 30, 2012:

Production is forecasted to average 149,000 to 154,000 BOEPD.

Production costs (including production and ad valorem taxes and transportation costs) are expected to average $13.25 to $15.25 per BOE based on current NYMEX strip prices for oil, NGLs and gas. Depletion, depreciation and amortization (“DD&A”) expense is expected to average $13.00 to $15.00 per BOE.

Total exploration and abandonment expense is expected to be $25 million to $50 million. General and administrative expense is expected to be $55 million to $60 million. Interest expense is expected to be $47 million to $52 million, and other expense is expected to be $20 million to $30 million. Accretion of discount on asset retirement obligations is expected to be $2 million to $4 million.

Noncontrolling interest in consolidated subsidiaries’ net income, excluding noncash mark-to-market adjustments, is expected to be $9 million to $12 million, primarily reflecting the public ownership in Pioneer Southwest.

The Company’s effective income tax rate is expected to range from 35 percent to 40 percent, assuming current capital spending plans and no significant mark-to-market changes in the Company’s derivative position. Cash income taxes are expected to range from $10 million to $15 million, primarily attributable to alternative minimum tax and state taxes.

Operations and Drilling Highlights

The following table summarizes the Company’s average daily oil, NGL, gas and total production by asset area during the three months ended March 31, 2012:


	Oil (Bbls)		NGLs (Bbls)		Gas (Mcf)		Total (BOE)
Permian Basin		40,855		12,948		57,678		63,417
Raton Basin		—		—		154,768		25,795
South Texas - Eagle Ford Shale		8,782		5,280		50,586		22,493
Mid-Continent		3,350		6,791		49,147		18,332
South Texas - Edwards and Austin Chalk		76		1		39,845		6,718
Barnett Shale		910		2,463		17,257		6,248
Alaska		3,695		—		—		3,695
Other		3		2		141		29

		57,671		27,485		369,422		146,727

For the past few years the Company has focused its capital budget expenditures on oil- and liquids-rich-gas drilling activities as a result of the decline in gas prices. As a result of these capital activities and commodity price changes, the Company’s total liquids production and revenue has increased to 58 percent and 88 percent, respectively, for the three months ended March 31, 2012 from 49 percent and 76 percent, respectively, for the same period last year.

PIONEER NATURAL RESOURCES COMPANY

The following table summarizes by geographic area the Company’s finding and development costs incurred from continuing operations during the three months ended March 31, 2012:


	Acquisition Costs					Exploration		Development		Asset Retirement
	Proved		Unproved			Costs		Costs		Obligations		Total
	(in thousands)
Permian Basin	$	1,350	$	12,242		$	47,892	$	516,203	$	735	$	578,422
Raton Basin		45		(23	)		2,465		4,473		—		6,960
South Texas - Eagle Ford Shale		—		1,709			43,379		1,542		17		46,647
Mid-Continent		—		306			1,879		2,712		—		4,897
South Texas - Edwards and Austin Chalk		—		195			1,715		1,455		—		3,365
Barnett Shale		2,388		3,375			48,208		10,178		78		64,227
Alaska		—		—			49,793		25,012		—		74,805
Other		—		12,335			317		1		—		12,653

	$	3,783	$	30,139		$	195,648	$	561,576	$	830	$	791,976

The following table summarizes the Company’s development and exploration/extension drilling activities for the three months ended March 31, 2012:


	Development Drilling
	Beginning Wells		Wells		Successful		Unsuccessful		Ending Wells
	in Progress		Spud		Wells		Wells		in Progress
Permian Basin		161		189		254		3		93
Raton Basin		5		—		4		—		1
Alaska		1		2		—		—		3

Total United States		167		191		258		3		97


	Exploration/Extension Drilling
	Beginning Wells		Wells		Successful		Unsuccessful		Ending Wells
	in Progress		Spud		Wells		Wells		in Progress
Permian Basin		—		8		1		—		7
South Texas - Eagle Ford Shale		39		29		33		—		35
Mid-Continent		5		—		—		5		—
Barnett Shale		26		7		13		—		20
Alaska		1		2		1		1		1

Total United States		71		46		48		6		63

Permian Basin area. The Company currently has 44 rigs operating in the Spraberry field, of which 40 are drilling vertical wells and four are drilling Wolfcamp Shale horizontal wells. The Company plans to reduce its vertical rig count to approximately 30 rigs by year end and increase its horizontal Wolfcamp Shale rig count to seven by year end. During 2012, the Company expects to drill approximately 750 vertical wells and 30 to 35 horizontal Wolfcamp Shale wells. During the three months ended March 31, 2012, the Company completed 254 vertical wells and one horizontal Wolfcamp Shale well. The vertical well completions included accelerating the completion of wells in progress at December 31, 2011. In approximately 50 percent of the planned 750 well vertical drilling program for 2012, the Wolfcamp interval will be the deepest interval completed. Of the remaining 50 percent of the wells, 20 percent are planned to be deepened to the Strawn interval, 20 percent to the Atoka interval and 10 percent to the Mississippian interval.

In the horizontal Wolfcamp Shale play, the Company believes it has significant resource potential within its acreage based on its extensive geologic data covering the Wolfcamp A, B, C and D intervals and its drilling results to date. Pioneer is the largest acreage holder in the play with more than 400,000 prospective acres.

The Company’s current focus is the Wolfcamp B interval in 200,000 acres in the southern part of the field to hold acreage that would otherwise expire by year-end 2013. Current plans call for drilling 90 horizontal wells in this area by the end of 2013, with 30 to 35 horizontal wells being drilled in 2012.

The Company’s first two successful well in the Wolfcamp play were drilled in Upton County with 5,800-foot laterals and 30 fracture stimulation stages. Both wells continue to produce above expectations and flow naturally at rates greater than 215 BOEPD and 350 BOEPD, respectively, after being on production for more than six months and four months, respectively.

Pioneer drilled two wells in Reagan County and one well in southern Upton County during the first quarter of 2012. All three wells are testing longer 7,000-foot laterals and additional fracture stimulation stages. The two wells in southern Reagan County have been fracture stimulated and recently placed on production. They are in the early stages of unloading water after being fracture stimulated, with oil production rates increasing daily. The Company expects to drill nine horizontal Wolfcamp Shale wells in the second quarter of 2012 and to place two to three additional wells on production by the end of the quarter.

PIONEER NATURAL RESOURCES COMPANY

The Company continues to expand its integrated services to control drilling costs and support the execution of its accelerating drilling program. The Company has 15 Company-owned drilling rigs and five Company-owned fracture stimulation fleets currently operating in the Spraberry field. One additional fleet was recently added and a second additional fleet will be added by mid-year. To support its growing operations, the Company also owns other field service equipment, including pulling units, fracture stimulation tanks, water transport trucks, hot oilers, blowout preventers, construction equipment and fishing tools. In addition, the Company has contracted for tubular and pumping unit requirements through 2012 and well cementing services through 2016.

In early April, the Company completed the acquisition of Premier Silica, which is expected to supply the Company’s growing brown sand requirements for fracture stimulating wells in the Spraberry vertical and horizontal Wolfcamp Shale plays along with the Barnett Shale Combo play.

South Texas and Eagle Ford Shale area . The Company’s drilling activities in the South Texas area during 2012 continue to be primarily focused on delineation and development of Pioneer’s substantial acreage position in the Eagle Ford Shale play. The 2012 drilling program will continue to focus on liquids-rich drilling, with only 15 percent of the wells designated to hold strategic dry gas acreage.

The Company completed 33 horizontal Eagle Ford Shale wells during the first three months of 2012, all of which were successful, with average lateral lengths of approximately 5,500 feet and an average of 13-stage fracture stimulations. The Company is currently running 12 drilling rigs and three fracture stimulation fleets, two of which are Pioneer-owned fleets, in the play.

To improve the execution of its drilling and completions program and reduce costs, the Company is testing the use of lower-cost white sand instead of ceramic proppant to fracture stimulate wells drilled in shallower areas of the field. Early well performance has been similar to direct offset ceramic-stimulated wells. The Company plans to continue to monitor the performance of these wells and plans to use white sand in 50 percent of its 2012 drilling program.

The unconsolidated affiliate formed by the Company to operate gathering facilities in the Eagle Ford Shale area, EFS Midstream, is obligated to construct midstream assets in the Eagle Ford Shale area. Construction of the midstream assets is continuing, with the majority of the construction expected to be completed by 2013. Nine of the 12 planned central gathering plants (“CGPs”) were completed as of March 31, 2012, with two additional CGPs expected to be completed over the remainder of 2012. EFS Midstream is providing gathering, treating and transportation services for the Company during a 20-year contractual term. During 2011, EFS Midstream entered into a $300 million, five-year revolving credit facility that is being used to fund infrastructure investments that exceed its operating cash flows.

Alaska. The Company owns a 70 percent working interest in, and is the operator of, the Oooguruk development project. The Company has drilled 12 production wells and eight injection wells of the estimated 17 production and 16 injection wells planned to fully develop this project. During the first quarter of 2012, the Company drilled two exploration wells, the first of which was drilled from an onshore location to further evaluate the productivity of the Torok formation and the feasibility of future development expansion. The Company flow tested the well during April 2012 until production could no longer be transported along the ice road being utilized. The well was successful with a gross initial production rate of approximately 2,000 barrels of oil per day. The Company is currently evaluating the production results and beginning initial future development plans. The second exploration well was drilled from an ice pad on the west side of the Oooguruk unit to test the Ivishak formation, which is the main producing horizon in the Prudhoe Bay field. This was well was non-commercial and was plugged and abandoned during the first quarter of 2012.

The Company also recently tested a new fracture stimulation design on a new well completed in the Nuiqsut interval from the Oooguruk development facilities. Gross initial production from the test was at a rate of 4,000 barrels of oil per day.

Barnett Shale. During the first three months of 2012, the Company had two drilling rigs and one Pioneer-owned fracture stimulation fleet operating in the field and completed 13 Barnett Shale Combo wells, all of which were successful. In total, the Company has accumulated over 80,000 gross acres in the liquid-rich area of the field and has acquired approximately 340 square miles of proprietary 3-D seismic covering its acreage, which it is using to high-grade future drilling location selections.

Results of Operations from Continuing Operations

Oil and gas revenues. Oil and gas revenues totaled $719.0 million for the three months ended March 31, 2012 as compared to $475.7 for the same period of 2011.

PIONEER NATURAL RESOURCES COMPANY

The increase in oil and gas revenues during the three months ended March 31, 2012, as compared to the same period of 2011, is reflective of a six percent increase in average reported oil prices and 70 percent, 47 percent and 14 percent increases in oil, NGL and gas sales volumes, respectively. Partially offsetting the effects of these increases in the quarter-to-quarter comparison were declines of one percent and 35 percent in reported NGL and gas prices, respectively.

The following table provides average daily sales volumes for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012		2011
Oil (Bbls)		57,671		33,926
NGLs (Bbls)		27,485		18,645
Gas (Mcf)		369,422		325,169
Total (BOE)		146,727		106,766

Average daily BOE sales volumes increased by 37 percent for the three months ended March 31, 2012, as compared to the same period of 2011, principally due to the Company’s successful drilling program.

The oil, NGL and gas prices that the Company reports are based on the market prices received for the commodities adjusted for transfers of the Company’s deferred hedge gains and losses from AOCI-Hedging and the amortization of deferred VPP revenue. See “Derivative activities” and “Deferred revenue” discussion below for additional information regarding the Company’s past cash flow hedging activities and the amortization of deferred VPP revenue.

The following table provides the Company’s average reported prices (including transfers of deferred hedge gains and losses and the amortization of deferred VPP revenue) and average realized prices (excluding transfers of deferred hedge gains and losses and the amortization of deferred VPP revenue) for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012		2011
Average reported prices:
Oil (per Bbl)	$	100.99	$	95.46
NGL (per Bbl)	$	41.81	$	42.17
Gas (per Mcf)	$	2.51	$	3.88
Total (per BOE)	$	53.85	$	49.51
Average realized prices:
Oil (per Bbl)	$	99.15	$	89.17
NGL (per Bbl)	$	41.81	$	42.17
Gas (per Mcf)	$	2.51	$	3.88
Total (per BOE)	$	53.12	$	47.51

Derivative activities. The primary purposes for which the Company utilizes commodity swap contracts, collar contracts and collar contracts with short puts are to (i) reduce the effect of price volatility on the commodities the Company produces, sells and consumes, (ii) support the Company’s annual capital budgeting and expenditure plans and (iii) reduce commodity price risk associated with certain capital projects. During the three months ended March 31, 2012 and 2011, the Company transferred $810 thousand of deferred oil hedge losses and $8.1 million of deferred oil hedge gains, respectively, from AOCI-Hedging to oil revenue.

Deferred revenue. During the three months ended March 31, 2012, the Company’s amortization of deferred VPP revenue increased oil revenues by $10.5 million as compared to an increase of $11.1 million during the same period of 2011. See Note M of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information about the Company’s VPPs.

PIONEER NATURAL RESOURCES COMPANY

Derivative gains, net. During the three months ended March 31, 2012, the Company recorded $91.8 million of net derivative gains on commodity price and interest rate derivatives, of which $28.1 million represented unrealized net gains and $63.7 million represented realized net gains. During the three months ended March 31, 2011, the Company recorded $244.4 million of net derivative losses. Derivative gains and losses result from changes in the fair values of the Company’s derivative contracts. See Notes D and G of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” and “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for additional information regarding the Company’s derivative activities and market risks associated with those activities.

Interest and other income . Interest and other income for the three months ended March 31, 2012 was $28.4 million as compared to $32.3 million for the same period in 2011. The $3.9 million decrease in interest and other income during the three months ended March 31, 2012, as compared to the same period in 2011, was primarily due to a $15.6 million decrease in Alaskan PPT credit recoveries, partially offset by a $6.7 million increase in equity earnings from EFS Midstream and a $3.7 million increase in third-party income from vertical integration services. See Note O of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding interest and other income.

Gain (Loss) on disposition of assets, net. The Company recorded a net gain on the disposition of assets of $43.6 million during the three months ended March 31, 2012 as compared to a net loss on the disposition of assets of $2.2 million for the three months ended March 31, 2011. The net gain for the three months ended March 31, 2012 was primarily attributable to the Company’s sale of a portion of its working interest in an unproved oil and gas property in the Eagle Ford Shale to unaffiliated third parties. The net loss for the three months ended March 31, 2011 was primarily associated with sales of excess materials and supplies inventory. See Note N of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding the Company’s gains and losses on the disposition of assets.

Oil and gas production costs. The Company recorded oil and gas production costs of $138.3 million during the three months ended March 31, 2012 as compared to $98.8 million during the same period of 2011. In general, lease operating expenses and workover costs represent the components of oil and gas production costs over which the Company has management control, while third-party transportation charges represent the cost to transport volumes produced to a sales point. Net natural gas plant/gathering charges represent the net costs to gather and process the Company’s gas, reduced by net revenues earned from the gathering and processing of third-party gas in Company-owned facilities.

Total oil and gas production costs per BOE from continuing operations for the three months ended March 31, 2012 increased by one percent as compared to the same period in 2011. The modest increase in production costs per BOE during the three months ended March 31, 2012, as compared to the first quarter of 2011, is primarily due to increased third-party transportation and processing charges associated with increasing Eagle Ford Shale production, partially offset by decreases in per BOE lease operating expenses, net natural gas plant gathering charges and workover expense.

PIONEER NATURAL RESOURCES COMPANY

The following table provides the components of the Company’s oil and gas production costs per BOE for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012		2011
Lease operating expenses	$	7.70	$	8.04
Third-party transportation charges		1.73		1.03
Net natural gas plant/gathering charges		0.24		0.40
Workover costs		0.69		0.81

Total production costs	$	10.36	$	10.28

Production and ad valorem taxes. The Company recorded production and ad valorem taxes of $45.8 million during the three months ended March 31, 2012 as compared to $33.3 million for the same period of 2011. In general, production and ad valorem taxes are directly related to commodity price changes; however, Texas ad valorem taxes are based upon prior year commodity prices, whereas production taxes are based upon current year commodity prices. During the three months ended March 31, 2012, the Company’s production and ad valorem taxes per BOE, in the aggregate, remained relatively consistent with those of the three months ended March 31, 2011, reflecting the offsetting effects of a per-BOE decrease in ad valorem taxes (primarily due to increasing sales volumes) and an increase in production taxes (primarily due to higher oil prices).

The following table provides the Company’s production and ad valorem taxes per BOE for the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31,
	2012		2011
Ad valorem taxes	$	1.11	$	1.50
Production taxes		2.32		1.96

Total ad valorem and production taxes	$	3.43	$	3.46

Depletion, depreciation and amortization expense. The Company’s total DD&A expense was $181.4 million ($13.59 per BOE) for the three months ended March 31, 2012 as compared to $126.7 million ($13.18 per BOE) during the same period of 2011. The increase in DD&A expense per BOE during the three months ended March 31, 2012, as compared to the same period of 2011, is primarily due to increases in depletion expense per BOE on oil and gas properties, partially offset by the per-BOE effect of increasing production on relatively fixed depreciation on other property and equipment.

Depletion expense on oil and gas properties was $12.99 per BOE during the three months ended March 31, 2012 as compared to $12.13 per BOE during the same period of 2011. The seven percent increase in per-BOE depletion expense during the three months ended March 31, 2012, as compared to the same period of 2011, is primarily due to (i) increased drilling expenditures on proved undeveloped locations, primarily in the Spraberry field and (ii) declines in proved gas reserves due to lower first-day-of-the-month gas prices during the 12-month period ending on March 31, 2012, partially offset by (iii) the impact of the fourth quarter 2011 impairment of $354.4 million of South Texas Edwards and Austin Chalk field carrying values.

Impairment of oil and gas properties. The Company reviews its long-lived assets to be held and used, including oil and gas properties, whenever events or circumstances indicate that the carrying value of those assets may not be recoverable.

During the second half of 2011 and the first quarter of 2012, events and circumstances provided indications of possible impairment of certain of the Company’s dry gas assets, including oil and gas proved properties in the Company’s Raton and Barnett Shale fields. The events and circumstances indicating possible impairment of these fields are primarily related to reductions in management’s gas price outlooks that led to a decrease in estimated future undiscounted net cash flows attributable to each field’s proved reserves. Management’s commodity price outlooks represent longer-term outlooks that are developed based on observable third-party futures price outlooks as of a measurement date (“Management’s Price Outlook”).

PIONEER NATURAL RESOURCES COMPANY

The Company’s estimates of undiscounted future net cash flows attributable to the Raton and Barnett Shale fields’ oil and gas properties indicated on March 31, 2012 that their carrying amounts were expected to be recovered. However, the carrying values of these fields continue to be at risk for impairment if future estimates of undiscounted cash flows decline. For example, the Company estimates that the carrying values of the Raton and Barnett fields may become partially impaired if the average gas price in Management’s Price Outlook, which is approximately $4.70 per Mcf as of March 31, 2012, were to decline by approximately $0.10 per Mcf to $0.30 per Mcf, assuming none of the other impairment inputs changed. The Company’s Raton and Barnett Shale fields are relatively long-lived assets that had carrying values of $2.3 billion and $511.7 million, respectively, as of March 31, 2012. If the Raton and Barnett Shale fields were to become impaired in a future quarter, the Company would recognize impairment charges in that period and such noncash pretax charges could range from $1.5 billion to $1.8 billion for the Raton field and $300 million to $400 million for the Barnett Shale field.

It is reasonably possible that the estimate of undiscounted future net cash flows attributable to these or other properties may change in the future resulting in the need to impair their carrying values. The primary factors that may affect estimates of future cash flows are (i) future reserve adjustments, both positive and negative, to proved reserves and appropriate risk-adjusted probable and possible reserves, (ii) results of future drilling activities, (iii) Management’s Price Outlook and (iv) increases or decreases in production and capital costs associated with these fields. Additionally, the Company is actively developing the Barnett Shale Combo play, which has caused its net carrying value and proved reserves to increase in recent periods.

See Note B of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for more information about continuing impairment risks.

Exploration and abandonments expense. The following table provides the Company’s geological and geophysical costs, exploratory dry holes expense and lease abandonments and other exploration expense for the three months ended March 31, 2012 and 2011 (in thousands):


	Three Months Ended March 31,
	2012		2011
Geological and geophysical	$	26,035	$	15,614
Exploratory dry holes		26,879		644
Leasehold abandonments and other		373		1,226

	$	53,287	$	17,484

The Company’s exploration and abandonment expense during the three months ended March 31, 2012 is primarily comprised of a $19.1 million plugging and abandonment charge related to an unsuccessful exploration well in Alaska.

During the three months ended March 31, 2012, the Company drilled and evaluated 54 exploration/extension wells, 48 of which were successfully completed as discoveries. During the same period in 2011, the Company drilled and evaluated 17 exploration/extension wells, all of which were successfully completed as discoveries.

General and administrative expense. General and administrative expense for the three months ended March 31, 2012 was $63.1 million as compared to $43.9 million during the same period of 2011. The $19.2 million increase in general and administrative expense for the three months ended March 31, 2012, as compared to the same period of 2011, was primarily due to (i) a $7.8 million increase in wages, salaries and benefits expenses related to staffing increases in support of the Company’s capital expansion initiatives, (ii) a $7.4 million increase in share-based compensation, including awards specifically designed to retain key employees and (iii) a $2.2 million increase in charitable donations.

Accretion of discount on asset retirement obligations. Accretion of discount on asset retirement obligations was $2.4 million for the three months ended March 31, 2012 as compared to $2.0 million during the same period of 2011. See Note H of Notes to Consolidated Financial Statements in “Item 1. Financial Statements” for information regarding the Company’s asset retirement obligations.

PIONEER NATURAL RESOURCES COMPANY

Interest expense. Interest expense was $46.9 million for the three months ended March 31, 2012 as compared to $45.2 million during the same period of 2011. The weighted average interest rate on the Company’s indebtedness for the three months ended March 31, 2012, including the effects of capitalized interest, was 7.7 percent, as compared to 7.2 percent for the same period of 2011.

Other expense. Other expense for the three months ended March 31, 2012 was $23.6 million as compared to $17.9 million for the same period of 2011. The $5.7 million increase in other expense for the three months ended March 31, 2012, as compared to the same period in 2011, is primarily attributable to a $5.7 million increase in inventory impairment charges and a $3.2 million increase in unused gas transportation commitment charges, partially offset by a $2.2 million decrease in losses on extinguishment of debt. See Note P of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information.

Income tax provision/benefit. The Company recorded income tax provision from continuing operations of $117.7 million during the three months ended March 31, 2012 as compared to an income tax benefit of $47.9 million during the same period of 2011. The Company’s effective tax rates, excluding net income attributable to noncontrolling interests, for the three months ended March 31, 2012 and 2011 were 37 percent and 40 percent, respectively, as compared to the Company’s combined United States federal and state statutory rate of approximately 37 percent.

See Note E of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding the Company’s income taxes.

Income from discontinued operations, net of tax. The Company reported income from discontinued operations, net of tax of $10.7 million for the three months ended March 31, 2012 as compared to $419.9 million for the same period of 2011.

During December 2011, the Company committed to a plan to exit South Africa and initiated a process to divest of its net assets in South Africa. In March 2012, the Company agreed to sell its net assets in South Africa to an unaffiliated third party, using a January 1, 2012 effective date, for net cash proceeds of $52.0 million, before normal closing adjustments. The sale is subject to certain regulatory approvals and is expected to close in mid-2012.

During February 2011, the Company completed the sale of 100 percent of the Company’s share holdings in Pioneer Tunisia to an unaffiliated party for net cash proceeds of $802.5 million, including normal post-closing adjustments and excluding cash and cash equivalents sold, resulting in a pretax gain of $645.2 million.

Discontinued operations for the three months ended March 31, 2012 include the historical results of operations of Pioneer South Africa. See Note Q of the Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for specific information regarding the Company’s discontinued operations.

Net income attributable to noncontrolling interest. Net income attributable to the noncontrolling interests for the three months ended March 31, 2012 was $6.3 million as compared to net loss attributable to the noncontrolling interests of $4.8 million for the same period of 2011. The $11.1 million increase in income attributable to noncontrolling interests for the three months ended March 31, 2012, as compared to the same period in 2011, is primarily due to fluctuations in Pioneer Southwest’s mark-to-market derivative gains and losses. See Note B of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding Pioneer Southwest and the Company’s noncontrolling interests.

Capital Commitments, Capital Resources and Liquidity

Capital commitments. The Company’s primary needs for cash are for capital expenditures and acquisition expenditures on oil and gas properties and related vertical integration assets and facilities, payment of contractual obligations, dividends/distributions and working capital obligations. Funding for these cash needs may be provided by any combination of internally-generated cash flow, proceeds from the disposition of nonstrategic assets or external financing sources as discussed in “Capital resources” below.

The Company’s capital budget for 2012 is focused on oil- and liquids-rich-gas drilling activities with total expenditures of $2.8 billion (excluding effects of acquisitions, asset retirement obligations, capitalized interest and geological and geophysical administrative costs), consisting of $2.4 billion for drilling operations and $400 million for vertical integration additions, including the April 2012 acquisition of Premier Silica for $297.0 million. Based on results for the first quarter of 2012 and Management’s Price Outlook, the Company expects its cash flows from operating activities and availability under its credit facility to be sufficient to fund its planned capital expenditures and contractual obligations for 2012.

PIONEER NATURAL RESOURCES COMPANY

Investing activities. Investing activities used $679.7 million of cash during the three months ended March 31, 2012 as compared to $334.2 million of cash provided from investing activities during the three months ended March 31, 2011. The $1.0 billion change in investing activities for the three months ending March 31, 2012, as compared to the three months ended March 31, 2011, is primarily due to (i) a $752.0 million decrease in proceeds from disposition of assets primarily attributable to the first quarter 2011 sale of Pioneer Tunisia and (ii) a $368.4 million increase in additions to oil and gas properties, partially offset by (iii) a $69.4 million decrease in additions to other assets and other property and equipment, primarily comprised of purchases of drilling rigs, fracture stimulation equipment and well servicing equipment used in the Company’s vertical integration services and (iv) a $37.0 million decrease in investments in EFS Midstream. During the three months ended March 31, 2012, the Company’s investing activities were funded by net cash provided by operating activities, cash on hand and borrowings under its credit facility.

Dividends/distributions. During February of both 2012 and 2011, the Company’s board of directors (“the Board”) declared semiannual dividends of $0.04 per common share. Future dividends are at the discretion of the Board, and, if declared, the Board may change the current dividend amount based on the Company’s liquidity and capital resources at the time.

During January 2012, the Pioneer Southwest board of directors (the “Pioneer Southwest Board”) declared a quarterly distribution of $0.51 per limited partner unit, respectively, compared to the quarterly distributions of $0.50 per limited partner unit declared in January 2011. Associated therewith, Pioneer Southwest paid aggregate distributions to noncontrolling unitholders of $8.7 million and $6.3 million during the three months ended March 31, 2012 and 2011, respectively. During April 2012, the Pioneer Southwest Board declared a quarterly distribution of $0.52 per limited partner unit for the period from January 1, 2012 to March 31, 2012. The distribution is payable on May 11, 2012 to unitholders of record at the close of business on May 4, 2012. Future distributions by Pioneer Southwest are at the discretion of the Pioneer Southwest Board, and, if declared, the Pioneer Southwest Board may change the distribution amount based on Pioneer Southwest’s liquidity and capital resources at the time.

Contractual obligations, including off-balance sheet obligations. The Company’s contractual obligations include long-term debt, operating leases, drilling commitments, derivative obligations, other liabilities, transportation commitments, VPP obligations and EFS Midstream capital funding commitments. From time-to-time, the Company enters into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations of the Company. As of March 31, 2012, the material off-balance sheet arrangements and transactions that the Company has entered into included (i) undrawn letters of credit, (ii) operating lease agreements, (iii) drilling, gathering, treating, fractionation and transportation commitments, (iv) open purchase commitments, (v) a VPP obligation (to physically deliver volumes and pay related lease operating expenses and capital costs in the future), (vi) take-or-pay obligations that allow the payer to recover make up volumes in the future and (vii) contractual obligations for which the ultimate settlement amounts are not fixed and determinable, such as derivative contracts that are sensitive to future changes in commodity prices or interest rates. Other than the off-balance sheet arrangements described above, the Company has no transactions, arrangements or other relationships with unconsolidated entities or other parties that are reasonably likely to materially affect the Company’s liquidity or availability of or requirements for capital resources. Since December 31, 2011, the material changes in the Company’s contractual obligations include (i) a $91.7 million increase in outstanding long-term debt, (ii) a $10.5 million decrease in the Company’s VPP obligations and (iii) a $28.1 million increase in the Company’s derivative net assets. During 2011, EFS Midstream entered into a $300 million, five-year revolving credit facility to fund infrastructure investments that are in excess of operating cash flow; accordingly, future capital needs of EFS Midstream are expected to be funded from its operating cash flow and the borrowings under its credit facility.

The Company periodically measures and records certain assets and liabilities at fair value. The assets and liabilities that the Company periodically measures and records at fair value include trading securities, deferred compensation plan assets, commodity derivative contracts and interest rate derivative contracts. See Note D of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding these assets and liabilities and the valuation techniques used to measure their fair values.

The Company’s commodity and interest rate derivative contracts that are periodically measured and recorded at fair value represent those derivatives that continue to be subject to market or credit risk. As of March 31, 2012, these contracts represented net assets of $402.2 million. The ultimate liquidation value of the Company’s commodity and interest rate derivatives that are subject to market risk will be dependent upon actual future commodity prices and interest rates, which may differ materially from the inputs used to determine the derivatives’ fair values as of March

PIONEER NATURAL RESOURCES COMPANY

31, 2012. See Note G of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” and “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for additional information about the Company’s derivative instruments and market risk.

Capital resources. The Company’s primary capital resources are net cash provided by operating activities, proceeds from sales of nonstrategic assets and proceeds from financing activities (principally borrowings under the Company’s credit facility). If internal cash flows and cash on hand do not meet the Company’s expectations, the Company may reduce its level of capital expenditures, reduce dividend payments, and/or fund a portion of its capital expenditures using availability under its credit facility, issuances of debt or equity securities or from other sources, such as asset sales or joint ventures.

Operating activities. Net cash provided by operating activities during the three months ended March 31, 2012 was $426.1 million as compared to $143.2 million during the same period of 2011. The increase in net cash provided by operating activities for the three months ended March 31, 2012, as compared to the three months ended March 31, 2011, is primarily due to increases in oil and gas sales volumes, oil prices, realized derivative gains and working capital changes.

Asset divestitures. During the first quarter of 2012, the Company completed a sale of a portion of its interest in an unproved oil and gas property in the Eagle Ford Shale to unaffiliated third parties for proceeds of $55.2 million. Associated therewith, the Company recorded a pretax gain of $43.1 million.

During February 2011, the Company completed the sale of 100 percent of the Company’s share holdings in Pioneer Tunisia to an unaffiliated third party for net cash proceeds of $802.5 million, including normal post-closing adjustments and excluding cash and cash equivalents sold, resulting in a pretax gain of $645.2 million. See Note Q of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for information regarding the Company’s discontinued operations.

See Note N of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for information regarding the Company’s divestitures.

Financing activities. Net cash provided by financing activities during the three months ended March 31, 2012 was $33.0 million as compared to net cash used in financing activities of $67.9 million during the three months ended 2011. The $101.0 million increase in cash provided by financing activities during the three months ended March 31, 2012, as compared to the three months ended March 31, 2011, is primarily due to (i) a $130.2 million increase in net borrowings on long-term debt, partially offset by (ii) a $20.4 million increase in treasury stock purchases from employees to satisfy employee withholding tax payments on the vesting of share-based awards and (iii) a $15.1 million decrease in excess tax benefits from share-based payment arrangements.

During March 2012, Pioneer Southwest entered into the Pioneer Southwest Credit Facility with a syndicate of financial institutions that matures in March 2017, unless extended in accordance with the terms of the Pioneer Southwest Credit Facility. The Pioneer Southwest Credit Facility provides for aggregate loan commitments of $300 million. As of March 31, 2012, the Company had $50.0 outstanding borrowings under the Pioneer Southwest Credit Facility. See Note F of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for information about the available loans, interest rates and debt covenant terms of the Company’s credit facility and the Pioneer Southwest Credit Facility.

Effective April 1, 2012, the Company’s 2.875% Convertible Senior Notes become convertible at the option of the holders for the quarter ended June 30, 2012, and may become convertible in future quarters depending on the Company’s stock price or other conditions. If the 2.875% Convertible Senior Notes had qualified for and been converted as of March 31, 2012, the note holders would have received $479.9 million of cash and approximately 3.5 million shares of the Company’s common stock, which was valued at $386.1 million at March 31, 2012. The Company has the intent and ability to fund cash payments that may be required for conversions, redemptions or repurchases of the 2.875% Convertible Senior Notes with available borrowing capacity under the corporate credit facility. The 2.875% Convertible Senior Notes will be redeemable by the Company on or after January 15, 2013 and the holders may require the Company to repurchase the notes for cash on January 15, 2013 and certain other future dates. See Note F of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for more information about the Company’s 2.875% Convertible Senior Notes.

As the Company pursues its strategy, it may utilize various financing sources, including, to the extent available, 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 Board.

PIONEER NATURAL RESOURCES COMPANY

Liquidity. The Company’s principal sources of short-term liquidity are cash on hand and unused borrowing capacity under its credit facility. As of March 31, 2012, the Company had $67.0 million in outstanding borrowings under its credit facility and was in compliance with all of its debt covenants. After adjusting for $65.1 million of undrawn and outstanding letters of credit under its credit facility, the Company had $1.1 billion of unused borrowing capacity as of March 31, 2012. If internal cash flows and cash on hand do not meet the Company’s expectations, the Company may reduce its level of capital expenditures, reduce dividend payments, and/or fund a portion of its capital expenditures using borrowings under its credit facility, issuances of debt or equity securities or other sources, such as asset sales or joint ventures. The Company cannot provide any assurance that needed short-term or long-term liquidity will be available on acceptable terms or at all. Although the Company expects that internal operating cash flows, cash on hand and available capacity under the Company’s credit facility will be adequate to fund 2012 capital expenditures and dividend/distribution payments and provide adequate liquidity to fund other needs, no assurances can be given that such funding sources will be adequate to meet the Company’s future needs.

Debt ratings. The Company receives debt credit ratings from several of the major ratings agencies, which are subject to regular reviews. The Company believes that each of the rating agencies considers many factors in determining the Company’s ratings including: production growth opportunities, liquidity, debt levels, asset composition and proved reserve mix. A reduction in the Company’s debt ratings could negatively impact the Company’s ability to obtain additional financing or the interest rate, fees and other terms associated with such additional financing. In November 2011, the Company achieved an investment grade rating with one of the credit rating agencies and in March 2012 was moved to positive outlook with another one of the credit rating agencies.

Book capitalization and current ratio. The Company’s net book capitalization at March 31, 2012 was $8.1 billion, consisting of $316.9 million of cash and cash equivalents, debt of $2.6 billion and equity of $5.8 billion. The Company’s net debt to net book capitalization was 28 percent and 31 percent at March 31, 2012 and December 31, 2011, respectively. The Company’s ratio of current assets to current liabilities was 1.23 to 1.00 at March 31, 2012 as compared to 1.46 to 1.00 at December 31, 2011.

New accounting pronouncements. The effects of new accounting pronouncements are discussed in Note B of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements.”

PIONEER NATURAL RESOURCES COMPANY

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The following quantitative and qualitative disclosures about market risk are supplementary to the quantitative and qualitative disclosures provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. As such, the information contained herein should be read in conjunction with the related disclosures in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about the Company’s potential exposure to market risks. The term “market risks,” insofar as it relates to currently anticipated transactions of the Company, refers to the risk of loss arising from changes in commodity prices, foreign exchange rates and interest rates. These disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how the Company views and manages ongoing market risk exposures. None of the Company’s market risk sensitive instruments are entered into for speculative purposes.

The following table reconciles the changes that occurred in the fair values of the Company’s open derivative contracts during the three months ending March 31, 2012:


	Derivative Contract Net Assets
	Commodities			Interest Rates			Total
	(in thousands)
Fair value of contracts outstanding as of December 31, 2011	$	389,753		$	(15,654	)	$	374,099
Changes in contract fair value (a)		88,130			3,620			91,750
Contract maturities		(61,892	)		—			(61,892	)
Contract terminations (b)		(1,804	)		—			(1,804	)

Fair value of contracts outstanding as of March 31, 2012	$	414,187		$	(12,034	)	$	402,153

(a)	At inception, new derivative contracts entered into by the Company had no intrinsic value.

(b)	During the three months ended March 31, 2012, the Company terminated diesel contracts for 500 Bbls per day with an average swap price of $3.09 per gallon.

Interest rate sensitivity. See Note F of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” and Capital Commitments, Capital Resources and Liquidity included in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information regarding debt transactions.

The following table provides information about financial instruments to which the Company was a party as of March 31, 2012 and that are sensitive to changes in interest rates. For debt obligations, the table presents maturities by expected maturity dates, the weighted average interest rates expected to be paid on the debt given current contractual terms and market conditions and the debt’s estimated fair value. For fixed rate debt, the weighted average interest rate represents the contractual fixed rates that the Company was obligated to periodically pay on the debt as of March 31, 2012. 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 LIBOR on May 1, 2012.

PIONEER NATURAL RESOURCES COMPANY


	Nine Months Ending December 31,			Year Ending December 31,																	Liability Fair Value at March 31,
	2012			2013			2014			2015			2016			Thereafter			Total		2012
	($ in thousands)
Total Debt:
Fixed rate principal maturities (a)	$	—		$	479,930		$	—		$	—		$	455,385		$	1,634,600		$	2,569,915	$	(3,348,676	)
Weighted average interest rate		6.05	%		6.74	%		6.77	%		6.78	%		6.88	%		7.23	%
Variable rate principal maturities:
Pioneer Natural Resources credit facility	$	—		$	—		$	—		$	—		$	67,000		$	—		$	67,000	$	(86,610	)
Weighted average interest rate		2.24	%		2.32	%		2.62	%		3.10	%		3.33	%
Pioneer Southwest credit facility	$	—		$	—		$	—		$	—		$	—		$	50,000		$	50,000	$	(50,481	)
Weighted average interest rate		2.12	%		2.20	%		2.50	%		2.98	%		3.21	%		3.28	%
Interest Rate Swaps:
Notional debt amount (b)	$	117,222		$	—		$	—		$	—		$	—		$	—				$	(12,034	)
Fixed rate payable (%)		3.06	%		—			—			—			—			—
Variable rate receivable (%)		0.49	%		—			—			—			—			—

(a)	Represents maturities of principal amounts excluding debt issuance discounts and premiums and net deferred fair value hedge losses.

(b)

Represents weighted average notional contract amounts of interest rate derivatives. Subsequent to March 31, 2012, the Company entered into additional interest rate derivative contracts that lock in a fixed forward annual interest rate of 3.21%, for a 10-year period ending in December 2025, on a notional amount of $250 million. These derivative contracts mature and settle by their terms during December 2015.

Commodity derivative instruments and price sensitivity. The following table provides information about the Company’s oil, NGL and gas derivative financial instruments that were sensitive to changes in oil, NGL and gas prices as of March 31, 2012. Although mitigated by the Company’s derivative activities, declines in oil, NGL and gas prices would reduce the Company’s revenues.

The Company manages commodity price risk with derivative contracts, such as 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 minimum (“floor” or “long put”) and maximum (“ceiling”) prices on a notional amount of sales volumes, thereby allowing some 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 the variable market prices by the long put-to-short put price differential.

See Note G of Notes to Consolidated Financial Statements included in “Item 1. Financial Statements” for a description of the accounting procedures followed by the Company relative to its derivative financial instruments and for specific information regarding the terms of the Company’s derivative financial instruments that are sensitive to changes in oil, NGL or gas prices.

PIONEER NATURAL RESOURCES COMPANY


	Nine Months Ending December 31,			Year Ending December 31,								Asset (Liability) Fair Value at March 31,
	2012			2013			2014			2015		2012
												(in thousands)
Oil Derivatives:
Average daily notional Bbl volumes:
Collar contracts with short puts (a)		48,301			67,290			30,000			—	$	(75,257	)
Weighted average ceiling price per Bbl	$	118.51		$	120.61		$	123.39		$	—
Weighted average floor price per Bbl	$	83.72		$	88.88		$	90.33		$	—
Weighted average short put price per Bbl	$	67.97		$	71.72		$	73.17		$	—
Collar contracts		2,000			—			—			—	$	553
Weighted average ceiling price per Bbl	$	127.00		$	—		$	—		$	—
Weighted average floor price per Bbl	$	90.00		$	—		$	—		$	—
Swap contracts		3,000			3,000			—			—	$	(44,659	)
Weighted average fixed price per Bbl	$	79.32		$	81.02		$	—		$	—
Average forward NYMEX oil prices (b)	$	106.74		$	105.15		$	99.67		$	—
Rollfactor swap contracts		665			6,000			—			—	$	213
Weighted average fixed price per Bbl (c)	$	0.28		$	0.43		$	—		$	—
Average forward rollfactor prices (b)	$	(0.10	)	$	0.53		$	—		$	—
Basis swap contracts		13,382			—			—			—	$	785
Weighted average fixed price per MMBtu	$	(1.15	)	$	—		$	—		$	—
Average forward basis differential prices (d)	$	(2.59	)	$	—		$	—		$	—
NGL Derivatives:
Average daily notional Bbl volumes:
Collar contracts with short puts		3,000			—			—			—	$	6,764
Weighted average ceiling price per Bbl	$	79.99		$	—		$	—		$	—
Weighted average floor price per Bbl	$	67.70		$	—		$	—		$	—
Weighted average short put price per Bbl	$	55.76		$	—		$	—		$	—
Swap contracts		750			—			—			—	$	(3,194	)
Weighted average fixed price per Bbl	$	35.03		$	—		$	—		$	—
Average forward NGL prices (e)	$	61.62		$	—		$	—		$	—
Gas Derivatives:
Average daily notional MMBtu volumes:
Collar contracts with short puts		—			—			60,000			30,000	$	27,694
Weighted average ceiling price per MMBtu	$	—		$	—		$	7.80		$	7.11
Weighted average floor price per MMBtu	$	—		$	—		$	5.83		$	5.00
Weighted average short put price per MMBtu	$	—		$	—		$	4.42		$	4.00
Collar contracts		65,000			150,000			140,000			50,000	$	206,943
Weighted average ceiling price per MMBtu	$	6.60		$	6.25		$	6.44		$	7.92
Weighted average floor price per MMBtu	$	5.00		$	5.00		$	5.00		$	5.00
Swap contracts		275,000			112,500			50,000			—	$	308,651
Weighted average fixed price per MMBtu	$	4.97		$	5.62		$	6.05		$	—
Average forward NYMEX gas prices (b)	$	2.68		$	3.50		$	3.90		$	4.11
Basis swap contracts		136,000			142,500			115,000			—	$	(14,250	)
Weighted average fixed price per MMBtu	$	(0.34	)	$	(0.22	)	$	(0.23	)	$	—
Average forward basis differential prices (f)	$	(0.11	)	$	(0.13	)	$	(0.16	)	$	—

(a)	Subsequent to March 31, 2012, the Company entered into additional collar contracts with short puts for 10,000 Bbls per day of the Company’s 2014 production with a ceiling price of $120.93 per Bbl, a floor price of $95.00 per Bbl and a short put price of $80.00 per Bbl.

(b)	The average forward NYMEX oil and gas prices are based on May 1, 2012 market quotes.

(c)

Represents swaps that fix the difference between (i) each day’s price per Bbl of WTI for the first nearby month less (ii) the price per Bbl of WTI for the second nearby NYMEX month, multiplied by .6667; plus (iii) each day’s price per Bbl of WTI for the first nearby month less (iv) the price per Bbl of WTI for the third nearby NYMEX month, multiplied by .3333.

PIONEER NATURAL RESOURCES COMPANY

(d)	The average forward basis differential prices are based on May 1, 2012 market quotes for basis differentials between Midland WTI and Cushing WTI.

(e)	Forward component NGL prices are derived from active-market NGL component price quotes as of May 1, 2012.

(f)	The average forward basis differential prices are based on May 1, 2012 market quotes for basis differentials between the relevant index prices and NYMEX-quoted forward prices.

Marketing and basis transfer derivative instruments and price sensitivity. The Company manages commodity price risk and mitigates firm transportation commitment costs with derivative contracts. Periodically, the Company enters into gas buy and sell marketing arrangements to fulfill firm pipeline transportation commitments. Associated with these marketing arrangements, the Company may enter into gas index swaps to mitigate price risk. From time to time, the Company also enters into long and short gas swap contracts that transfer gas basis risk from one sales index to another sales index.

The following table provides information about the Company’s marketing and basis transfer derivative financial instruments that were sensitive to changes in gas prices as of March 31, 2012. Although mitigated by the Company’s derivative activities, declines in gas prices would reduce the Company’s future cash resources.


	Three months ended June 30, 2012			Liability Fair Value at March 31, 2012
				(in thousands)
Average Daily Gas Production Associated with Marketing Derivatives (MMBtu):
Basis Swap Contracts:
Index swap volume (a)		13,297		$	(46	)
Price differential ($/MMBtu)	$	0.15
Average forward basis differential prices (b)	$	0.11
Average Daily Gas Production Associated with Basis Transfer Derivatives (MMBtu):
Basis Swap Contracts:
Index swap volume (c)		1,648		$	(10	)
NGI-So Cal Border Monthly price differential to NYMEX HH ($/MMBtu)	$	0.13
Index swap volume (c)		(1,648	)
IF-HSC price differential to NYMEX HH ($/MMBtu)	$	(0.06	)
Average forward basis differential prices (b)	$	0.20

(a)	Subsequent to March 31, 2012, the Company entered into additional marketing basis swap contracts for 30,000 MMBtus per day for May 2012 with a price of $0.28 and for 40,000 MMBtus per day for the period June through October 2012 with a price of $0.25 per MMBtu.

(b)	The average forward basis differential prices are based on May 1, 2012 market quotes for basis differentials between the relevant index prices and NYMEX-quoted forward prices.

(c)

PIONEER NATURAL RESOURCES COMPANY

Item 4.

Controls and Procedures

Evaluation of disclosure controls and procedures. The Company’s management, with the participation of its principal executive officer and principal financial officer, have evaluated, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Report. Based on that evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this Report, in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including that such information is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2012 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PIONEER NATURAL RESOURCES COMPANY

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

The Company is party to various proceedings and claims incidental to its business. While many of these matters involve inherent uncertainty, the Company believes that the amount of the liability, if any, ultimately incurred with respect to such proceedings and claims will not have a material adverse effect on the Company’s consolidated financial position as a whole or on its liquidity, capital resources or future annual results of operations.

Item 1A .

Risk Factors

In addition to the other information set forth in this Report, you should carefully consider the risks discussed in the Company’s Annual Report on Form 10-K under the headings “Part I Item 1. Business – Competition, Markets and Regulations,” “Part I, Item 1A. Risk Factors” and “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk,” which risks could materially affect the Company’s business, financial condition or future results. Except as set forth below, there has been no material change in the Company’s risk factors from those described in the Annual Report on Form 10-K.

The Company’s sand mining operations are subject to operating risks that are often beyond the Company’s control, and such risks may not be covered by insurance.

Ownership of industrial sand mining operations are subject to risks, many of which are beyond the Company’s control. These risks include:

•

unusual or unexpected geological formations or pressures;

•

cave-ins, pit wall failures or rock falls;

•

unanticipated ground, grade or water conditions;

•

inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change;

•

environmental hazards;

•

changes in laws and regulations (or the interpretation thereof);

•

inability to acquire or maintain necessary permits or mining or water rights;

•

restrictions on blasting operations;

•

inability to obtain necessary production equipment or replacement parts;

•

reduction in the amount of water available for processing;

•

technical difficulties or failures;

•

labor disputes;

•

late delivery of supplies; and

•

fires, explosions or other accidents

Any of these risks could result in damage to, or destruction of, the Company’s mining properties or production facilities, personal injury, environmental damage, delays in mining or processing, losses or possible legal liability. Not all of these risks are insurable, and the Company’s insurance coverage contains limits, deductibles, exclusions and endorsements. The Company’s insurance coverage may not be sufficient to meet its needs in the event of loss and any such loss may have a material adverse effect on the Company.

The Company’s estimates of mineral reserves and resource deposits are imprecise and actual reserves could be less than estimated.

The Company bases its mineral reserve and resource estimates on engineering, economic and geological data assembled and analyzed by engineers and geologists, which are reviewed by outside firms. However, commercial sand reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable. There are numerous uncertainties inherent in estimating quantities and qualities of commercial sand reserves and costs to mine recoverable reserves, including many factors beyond the Company’s control. Estimates of economically recoverable commercial sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:

•

geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience;

PIONEER NATURAL RESOURCES COMPANY

•

assumptions concerning future prices of commercial sand products, operating costs, mining technology improvements, development costs and reclamation costs; and

•

assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies.

The Company’s sand mining operations are subject to extensive environmental and health and safety regulations that impose significant costs and potential liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect the Company’s results of operations.

The Company’s sand mining operations are subject to a variety of federal, state and local regulatory environmental requirements affecting the mining and mineral processing industry, including among others, those relating to employee health and safety, environmental permitting and licensing, air and water emissions, greenhouse gas emissions, water pollution, waste management, remediation of soil and groundwater contamination, land use, reclamation and restoration of properties, hazardous materials and natural resources. Some environmental laws impose substantial penalties for noncompliance, and others, such as the federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), impose strict, retroactive and joint and several liability for the remediation of releases of hazardous substances. Failure to properly handle, transport, store or dispose of hazardous materials or otherwise conduct the Company’s sand mining operations in compliance with environmental laws could expose the Company to liability for governmental penalties, cleanup costs and civil or criminal liability associated with releases of such materials into the environment, damages to property or natural resources and other damages, as well as potentially impair the Company’s ability to conduct its sand mining operations. In addition, future environmental laws and regulations could restrict the Company’s ability to expand its facilities or extract mineral deposits or could require the Company to acquire costly equipment or to incur other significant expenses in connection with its sand mining operations. Future events, including changes in any environmental requirements (or their interpretation or enforcement) and the costs associated with complying with such requirements, could have a material adverse effect on the Company’s sand mining operations.

Any failure by the Company to comply with applicable environmental laws and regulations in connection with its sand mining operations may cause governmental authorities to take actions that could adversely impact the Company, including:

•

issuance of administrative, civil and criminal penalties;

•

denial, modification or revocation of permits or other authorizations;

•

imposition of injunctive obligations or other limitations on the Company’s operations, including cessation of operations; and

•

requirements to perform site investigatory, remedial or other corrective actions.

In addition to environmental regulation, the Company’s sand mining operations are subject to laws and regulations relating to human exposure to crystalline silica. Several federal and state regulatory authorities, including the U.S. Mining Safety and Health Administration, may continue to propose changes in their regulations regarding workplace exposure to crystalline silica, such as permissible exposure limits and required controls and personal protective equipment.

The Company’s sand mining operations are subject to the Federal Mine Safety and Health Act of 1977, which imposes stringent health and safety standards on numerous aspects of the Company’s sand mining operations.

The Company’s sand mining operations are subject to the Federal Mine Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006, which imposes stringent health and safety standards on numerous aspects of mineral extraction and processing operations, including the training of personnel, operating procedures, operating equipment and other matters. The Company’s failure to comply with such standards, or changes in such standards or the interpretation or enforcement thereof, could have a material adverse effect on the Company’s sand mining operations or otherwise impose significant restrictions on the Company’s ability to conduct mineral extraction and processing operations.

PIONEER NATURAL RESOURCES COMPANY

The Company’s sand mining operations are subject to extensive other regulations, including licensing, plant and wildlife protection and reclamation regulation, that impose significant costs and liabilities.

In addition to the health, safety and environmental regulation discussed above, the Company’s sand mining operations are also subject to extensive governmental regulation on matters such as permitting and licensing requirements, plant and wildlife protection, wetlands protection, reclamation and restoration of mining properties after mining is completed, and the effects that mining have on groundwater quality and availability. In addition, the Company’s sand mining operations require numerous governmental, environmental, mining and other permits, water rights and approvals authorizing operations at each sand mining facility.

In order to obtain permits and renewals of permits in the future for its sand mining operations, the Company may be required to prepare and present data to governmental authorities pertaining to the impact that any such activities may have on the environment. Obtaining or renewing required permits may be delayed or prevented due to opposition by neighboring property owners, members of the public or other third parties, and other factors beyond the Company’s control. A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on the Company’s sand mining operations at the affected facility. Current or future regulations could have a material adverse effect on the Company’s sand mining operations and the Company may not be able to renew or obtain permits in the future.

The Company’s sand mining operations entail silica-related health issues and litigation that could have a material adverse effect on the Company.

The inhalation of respirable crystalline silica is associated with the lung disease silicosis. There is evidence of an association between crystalline silica exposure or silicosis and lung cancer and a possible association with other diseases, including immune system disorders such as scleroderma. These health risks have been, and may continue to be, a significant issue confronting the commercial sand industry. The actual or perceived health risks of mining, processing and handling sand could materially and adversely affect the Company through the threat of product liability or employee lawsuits and increased scrutiny by federal, state and local regulatory authorities.

Premier Silica is named as a defendant, usually among many defendants, in numerous products liability lawsuits brought by or on behalf of current or former employees of Premier Silica’s customers alleging damages caused by silica exposure. As of May 1, 2012, Premier Silica was the subject of approximately 2,500 silica exposure claims, the great majority of which have been inactive for many years due to the plaintiffs’ failure to meet specific legal requirements to advance their claims. Almost all of the claims pending against Premier Silica arise out of the alleged use of Premier Silica’s sand products in foundries or as an abrasive blast media and have been filed in the states of Texas, Louisiana, Florida and West Virginia, although some cases have been brought in many other jurisdictions over the years.

PIONEER NATURAL RESOURCES COMPANY

It is possible that Premier Silica will continue to have silica-related products liability claims filed against it, including claims that allege silica exposure for periods for which there is not insurance coverage. Any pending or future claims or inadequacies of insurance coverage or indemnification from the seller could have a material adverse effect on the Company’s results of operations.

These risks are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition or future results.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table summarizes the Company’s purchases of treasury stock under plans or programs during the three months ended March 31, 2012:


Period	Total Number of Shares (or Units) Purchased (a)		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs		Approximate Dollar Amount of Shares that May Yet Be Purchased under Plans or Programs
January 2012		153,159	$	92.63		—
February 2012		279,725	$	113.42		—
March 2012		94,098	$	108.55		—

Total		526,982	$	106.51		—	$	—

(a)	Consists of shares purchased from employees in order for the employee to satisfy tax withholding payments related to share-based awards that vested during the period.

Item 4.

Mine Safety Disclosures

Not applicable.

PIONEER NATURAL RESOURCES COMPANY

Item 6.

Exhibits

Exhibits


Exhibit Number		Description
10.1	—	Amended and Restated Credit Agreement entered into as of March 29, 2012, among Pioneer Southwest Energy Partners L.P., as the Borrower, Bank of America, N.A., as Administrative Agent, and certain other lenders (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Pioneer Southwest Energy Partners L.P., File No. 001-34032, filed with the SEC on April 3, 2012).

10.2	(a) —	Form of Restricted Stock Award Agreement between the Company and Timothy L. Dove, with respect to annual awards made under the Company’s 2006 Long-Term Incentive Plan, together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers who received this award and identifying the material differences between each of those agreements and the filed Restricted Stock Award Agreement.

10.3	(a) —	Form of Performance Unit Award Agreement between the Company and each of Scott D. Sheffield and Timothy L. Dove, with respect to awards made under the Company’s 2006 Long-Term Incentive Plan, together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers and identifying the material differences between each of those agreements and the filed Performance Unit Award Agreement.

10.4	(a) —	Form of Restricted Stock Unit Agreement between the Company and Scott D. Sheffield, with respect to annual awards made under the Company’s 2006 Long Term Incentive Plan together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers who received this award and identifying the material differences between each of those agreements and the filed Restricted Stock Unit Agreement.

10.5	(a) —	Form of Nonstatutory Stock Option Agreement between the Company and each of Scott D. Sheffield and Timothy L. Dove, with respect to awards made under the Company’s 2006 Long-Term Incentive Plan, together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers and identifying the material differences between each of those agreements and the filed Nonstatutory Stock Option Agreement.

10.6	(a) —	Form of Restricted Stock Award Agreement between the Company and executive officers of the Company with respect to retention awards made under the Company’s 2006 Long-Term Incentive Plan.

10.7	(a) —	Form of Restricted Stock Unit Award Agreement between the Company and executive officers of the Company with respect to retention awards made under the Company’s 2006 Long-Term Incentive Plan.

10.8	(a) —	Amendment No. 7 to the Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan, executed April 2, 2012.

31.1	(a) —	Chief Executive Officer certification under Section 302 of Sarbanes-Oxley Act of 2002.

31.2	(a) —	Chief Financial Officer certification under Section 302 of Sarbanes-Oxley Act of 2002.

32.1	(b) —	Chief Executive Officer certification under Section 906 of Sarbanes-Oxley Act of 2002.

32.2	(b) —	Chief Financial Officer certification under Section 906 of Sarbanes-Oxley Act of 2002.

101.INS	(a) —	XBRL Instance Document.

101.SCH	(a) —	XBRL Taxonomy Extension Schema.

101.CAL	(a) —	XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	(a) —	XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	(a) —	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	(a) —	XBRL Taxonomy Extension Presentation Linkbase Document.

(a)	Filed herewith.

(b)	Furnished herewith.

PIONEER NATURAL RESOURCES COMPANY

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.


	PIONEER NATURAL RESOURCES COMPANY

Date: May 7, 2012	By:	/s/ R ICHARD P. D EALY
		Richard P. Dealy
		Executive Vice President and Chief Financial Officer

Date: May 7, 2012	By:	/s/ F RANK W. H ALL
		Frank W. Hall
		Vice President and Chief Accounting Officer

PIONEER NATURAL RESOURCES COMPANY

Exhibit Index


Exhibit Number		Description
10.1	—	Amended and Restated Credit Agreement entered into as of March 29, 2012, among Pioneer Southwest Energy Partners L.P., as the Borrower, Bank of America, N.A., as Administrative Agent, and certain other lenders (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Pioneer Southwest Energy Partners L.P., File No. 001-34032, filed with the SEC on April 3, 2012).

10.2	(a) —	Form of Restricted Stock Award Agreement between the Company and Timothy L. Dove, with respect to annual awards made under the Company’s 2006 Long-Term Incentive Plan, together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers who received this award and identifying the material differences between each of those agreements and the filed Restricted Stock Award Agreement.

10.3	(a) —	Form of Performance Unit Award Agreement between the Company and each of Scott D. Sheffield and Timothy L. Dove, with respect to awards made under the Company’s 2006 Long-Term Incentive Plan, together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers and identifying the material differences between each of those agreements and the filed Performance Unit Award Agreement.

10.4	(a) —	Form of Restricted Stock Unit Agreement between the Company and Scott D. Sheffield, with respect to annual awards made under the Company’s 2006 Long Term Incentive Plan together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers who received this award and identifying the material differences between each of those agreements and the filed Restricted Stock Unit Agreement.

10.5	(a) —	Form of Nonstatutory Stock Option Agreement between the Company and each of Scott D. Sheffield and Timothy L. Dove, with respect to awards made under the Company’s 2006 Long-Term Incentive Plan, together with a schedule identifying other substantially identical agreements between the Company and each of its other executive officers and identifying the material differences between each of those agreements and the filed Nonstatutory Stock Option Agreement.

10.6	(a) —	Form of Restricted Stock Award Agreement between the Company and executive officers of the Company with respect to retention awards made under the Company’s 2006 Long-Term Incentive Plan.

10.7	(a) —	Form of Restricted Stock Unit Award Agreement between the Company and executive officers of the Company with respect to retention awards made under the Company’s 2006 Long-Term Incentive Plan.

10.8	(a) —	Amendment No. 7 to the Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan, executed April 2, 2012.

31.1	(a) —	Chief Executive Officer certification under Section 302 of Sarbanes-Oxley Act of 2002.

31.2	(a) —	Chief Financial Officer certification under Section 302 of Sarbanes-Oxley Act of 2002.

32.1	(b) —	Chief Executive Officer certification under Section 906 of Sarbanes-Oxley Act of 2002.

32.2	(b) —	Chief Financial Officer certification under Section 906 of Sarbanes-Oxley Act of 2002.

101.INS	(a) —	XBRL Instance Document.

101.SCH	(a) —	XBRL Taxonomy Extension Schema.

101.CAL	(a) —	XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	(a) —	XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	(a) —	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	(a) —	XBRL Taxonomy Extension Presentation Linkbase Document.

(a)	Filed herewith.

(b)	Furnished herewith.

EXHIBIT 10.2

RESTRICTED STOCK AWARD AGREEMENT

PIONEER NATURAL RESOURCES COMPANY

2006 LONG TERM INCENTIVE PLAN

, 20

To: Timothy L. Dove:

Pioneer Natural Resources Company, a Delaware corporation (the “ Company ”), is pleased to grant you an award (this “ Award ”) to receive an aggregate of shares (the “ Restricted Shares ”) of common stock, par value $0.01, of the Company (the “ Stock ”). This Award is subject to your acceptance of and agreement to all the applicable terms, conditions and restrictions described in this Restricted Stock Award Agreement (the “ Agreement ”) and the Pioneer Natural Resources Company 2006 Long Term Incentive Plan (the “ Plan ”). A copy of the Plan is available upon request. Except as provided below, to the extent that any provision of this Agreement conflicts with the expressly applicable terms of the Plan, you acknowledge and agree that those terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan. Terms that have their initial letters capitalized, but that are not otherwise defined in this Agreement, shall have the meanings given to them in the Plan in effect as of the date of this Agreement.

This Agreement sets forth the terms of the agreement between you and the Company with respect to the Restricted Shares. By accepting this Agreement, you agree to be bound by all of the terms hereof.

1. Escrow of Restricted Shares . The Company shall, at its sole election, either issue in your name a certificate for the Restricted Shares and retain that certificate for the period during which the restrictions described in Section 3 are in effect, or issue the Restricted Shares in your name electronically and control the Restricted Shares electronically during the period of restriction. You shall, if requested, execute and deliver to the Company a stock power in blank for the Restricted Shares and deliver such stock power to the Company. You hereby agree that the Company shall hold the certificate for, or control electronically, the Restricted Shares and the related stock power pursuant to the terms of this Agreement until such time as the restrictions described in Section 3 lapse as described in Sections 4, 5 and 6, or the Restricted Shares are cancelled pursuant to the terms of Section 3.

2. Ownership of Restricted Shares . From and after the time that a certificate (electronic or otherwise) has been issued in your name, you are entitled to all the rights of absolute ownership of the Restricted Shares, including the right to vote those shares and to receive dividends thereon if, as and when declared by the Board subject, however, to the terms, conditions and restrictions described in the Plan and in this Agreement.

3. Restrictions . The Restricted Shares are restricted in that they may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of until such restrictions are removed or expire as described in Section 4, 5 or 6 of this Agreement. The Restricted Shares are also restricted in the sense that they may be forfeited to the Company. You hereby agree that if the Restricted Shares are forfeited as provided in Section 6, you shall forfeit the Restricted Shares to the Company and all your rights thereto shall terminate without any payment of consideration by the Company. You hereby acknowledge that if issued, the certificate for the Restricted Shares, at the Company’s sole discretion, may bear a legend noted conspicuously thereon referring to the terms, conditions, and restrictions described in the Plan and in this Agreement. Any attempt to dispose of any Restricted Shares in contravention of the terms, conditions and restrictions described in the Plan or in this Agreement shall be ineffective.

4. Expiration of Restrictions and Risk of Forfeiture . Subject to the terms and conditions of this Agreement, the restrictions described in Section 3 shall lapse in full on the third anniversary of the date of this Agreement (the “ Vesting Date ”); provided, however, that such restrictions will expire on the Vesting Date only if you have been an employee of the Company or of a Subsidiary continuously from the date of this Agreement through the Vesting Date; provided, further, however, that if you cease to be an employee of the Company or of a Subsidiary for any reason after the Vesting Date, all Restricted Shares granted pursuant to this Agreement will survive the termination of employment.

5. Change in Control of the Company . Notwithstanding Section 4 of this Agreement, upon the occurrence of a Change in Control, all of the Restricted Shares subject to this Award shall become immediately and unconditionally vested and unrestricted.

6. Termination of Employment .

(a) Termination By Employee Without Good Reason . If your employment relationship with the Company or any of its Subsidiaries is terminated voluntarily by you prior to the Vesting Date and such termination is not a Termination for Good Reason (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then all Restricted Shares granted pursuant to this Agreement shall become null and void as of the date of such termination.

(b) Termination By The Company For Cause . If your employment relationship with the Company or any of its Subsidiaries is terminated by the Company prior to the Vesting Date and such termination is a Termination for Cause (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then all Restricted Shares granted pursuant to this Agreement shall become null and void as of the date of termination.

(c) Termination By The Company Not For Cause Or By Employee For Good Reason . If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date (x) by the Company and such Subsidiaries and such termination is not a Termination for Cause or (y) by you and such termination is a Termination for Good Reason, then all of the Restricted Shares subject to this Award shall become immediately and unconditionally vested and unrestricted.

(d) Other Termination Events . If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date as a result of any of the following events:

(i) your death;

(ii) your Disability; or

(iii) your Normal Retirement,

then the restrictions on a number of Restricted Shares shall automatically lapse such that the number of Restricted Shares for which the restrictions have lapsed as of your date of termination will be equal to the product of (i) the total number of Restricted Shares granted to you pursuant to this Agreement, times (ii) a fraction, the numerator of which is the number of full months (counting the month in which your termination of employment occurs as a full month), beginning with the first full month following the date of this Agreement, during which you were employed by the Company and/or any Subsidiary and the denominator of which is 36. The portion, if any, of your Restricted Shares for which restrictions have not lapsed as of the date of the termination of your employment relationship shall become null and void as of the date of termination; provided, however, that the portion, if any, of this Award for which forfeiture restrictions have lapsed as of the date of termination will survive.

For purposes of this Section 6(d), “ Disability ” shall have the meaning ascribed to it in the Severance Agreement between you and the Company or one of its Subsidiaries; and “ Normal Retirement ” shall mean the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed due to your retirement on or after the date you attain age 60.

7. Adjustment Provisions . In the event there is any change in the Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, the number of shares associated with the Award of Restricted Shares subject to this Agreement shall be adjusted in the manner consistent with the adjustment provisions provided in Section 9(b) and 9(c)(ii) of the Plan. Unless otherwise determined by the Committee, Stock distributed in connection with a stock split or stock divided shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Stock has been distributed.

8. Delivery of Stock . Promptly following the expiration of the restrictions on the Restricted Shares as contemplated in Sections 4, 5 and 6 of this Agreement, the Company shall cause to be issued and delivered to you or your designee a certificate representing the number of Restricted Shares as to which restrictions have lapsed, free of any restrictive legend relating to the lapsed restrictions, upon receipt by the Company of any tax withholding as may be requested. The value of such Restricted Shares shall not bear any interest owing to the passage of time.

9. Furnish Information . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

10. Remedies . The parties to this Agreement shall be entitled to recover from each other reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

11. Confidential Information and Nonsolicitation .

(a) As further consideration for the granting of the Restricted Shares hereunder, you hereby agree with the Company that, during and following your employment relationship with the Company and each of its Subsidiaries by which you are employed, you will keep confidential all confidential or proprietary information and materials, as well as all trade secrets, belonging to the Company or one of its Subsidiaries, or their customers or other third parties who furnished such information, materials, and/or trade secrets to the Company or its Subsidiary with expectations of confidentiality ( “ Confidential Information ” ). Confidential Information shall not include information that (A) is already properly in the public domain or enters the public domain with the express consent of the Company, or (B) is intentionally made available by the Company to third parties without any expectation of confidentiality. Upon the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed, you promise to promptly return to the Company all Confidential Information, and all documents and materials (including electronically stored information) in your possession, custody or control that constitutes or reflects Confidential Information. Notwithstanding the foregoing, you may disclose information as may be required by law and may disclose information in confidence to your spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan, provided that you ensure that such spouse or advisor or institution treats the information confidentially and does not disclose such information or use it for his, her or its own benefit. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor militating against the advisability of granting any such future award to you. Such consideration shall be in addition to the rights and remedies available to the Company pursuant to paragraph (d) below.

(b) As an incentive for the Company to issue you this Award, and in consideration of the Company’s promise to provide you with Confidential Information and so as to protect the Company’s legitimate business interests, including the protection of its Confidential Information and the goodwill with which you will be associated, and that this Award will encourage you to build, you agree that during your employment relationship with the Company and each of its Subsidiaries by which you are employed, and for a period of twelve (12) months immediately following the time that you are no longer employed by the Company or any of its Subsidiaries, you will not, directly or indirectly (i) solicit or encourage (or assist another in soliciting or encouraging) any employee, contractor, consultant, supplier, or vendor of the Company or any of its Subsidiaries to terminate or lessen his, her or its relationship with the Company or any of its Subsidiaries, or (ii) on behalf of a Competing Business, engage, employ, or solicit or contact for employment or engagement (or assist another in such activity) any employee of the Company or any of its Subsidiaries or any person who was an employee of the Company or any of its Subsidiaries at any time during the last twelve (12) months of your employment with the Company and any of its Subsidiaries (or, if you are employed by the Company and any of its Subsidiaries for less than twelve (12) months, those persons who were employees of the Company or any of its Subsidiaries during your employment with the Company and any of its Subsidiaries). For purposes of this Agreement, “ Competing Business ” means any person, entity, or other business concern (other than the Company or any of its Subsidiaries) that engages in, or is planning to engage in, the business conducted by the Company and any of its Subsidiaries for which you provide services during the term of your employment with the Company and any of its Subsidiaries, including without limitation, the business of oil and gas exploration and production, the gathering and transportation of oil and gas production, and the drilling, completion and/or servicing of oil and gas wells.

(c) You agree that the Company’s substantial investments in its business interests, goodwill, and Confidential Information are worthy of protection, and that the Company’s need for the protection afforded by this Section is greater than any hardship you might experience by complying with its terms. You further acknowledge and agree that the restrictions set forth in this Section are not adverse to the public interest. You further agree that the limitations as to time and scope of activity to be restrained contained herein are reasonable and are not greater than necessary to protect the Confidential Information, goodwill and other legitimate business interests of the Company. Although the Company and you believe the limitations as to time and scope of activity contained in this Section are reasonable and do not impose a greater restraint than necessary to protect the Company’s legitimate business interests, if this is judicially determined not to be the case, the Company and you specifically request that the limitations contained in this Section be reformed to the extent necessary to make this Section enforceable.

(d) You acknowledge and agree that your violation or threatened or attempted violation of the covenants contained in this Section will cause irreparable harm to the Company and that money damages would not be sufficient remedy for any breach of this Section. You agree that the Company shall be entitled as a matter of right to specific performance of the covenants in this Section, including entry of an ex parte temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this Section, or both, or other appropriate judicial remedy, writ or order, in any court of competent jurisdiction, restraining any violation or further violation of such agreements by you or others acting on your behalf, without any showing of irreparable harm and without any showing that the Company does not have an adequate remedy at law. Such remedies shall be in addition to all other remedies available to the Company at law and equity.

(e) Your obligations under this Section shall survive the termination of this Agreement and your employment, regardless of the reason for such termination.

12. Payment of Taxes . The Company may from time to time require you to pay to the Company (or the Company’s Subsidiary if you are an employee of a Subsidiary of the Company) the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s current or future obligation to withhold federal, state or local income or other taxes that you incur as a result of the Award. With respect to any required tax withholding, unless another arrangement is permitted by the Company in its discretion, the Company shall withhold from the shares of Stock to be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ Fair Market Value, as defined in the Plan, at the time as of which such determination is made. In the event the Company subsequently determines that the aggregate Fair Market Value, as defined in the Plan, of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency.

13. Right of the Company and Subsidiaries to Terminate Employment . Nothing contained in this Agreement shall confer upon you the right to continue in the employ of the Company or any Subsidiary of the Company, or interfere in any way with the rights of the Company or any Subsidiary of the Company to terminate your employment at any time.

14. No Liability for Good Faith Determinations . Neither the Company nor the members of the Board and the Committee shall be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Shares granted hereunder.

15. No Guarantee of Interests . The Board and the Company do not guarantee the Stock of the Company from loss or depreciation.

16. Company Records . Records of the Company or its Subsidiaries regarding your period of employment, termination of employment and the reason therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

17. Severability . If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

18. Notices . Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any such notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third Business Day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company or you may change, at any time and from time to time, by written notice to the other, the address which it or he had previously specified for receiving notices.

The Company and you agree that any notices shall be given to the Company or to you at the following addresses:


Company:		Pioneer Natural Resources Company
		Attn: Corporate Secretary
		5205 N. O’Connor Boulevard, Suite 200
		Irving, Texas 75039-3746

Holder:		At your current address as shown in the Company’s records.

19. Waiver of Notice . Any person entitled to notice hereunder may waive such notice in writing.

20. Successors . This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

21. Headings . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

22. Governing Law . All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of the State of Delaware except to the extent Delaware law is preempted by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock.

23. Execution of Receipts and Releases . Any payment of cash or any issuance or transfer of shares of Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

24. Amendment . This Agreement may be amended at any time unilaterally by the Company, provided that such amendment is consistent with all applicable laws and does not reduce any rights or benefits you have accrued pursuant to this Agreement. This Agreement may also be amended at any time unilaterally by the Company to the extent the Company believes in good faith that such amendment is necessary or advisable to bring this Agreement in compliance with any applicable laws, including Section 409A of the Code.

25. The Plan . This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan; provided, however, that notwithstanding anything to the contrary herein, any provision of this Agreement that is inconsistent with the provisions of Section 9(c), (e), and (f) of the Plan shall control over such provisions of the Plan.

26. Agreement Respecting Securities Act of 1933 . You represent and agree that you will not sell the Stock that may be issued to you pursuant to your Restricted Shares except pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to an exemption from registration under the Securities Act of 1933 (including Rule 144).

27. Electronic Delivery and Acknowledgement . No signature by you is required to accept the award represented by this Agreement. By your acceptance of this Award, you are acknowledging that you have received and read, understood and accepted all the terms, conditions and restrictions of this Agreement and the Plan. The Company may, in its sole discretion, deliver any documents related to this Award and this Agreement, or other awards that have been or may be awarded under the Plan, by electronic means, including prospectuses, proxy materials, annual reports and other related documents, and the Company may, in its sole discretion, engage a third party to effect the delivery of these documents on its behalf and provide other administrative services related to this Award and the Plan. By your acceptance of the award represented by this Agreement, you consent to receive such documents by electronic delivery and to the engagement of any such third party.

Schedule I

The document to which this Schedule I is attached is the form of Restricted Stock Award Agreement between the Company and Timothy L. Dove.

The form of Restricted Stock Award Agreement between the Company and its other executive officers varies from this form by modifying Section 6 to provide, in its entirety, the following:

6. Termination of Employment .

(b) Termination By The Company For Cause . If your employment relationship with the Company or any of its Subsidiaries is terminated by the Company prior to the Vesting Date and such termination is a Termination for Cause (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then all Restricted Shares granted pursuant to this Agreement shall become null and void as of the date of termination.

(c) Other Termination Events . If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date as a result of any of the following events:

(i) your death;

(ii) your Disability;

(iii) your Normal Retirement;

(iv) a termination by you that is a Termination for Good Reason; or

(v) a termination by the Company that is not a Termination for Cause,

the denominator of which is 36. The portion, if any, of your Restricted Shares for which restrictions have not lapsed as of the date of the termination of your employment relationship shall become null and void as of the date of termination; provided, however, that the portion, if any, of this Award for which forfeiture restrictions have lapsed as of the date of termination will survive.

For purposes of this Section 6(c), “ Disability ” shall have the meaning ascribed to it in the Severance Agreement between you and the Company or one of its Subsidiaries; and “ Normal Retirement ” shall mean the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed due to your retirement on or after the date you attain age 60.

EXHIBIT 10.3

PERFORMANCE UNIT AWARD AGREEMENT

PIONEER NATURAL RESOURCES COMPANY

2006 LONG TERM INCENTIVE PLAN

, 20

To: Scott D. Sheffield

Pioneer Natural Resources Company, a Delaware corporation (the “ Company ”), is pleased to grant you an award (this “ Award ”) to receive an aggregate of performance units (each, a “ Performance Unit ”) in respect of the period through (the “ Performance Period ”). This Award is subject to your acceptance of and agreement to all the applicable terms, conditions and restrictions described in this Performance Unit Award Agreement (the “ Agreement ”) and the Pioneer Natural Resources Company 2006 Long Term Incentive Plan (as it may be amended from time to time, the “ Plan ”). A copy of the Plan is available upon request. Except as provided below, to the extent that any provision of this Agreement conflicts with the expressly applicable terms of the Plan, you acknowledge and agree that those terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan. Terms that have their initial letters capitalized, but that are not otherwise defined in this Agreement, shall have the meanings given to them in the Plan in effect as of the date of this Agreement. The Performance Units contemplated herein are described in the Plan as Restricted Stock Units subject to restrictions that lapse based on the achievement of performance goals pursuant to Section 6(a)(i) of the Plan.

This Agreement sets forth the terms of the agreement between you and the Company with respect to the Performance Units. By accepting this Agreement, you agree to be bound by all of the terms hereof.

1. Overview of Performance Units .

(a) Performance Units Generally . Each Performance Unit represents a contractual right to receive one share of the Company’s common stock (the “ Common Stock ”), subject to the terms and conditions of this Agreement; provided that, based on the relative achievement against each Performance Objective (as defined below), the number of shares of Common Stock that may be deliverable hereunder in respect of the Performance Units may range from % to % of the number of Performance Units stated in the preamble to this Agreement (such stated number of Performance Units hereafter called the “ Initial Performance Units ”). Your right to receive Common Stock in respect of Performance Units is generally contingent, in whole or in part, upon (i) the achievement of the performance objective outlined in Section 2 below (the “ Performance Objective ”) and (ii) except as provided in Section 4 or Section 5, your continued employment with the Company or one of its Subsidiaries through the end of the Performance Period.

(b) Dividend Equivalents . With respect to each outstanding Performance Unit, the Company shall credit a book entry account with an amount equal to the amount of any cash dividend paid on one share of Common Stock. The amount credited to such book entry account shall be payable to you at the same time or times, and subject to the same terms and conditions as are applicable to, your Performance Units; provided that, if more than the Initial Performance Units shall become payable in accordance with this Agreement, the maximum amount payable in respect of such dividend equivalents shall be the amount credited to your book entry account. Dividends and distributions payable on Common Stock other than in cash will be addressed in accordance with Section 8 hereof.

2. Total Shareholder Return Objective . The Performance Objective with respect to the Initial Performance Units is based on Total Shareholder Return. Total Shareholder Return shall mean, as to the Company and each of the Peer Companies (as defined below), the annualized rate of return shareholders receive through stock price changes and the assumed reinvestment of dividends paid over the Performance Period. Dividends per share paid other than in the form of cash shall have a value equal to the amount of such dividends reported by the issuer to its shareholders for purposes of Federal income taxation. For purposes of determining the Total Shareholder Return for the Company and each of the Peer Companies, the change in the price of the Company’s Common Stock and of the common stock of each Peer Company, as the case may be, shall be based upon the average of the closing stock prices of the Company and such Peer Company on each trading day in the -day period preceding each of the start (the “ Initial Value ”) and the end (the “ Closing Value ”) of the Performance Period. The Initial Value of the Common Stock to be used to determine Total Shareholder Return over the Performance Period is $ per share. Achievement with respect to this Performance Objective shall be determined based on the Company’s relative ranking in respect of the Performance Period with regard to Total Shareholder Return as compared to Total Shareholder Return of the Peer Companies, and shall be determined in accordance with the applicable table as set forth in Appendix A hereto. The applicable table shall be determined based on the number of Peer Companies for the Performance Period. A company shall be a “ Peer Company ” if it (i) is one of the companies listed on Appendix A hereto and (ii) has a class of common equity securities listed to trade under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), during each day of the Performance Period. The number of Performance Units, if any, determined to be earned pursuant to the applicable table under Appendix A, as modified pursuant to Section 4(a), Section 4(b) or Section 5, if applicable, shall be referred to “ Earned Performance Units ”.

3. Conversion of Performance Units; Delivery of Performance Units . Unless an earlier date applies pursuant to Section 4(a), Section 5(c) or Section 6, payment in respect of Earned Performance Units shall be made not later than March 1 of the year following the year in which the Performance Period ends. Unless otherwise determined by the Committee, all payments in respect of Earned Performance Units shall be made in freely transferable shares of Common Stock; provided, however, that if and to the extent that the reservation of the power to

settle (as opposed to the act of settling) Performance Units in cash instead of shares would result in an additional financial accounting charge for the Company, the Committee shall not have the right to settle such Performance Units other than in the form of Common Stock (or, if applicable, stock of a Successor Corporation (as defined in Section 5)). Neither this Section 3 nor any action taken pursuant to or in accordance with this Section 3 shall be construed to create a trust of any kind. Any shares of Common Stock issued to you pursuant to this Agreement in settlement of Earned Performance Units shall be in book entry form registered in your name. Any fractional Earned Performance Units shall be rounded up to the nearest whole share of Common Stock.

4. Termination of Employment .

(a) Death or Disability . In the event that your employment with the Company or a Subsidiary terminates during the Performance Period due to your death or Disability (as such term is defined in the Severance Agreement between you and the Company or one of its subsidiaries), you shall be deemed to have Earned Performance Units equal to the product of (i) and (ii), where (i) and (ii) are:

(i) the Initial Performance Units;

(ii) a fraction (the “ Pro-Ration Fraction ”), (A) the numerator of which is the number of full months (counting the month in which your termination of employment occurs as a full month) during the Performance Period during which you were employed and (B) the denominator of which is 36.

Distribution of shares of Common Stock in respect of the Performance Units determined to be earned by reason of this Section 4(a) shall be made not later than 74 days following your death or Disability and shall be in full and complete satisfaction of all of your rights (and the rights of any person who derives his, her or its rights from you) under this Agreement.

(b) Normal Retirement . In the event that your employment with the Company and each of its Subsidiaries by which you are employed terminates during the Performance Period due to your retirement at or after having attained age 60, you shall be deemed to have Earned Performance Units, as of the end of the Performance Period, equal in number to the product of (i) the number of Earned Performance Units that you would have earned in accordance with Section 2 had you remained employed through the end of the Performance Period multiplied by (ii) the Pro-Ration Fraction. Any portion of the Performance Units that cannot become earned and payable in accordance with the preceding sentence shall terminate and automatically be cancelled as of the date of your termination of employment. Any portion of your Performance Units that is eligible to be earned pursuant to the first sentence of this subparagraph (b), but is not earned as of the end of the Performance Period, shall terminate and be cancelled upon the expiration of such Performance Period.

Agreement between you and the Company or one of its subsidiaries), then notwithstanding the terms of any such Severance Agreement you shall be deemed to have earned, as of the end of the Performance Period, the number of Earned Performance Units that you would have earned in accordance with Section 2 had you remained employed through the end of the Performance Period. Any portion of your Performance Units that is eligible to be earned pursuant to the preceding sentence, but is not earned as of the end of the Performance Period, shall terminate and be cancelled upon the expiration of such Performance Period.

(d) Other Termination of Employment . Unless otherwise determined by the Committee at or after grant, in the event that your employment with the Company or a Subsidiary terminates prior to the end of the Performance Period for any reason other than those listed in Section 4(a), 4(b) or 4(c), all of your Performance Units shall terminate and automatically be cancelled upon such termination of employment.

5. Change in Control . Notwithstanding the provisions of Section 1 through Section 4 hereof or the terms of any Change in Control Agreement between you and the Company or a Subsidiary (a “ CIC Agreement ”), if you have been continuously employed from the grant date specified above until the date that the Change in Control occurs (the “ Change in Control Date ”) or you are treated, for purposes of such CIC Agreement, to have remained in employment through the Change in Control Date, upon the occurrence of a Change in Control your rights in respect of the Performance Units shall be determined as provided in Section 5(a). If your employment shall have terminated prior to the Change in Control Date, but at least some of your Performance Units remain outstanding pursuant to Section 4(b) or Section 4(c), your rights in respect of your outstanding Performance Units shall be determined as provided in Section 5(b).

(a) If a Change in Control occurs, you will be issued a number of shares of Common Stock equal to the number of Performance Units that would have become Earned Performance Units in accordance with the provisions of Section 2 assuming that:

(i) the Performance Period ended on the Change in Control Date and

(ii) the determination of whether, and to what extent, the Performance Objective is achieved, is based on actual performance against the stated performance criteria through the Change in Control Date.

(b) If your employment terminated prior to the Change in Control Date, but some or all of your Performance Units are still outstanding on such date pursuant to Section 4(b) or 4(c), then, you shall receive a number of shares of Common Stock equal to the product of (A) the number of shares of Common Stock that would have been issued to you in respect to the Initial Performance Units, determined as though Section 5(a) was applicable to you times (B) the Pro-Ration Fraction.

(c) Any shares of Common Stock issuable pursuant to this Section 5 shall be issued immediately following (and not later than) 5 business days after the Change in Control Date and shall be fully earned and freely transferable as of the date of the Change in Control. Notwithstanding anything else contained in this Section 5 to the contrary, if the Change in Control involves a merger, reclassification, reorganization or other similar transaction pursuant

to which the Common Stock is exchanged for stock of the surviving corporation in such merger, the successor to the corporation or the direct or indirect parent of such a corporation (collectively, the “ Successor Corporation ”), then you shall receive, instead of each share of Common Stock otherwise deliverable hereunder, the same consideration (whether stock, cash or other property) payable or distributable in such transaction in respect of a share of Common Stock. Any property distributed pursuant to this Section 5(c), whether in shares of the Successor Corporation or otherwise, shall in all cases be freely transferable without any restriction (other than any such restriction that may be imposed at applicable law), and any securities issued hereunder shall be registered to trade under the 1934 Act, and shall have been registered under the Securities Act of 1933, as amended (the “ 1933 Act ”).

(d) Notwithstanding anything else contained in this Section 5 to the contrary, the Committee may elect, at its sole discretion by resolution adopted prior to the Change in Control Date, to satisfy your rights in respect of the Performance Units (as determined pursuant to the foregoing provisions of this Section 5), in whole or in part, by making a cash payment to you within 5 business days of the Change in Control Date in respect of all such Performance Units or such portion of such Performance Units as the Committee shall determine. Any cash payment for any Performance Unit shall be equal to the Fair Market Value of the number of shares of Common Stock into which it would convert, determined on the Change in Control Date.

6 . Nontransferability of Awards . The Performance Units granted hereunder may not be sold, transferred, pledged, assigned, encumbered or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Following your death, any shares distributable (or cash payable) in respect of Performance Units will be delivered or paid, at the time specified in Section 3 or, if applicable, Section 4 or Section 5, to your beneficiary in accordance with, and subject to, the terms and conditions hereof and of the Plan.

7 . Beneficiary Designation . You may from time to time name any beneficiary or beneficiaries (who may be named contingently or successively) to whom shall be delivered or paid under this Agreement following your death any shares that are distributable or cash payable hereunder in respect of your Performance Units at the time specified in Section 3 or, if applicable, Section 4 or Section 5. Each designation will revoke all prior designations, shall be in a form prescribed by the Committee, and will be effective only when filed in writing with the Committee during your lifetime. In the absence of any such effective designation, shares issuable in connection with your death shall be paid to your surviving spouse, if any, or otherwise to your estate.

8 . Adjustments in Respect of Performance Units . In the event of any common stock dividend or common stock split, recapitalization (including, but not limited to, the payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to stockholders (other than cash dividends), exchange of shares, or other similar corporate change with regard to the Company or any Peer Company, appropriate adjustments shall be made by the Committee to the Initial Value of the corresponding common stock, and, if any such event occurs with respect to the Company, in the aggregate number of Performance Units subject to this Agreement. The Committee’s determination with respect to any such adjustment shall be conclusive.

9 . Effect of Settlement . Upon conversion into shares of Common Stock (or Successor Corporation common stock) pursuant to Section 3 or Section 5, a cash settlement of your rights, at the election of the Committee at its sole discretion pursuant to Section 3 or Section 5(d), or a combination of the issuance of Common Stock and the payment of cash in accordance with any applicable provisions of this Agreement, all of your Performance Units subject to this Award shall be cancelled and terminated. If and to the extent that you are still employed at the end of the Performance Period, and none of your Performance Units shall have become earned in accordance with the terms of this Agreement, all such Performance Units subject to this Award shall be cancelled and terminated.

10 . Furnish Information . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

11 . Remedies . The parties to this Agreement shall be entitled to recover from each other reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise. If, due to Section 4 of the Plan, the Company fails or is unable to make the payment in respect of Earned Performance Units in freely transferable shares of Common Stock, and the Committee does not elect to settle such Earned Performance Units in cash instead of shares, as provided by Section 3 of this Agreement, as your sole and exclusive remedy for such failure, in addition to the rights provided under the first sentence of this Section 11, the Company shall pay to you an amount in cash equal to the product of the number of Earned Performance Units times the Fair Market Value of one share of Common Stock. The Company shall make such payment to you within ten (10) days following receipt of your written demand therefor, but in no event later than March 15 of the year following the year in which the Performance Period ends, subject to compliance with any tax withholding obligations that the Company in its discretion deems to be necessary with respect to such payment. Upon such payment pursuant to this Section 11, all of your Performance Units subject to this Award shall be cancelled and terminated. For purposes of this Section 11, the Fair Market Value of one share of Common Stock shall be determined as follows:

(a) with respect to a payment in respect of Earned Performance Units pursuant to Section 3, the Fair Market Value shall be determined as of the last day of the Performance Period;

(b) with respect to a payment in respect of Earned Performance Units where payment arises due to the termination of your employment with the Company or a Subsidiary during the Performance Period due to your death or Disability pursuant to Section 4(a), the Fair Market Value shall be determined as of the date your employment terminates due to death or Disability, as applicable;

(c) with respect to a payment in respect of Earned Performance Units where payment arises due to the termination of your employment with the Company or a Subsidiary during the Performance Period due to your retirement pursuant to Section 4(b), or due to your termination by the Company that is not a Termination for Cause or to your termination by you that is a Termination for Good Reason pursuant to Section 4(c), the Fair Market Value shall be determined as of the last day of the Performance Period;

(d) with respect to a payment based on the number of Performance Units that would have become Earned Performance Units in connection with a Change in Control pursuant to Section 5, the Fair Market Value shall be determined as of the Change in Control Date.

12. Confidential Information and Nonsolicitation .

(a) As further consideration for the granting of the Performance Units hereunder, you hereby agree with the Company that, during and following your employment relationship with the Company and each of its Subsidiaries by which you are employed, you will keep confidential all confidential or proprietary information and materials, as well as all trade secrets, belonging to the Company or one of its Subsidiaries, or their customers or other third parties who furnished such information, materials, and/or trade secrets to the Company or its Subsidiary with expectations of confidentiality (“ Confidential Information ”). Confidential Information shall not include information that (A) is already properly in the public domain or enters the public domain with the express consent of the Company, or (B) is intentionally made available by the Company to third parties without any expectation of confidentiality. Upon the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed, you promise to promptly return to the Company all Confidential Information, and all documents and materials (including electronically stored information) in your possession, custody or control that constitutes or reflects Confidential Information. Notwithstanding the foregoing, you may disclose information as may be required by law and may disclose information in confidence to your spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan, provided that you ensure that such spouse or advisor or institution treats the information confidentially and does not disclose such information or use it for his, her or its own benefit. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor militating against the advisability of granting any such future award to you. Such consideration shall be in addition to the rights and remedies available to the Company pursuant to paragraph (d) below.

Company or any of its Subsidiaries at any time during the last twelve (12) months of your employment with the Company and any of its Subsidiaries (or, if you are employed by the Company and any of its Subsidiaries for less than twelve (12) months, those persons who were employees of the Company or any of its Subsidiaries during your employment with the Company and any of its Subsidiaries). For purposes of this Agreement, “ Competing Business ” means any person, entity, or other business concern (other than the Company or any of its Subsidiaries) that engages in, or is planning to engage in, the business conducted by the Company and any of its Subsidiaries for which you provide services during the term of your employment with the Company and any of its Subsidiaries, including without limitation, the business of oil and gas exploration and production, the gathering and transportation of oil and gas production, and the drilling, completion and/or servicing of oil and gas wells.

(e) Your obligations under this Section shall survive the termination of this Agreement and your employment, regardless of the reason for such termination.

13 . Payment of Taxes . The Company may from time to time require you to pay to the Company (or the Company’s Subsidiary if you are an employee of a Subsidiary of the Company) the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s current or future obligation to withhold federal, state or local income or other taxes that you incur as a result of this Award. With respect to any required tax withholding, unless another arrangement is permitted by the Company in its discretion, the Company shall withhold

from the shares of Common Stock to be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ Fair Market Value, as defined in the Plan, at the time as of which such determination is made. In the event the Company subsequently determines that the aggregate Fair Market Value, as defined in the Plan, of any shares of Common Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency.

14 . Right of the Company and Subsidiaries to Terminate Employment . Nothing contained in this Agreement shall confer upon you the right to continue in the employ of the Company or any Subsidiary of the Company, or interfere in any way with the rights of the Company or any Subsidiary of the Company to terminate your employment at any time.

15 . No Liability for Good Faith Determinations . Neither the Company nor the members of the Board and the Committee shall be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Performance Units granted hereunder.

16 . No Guarantee of Interests . The Board and the Company do not guarantee the Common Stock of the Company from loss or depreciation.

17 . Company Records . Records of the Company or its Subsidiaries regarding your period of employment, termination of employment and the reason therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

18 . Severability . If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

19 . Notices . Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any such notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third Business Day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company or you may change, at any time and from time to time, by written notice to the other, the address which it or he had previously specified for receiving notices.

The Company and you agree that any notices shall be given to the Company or to you at the following addresses:


Company:		Pioneer Natural Resources Company
		Attn: Corporate Secretary
		5205 N. O’Connor Boulevard, Suite 200
		Irving, Texas 75039-3746


Holder:		At your current address as shown in the Company’s records.

20 . Waiver of Notice . Any person entitled to notice hereunder may waive such notice in writing.

21 . Successor . This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

22 . Headings . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

23 . Governing Law . All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of the State of Delaware except to the extent Delaware law is preempted by federal law. The obligation of the Company to sell and deliver Common Stock hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Common Stock.

24 . Execution of Receipts and Releases . Any payment of cash or any issuance or transfer of shares of Common Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

25 . Amendment . This Agreement may be amended at any time unilaterally by the Company provided that such amendment is consistent with all applicable laws and does not reduce any rights or benefits you have accrued pursuant to this Agreement. This Agreement may also be amended at any time unilaterally by the Company to the extent the Company believes in good faith that such amendment is necessary or advisable to bring this Agreement into compliance with any applicable laws, including Section 409A of the Code.

26 . The Plan . This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan; provided, however, that notwithstanding anything to the contrary herein, any provision of this Agreement that is inconsistent with the provisions of Section 9(c), (e), and (f) of the Plan shall control over such provisions of the Plan.

27 . Agreement Respecting Securities Act of 1933 . You represent and agree that you will not sell the Common Stock that may be issued to you pursuant to your Performance Units except pursuant to an effective registration statement under the 1933 Act or pursuant to an exemption from registration under the 1933 Act (including Rule 144).

28 . No Shareholder Rights . The Performance Units granted pursuant to this Agreement do not and shall not entitle you to any rights as a shareholder of Common Stock until such time as you receive shares of Common Stock pursuant to this Agreement. Your rights with respect to the Performance Units shall remain forfeitable at all times prior to the date on which rights become earned in accordance with this Agreement.

29 . Electronic Delivery and Acknowledgement . No signature by you is required to accept this Award represented by this Agreement. By your acceptance of this Award, you are acknowledging that you have received and read, understood and accepted all the terms, conditions and restrictions of this Agreement and the Plan. The Company may, in its sole discretion, deliver any documents related to this Award and this Agreement, or other awards that have been or may be awarded under the Plan, by electronic means, including prospectuses, proxy materials, annual reports and other related documents, and the Company may, in its sole discretion, engage a third party to effect the delivery of these documents on its behalf and provide other administrative services related to this Award and the Plan. By your acceptance of this Award represented by this Agreement, you consent to receive such documents by electronic delivery and to the engagement of any such third party.

Appendix A

Determination of Performance Units Earned

Peer Companies :


	__ Peer Companies	__ Peer Companies	__ Peer Companies	__ Peer Companies	__ Peer Companies
Rank Against Peers	Percentage of Initial Performance Units Earned	Percentage of Initial Performance Units Earned	Percentage of Initial Performance Units Earned	Percentage of Initial Performance Units Earned	Percentage of Initial Performance Units Earned
1
2
3
4
5
6
7
8
9
10
11
12

In addition, if at the end of the Performance Period the number of companies listed above that qualify as Peer Companies is less than , then the Committee shall, in good faith, determine the percentage of the Performance Units earned in a manner consistent with (i) the requirements to qualify the Performance Units as performance-based compensation exempt from the limitations imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended, to the extent the Committee determines that such qualification is in the Company’s best interest, and (ii) the following general guidelines for determining the number of earned Performance Units:

(a) If the Company’s Total Shareholder Return for the Performance Period ranks first as compared to the Total Shareholder Return of qualifying Peer Companies, the number of earned Performance Units shall equal % of the Initial Performance Units;

(b) If the Company’s Total Shareholder Return for the Performance Period ranks in the percentile as compared to the Total Shareholder Return of the qualifying Peer Companies, the number of earned Performance Units shall equal % of the Initial Performance Units;

(c) If the Company’s Total Shareholder Return for the Performance Period ranks in the percentile as compared to the Total Shareholder Return of the qualifying Peer Companies, the number of earned Performance Units shall equal % of the Initial Performance Units;

(d) If the Company’s Total Shareholder Return ranks below the percentile as compared to the Total Shareholder Return of the qualifying Peer Companies, none of the Initial Performance Units will become earned; and

(e) If the Company’s Total Shareholder Return ranking falls in between the levels specified in clauses (a) through (c) above, the Committee shall have the discretion to determine the percentage of the Initial Performance Shares that become earned within the levels specified above.

Schedule I

The document to which this Schedule I is attached is the form of Performance Unit Award Agreement between the Company and Scott D. Sheffield.

1. The form of Performance Unit Award Agreement between the Company and Scott D. Sheffield and Timothy L. Dove varies from this form in that Section 4(c) of the form of agreement with the Company’s other executive officers reads in its entirety as follows:

(c) Termination Without Cause or Termination For Good Reason . In the event that your employment with the Company and each of its Subsidiaries by which you are employed is terminated during the Performance Period (x) by the Company and such Subsidiaries and such termination is not a Termination for Cause or (y) by you and such termination is a Termination for Good Reason (as each such term is defined in the Severance Agreement between you and the Company or one of its subsidiaries), you shall be deemed to have earned, as of the end of the Performance Period, that number of Performance Units equal to the product of (i) the number of Earned Performance Units that you would have earned in accordance with Section 2 had you remained employed through the end of the Performance Period multiplied by (ii) the Pro-Ration Fraction. Any portion of the Performance Units that cannot become earned and payable in accordance with the preceding sentence shall terminate and automatically be cancelled as of the date of your termination of employment. Any portion of your Performance Units that is eligible to be earned pursuant to the second preceding sentence, but is not earned as of the end of the Performance Period, shall terminate and be cancelled upon the expiration of such Performance Period.

EXHIBIT 10.4

RESTRICTED STOCK UNIT AWARD AGREEMENT

PIONEER NATURAL RESOURCES COMPANY

2006 LONG TERM INCENTIVE PLAN

, 20

To: Scott D. Sheffield

Pioneer Natural Resources Company, a Delaware corporation (the “ Company ”), is pleased to grant you an award (this “ Award ”) to receive Restricted Stock Units (the “ Restricted Stock Units ”) whereby each Restricted Stock Unit represents the right to receive one share of common stock, par value $0.01, of the Company (the “ Stock ”), plus an additional amount pursuant to Section 2, subject to certain restrictions and on the terms and conditions contained in this Restricted Stock Unit Award Agreement (the “ Agreement ”) and the Pioneer Natural Resources Company 2006 Long Term Incentive Plan (the “ Plan ”). A copy of the Plan is available upon request. Except as provided below, to the extent that any provision of this Agreement conflicts with the expressly applicable terms of the Plan, you acknowledge and agree that those terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan. Terms that have their initial letters capitalized, but that are not otherwise defined in this Agreement, shall have the meanings given to them in the Plan in effect as of the date of this Agreement.

This Agreement sets forth the terms of the agreement between you and the Company with respect to the Restricted Stock Units. By accepting this Agreement, you agree to be bound by all of the terms hereof.

1. No Shareholder Rights . The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle you to any rights of a stockholder of the Company prior to the date shares of Stock are issued to you in settlement of the Award. Your rights with respect to Restricted Stock Units shall remain forfeitable at all times prior to the date on which rights become vested and the restrictions with respect to the Restricted Stock Units lapse in accordance with Section 4, 6 or 7.

2 . Dividend Equivalents . In the event that the Company declares and pays a dividend in respect of its outstanding shares of Stock and, on the record date for such dividend, you hold Restricted Stock Units granted pursuant to this Agreement that have not been settled, the Company shall pay to you an amount in cash equal to the cash dividends you would have received if you were the Beneficial Owner, as of such record date, of the number of shares of Stock related to the portion of your Restricted Stock Units that have not been settled as of such record date, such payment to be made on or promptly following the date that the Company pays such dividend (however, in no event shall the dividend equivalent payment be made later than 30 days following the date on which the Company pays such dividend).

3. Conversion of Restricted Stock Units; Issuance of Stock; Payment of Stock . No shares of Stock shall be issued to you prior to the date on which the Restricted Stock Units vest and the restrictions with respect to the Restricted Stock Units lapse, in accordance with Section 4, 6 or 7. Neither this Section 3 nor any action taken pursuant to or in accordance with this Section 3 shall be construed to create a trust of any kind. After any Restricted Stock Units vest pursuant to Section 4, 6 or 7 the Company shall, on or promptly following the applicable dates set forth in Section 5, cause to be issued Stock in book entry form registered in your name in payment of such vested Restricted Stock Units upon receipt by the Company of any required tax withholding with respect to such shares. The value of any fractional Restricted Stock Units shall be paid in cash at the time Stock is issued to you in connection with the Restricted Stock Units. The value of the fractional Restricted Stock Units shall equal the percentage of a Restricted Stock Unit represented by a fractional Restricted Stock Unit multiplied by the Fair Market Value of the Stock. The value of such shares of Stock shall not bear any interest owing to the passage of time.

4. Expiration of Restrictions and Risk of Forfeiture . Subject to the terms and conditions of this Agreement, the forfeiture restrictions on the Restricted Stock Units granted pursuant to this Agreement will expire in full on the third anniversary of the date of this Agreement (the “ Vesting Date ”); provided, however , that such restrictions will expire on the Vesting Date only if you have been an employee of the Company or of a Subsidiary continuously from the date of this Agreement through the Vesting Date; provided, further, however, that if you cease to be an employee of the Company or of a Subsidiary for any reason after the Vesting Date, all Restricted Stock Units granted pursuant to this Agreement will survive the termination of employment.

5. Payment Date . The payment date of the Stock related to your Restricted Stock Units will be the date on which the restrictions on such Restricted Stock Units expire as provided in Section 4, 6 or 7 of this Agreement; provided that, notwithstanding the provisions of Section 7(d) or Section 27, in the event that restrictions on your Restricted Stock Units expire due to the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed as a result of your Normal Retirement, then the payment date of the Stock related to such Restricted Stock Units will be the date on which the restrictions on such Restricted Stock Units would have expired as provided in Section 4 had you remained an employee of the Company or of a Subsidiary continuously from the date of this Agreement through the Vesting Date; provided, further, that, payment of your Restricted Stock Units may be made prior to the payment events specified in this Section 5 or in Section 27 to the limited extent necessary to pay employment or other taxes imposed on the Award.

6. Change in Control of the Company . Notwithstanding Section 4 of this Agreement, but subject to Section 27 of this Agreement, upon the occurrence of a Change in Control, all of the Restricted Stock Units granted pursuant to this Agreement shall become immediately and unconditionally vested and the shares of Stock related to such Restricted Stock Units shall be paid to you immediately.

7. Termination of Employment .

(a) Termination By Employee Without Good Reason . If your employment relationship with the Company or any of its Subsidiaries is terminated voluntarily by you prior to the Vesting Date and such termination is not a Termination for Good Reason (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then all Restricted Stock Units granted pursuant to this Agreement shall become null and void as of the date of such termination.

(b) Termination By The Company for Cause . If your employment relationship with the Company or any of its Subsidiaries is terminated by the Company prior to the Vesting Date and such termination is a Termination for Cause (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then all Restricted Stock Units granted pursuant to this Agreement shall become null and void as of the date of termination.

(c) Termination By The Company Not For Cause Or By Employee For Good Reason . Subject to Section 27 of this Agreement, if your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date (x) by the Company and such Subsidiaries and such termination is not a Termination for Cause or (y) by you and such termination is a Termination for Good Reason, then all of the Restricted Stock Units granted pursuant to this Agreement shall become immediately and unconditionally vested and unrestricted and the shares of Stock related to such Restricted Stock Units shall be paid to you immediately.

(d) Other Termination Events . Subject to Section 27 of this Agreement, if your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date as a result of any of the following events:

(i) your death;

(ii) your Disability; or

(iii) your Normal Retirement ,

then the restrictions on a number of the Restricted Stock Units shall automatically lapse such that the number of Restricted Stock Units for which the restrictions have lapsed as of the termination date will be equal to the product of (i) the total number of Restricted Stock Units granted to you pursuant to this Agreement, times (ii) a fraction, the numerator of which is the number of full months (counting the month in which your termination of employment occurs as a full month), beginning with the first full month following the date of this Agreement, during which you were employed by the Company and/or any Subsidiary and the denominator of which is 36. The portion, if any, of your Restricted Stock Units for which the restrictions have not lapsed as of the termination date of your employment relationship shall become null and void as of the termination date; provided, however, that the portion, if any, of this Award for which forfeiture restrictions have lapsed as of the date of termination shall survive.

For purposes of this Section 7(d), “ Disability ” shall have the meaning ascribed to it in the Severance Agreement between you and the Company or one of its Subsidiaries; and “ Normal Retirement ” shall mean the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed due to your retirement on or after the date that you attain age 60.

8. Adjustment Provisions . In the event there is any change in the Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, the number of shares associated with the Award of Restricted Stock Units subject to this Agreement shall be adjusted in the manner consistent with the adjustment provisions provided in Section 9(b) and 9(c)(ii) of the Plan.

9. Furnish Information . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

10. Remedies . The parties to this Agreement shall be entitled to recover from each other reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

11. Confidential Information and Nonsolicitation .

(a) As further consideration for the granting of the Restricted Stock Units hereunder, you hereby agree with the Company that, during and following your employment relationship with the Company and each of its Subsidiaries by which you are employed, you will keep confidential all confidential or proprietary information and materials, as well as all trade secrets, belonging to the Company or one of its Subsidiaries, or their customers or other third parties who furnished such information, materials, and/or trade secrets to the Company or its Subsidiary with expectations of confidentiality (“ Confidential Information ”). Confidential Information shall not include information that (A) is already properly in the public domain or enters the public domain with the express consent of the Company, or (B) is intentionally made available by the Company to third parties without any expectation of confidentiality. Upon the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed, you promise to promptly return to the Company all Confidential Information, and all documents and materials (including electronically stored information) in your possession, custody or control that constitutes or reflects Confidential Information. Notwithstanding the foregoing, you may disclose information as may be required by law and may disclose information in confidence to your spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan, provided that you ensure that such spouse or advisor or institution treats the information confidentially and does not disclose such information or use it for his, her or its own benefit. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor militating against the advisability of granting any such future award to you. Such consideration shall be in addition to the rights and remedies available to the Company pursuant to paragraph (d) below.

(b) As an incentive for the Company to issue you this Award, and in consideration of the Company’s promise to provide you with Confidential Information and so as to protect the Company’s legitimate business interests, including the protection of its Confidential Information and the goodwill with which you will be associated, and that this Award will encourage you to build, you agree that during your employment relationship with the Company and each of its Subsidiaries by which you are employed, and for a period of twelve (12) months immediately following the time that you are no longer employed by the Company or any of its Subsidiaries, you will not, directly or indirectly (i) solicit or encourage (or assist another in soliciting or encouraging) any employee, contractor, consultant, supplier, or vendor of the Company or any of its Subsidiaries to terminate or lessen his, her or its relationship with the Company or any of its Subsidiaries, or (ii) on behalf of a Competing Business, engage, employ, or solicit or contact for employment or engagement (or assist another in such activity) any employee of the Company or any of its Subsidiaries or any person who was an employee of the Company or any of its Subsidiaries at any time during the last twelve (12) months of your employment with the Company and any of its Subsidiaries (or, if you are employed by the Company and any of its Subsidiaries for less than twelve (12) months, those persons who were employees of the Company or any of its Subsidiaries during your employment with the Company and any of its Subsidiaries). For purposes of this Agreement, “ Competing Business ” means any person, entity, or other business concern (other than the Company or any of its Subsidiaries) that engages in, or is planning to engage in, the business conducted by the Company and any of its Subsidiaries for which you provide services during the term of your employment with the Company and any of its Subsidiaries, including without limitation, the business of oil and gas exploration and production, the gathering and transportation of oil and gas production, and the drilling, completion and/or servicing of oil and gas wells.

covenants in this Section, including entry of an ex parte temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this Section, or both, or other appropriate judicial remedy, writ or order, in any court of competent jurisdiction, restraining any violation or further violation of such agreements by you or others acting on your behalf, without any showing of irreparable harm and without any showing that the Company does not have an adequate remedy at law. Such remedies shall be in addition to all other remedies available to the Company at law and equity.

(e) Your obligations under this Section shall survive the termination of this Agreement and your employment, regardless of the reason for such termination.

12. Payment of Taxes . The Company may from time to time require you to pay to the Company (or the Company’s Subsidiary if you are an employee of a Subsidiary of the Company) the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s current or future obligation to withhold federal, state or local income or other taxes or social security or other obligations that you incur as a result of the Award, including without limitation with respect to any payment pursuant to Section 2 of this Agreement. With respect to any required tax withholding, unless another arrangement is permitted by the Company in its discretion, the Company shall withhold from the shares of Stock to be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ Fair Market Value at the time as of which such determination is made. In the event the Company subsequently determines that the aggregate Fair Market Value of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency.

13. Right of the Company and Subsidiaries to Terminate Employment . Nothing contained in this Agreement shall confer upon you the right to continue in the employ of the Company or any Subsidiary of the Company, or interfere in any way with the rights of the Company or any Subsidiary of the Company to terminate your employment at any time.

14. No Liability for Good Faith Determinations . Neither the Company nor the members of the Board and the Committee shall be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Stock Units granted hereunder.

15. No Guarantee of Interests . The Board and the Company do not guarantee the Stock of the Company from loss or depreciation.

16. Company Records . Records of the Company or its Subsidiaries regarding your period of employment, termination of employment and the reason therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

17. Severability . If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

18. Notices . Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any such notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third Business Day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company or you may change, at any time and from time to time, by written notice to the other, the address which it or he had previously specified for receiving notices.

The Company and you agree that any notices shall be given to the Company or to you at the following addresses:


Company:		Pioneer Natural Resources Company
		Attn: Corporate Secretary
		5205 N. O’Connor Boulevard, Suite 200
		Irving, Texas 75039-3746

Holder:		At your current address as shown in the Company’s records.

19. Waiver of Notice . Any person entitled to notice hereunder may waive such notice in writing.

20. Successors . This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

21. Headings . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

22. Governing Law . All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of the State of Delaware except to the extent Delaware law is preempted by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock.

23. Execution of Receipts and Releases . Any payment of cash or any issuance or transfer of shares of Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

24. Amendment . This Agreement may be amended at any time unilaterally by the Company, provided that such amendment is consistent with all applicable laws and does not reduce any rights or benefits you have accrued pursuant to this Agreement. This Agreement may also be amended at any time unilaterally by the Company to the extent the Company believes in good faith that such amendment is necessary or advisable to bring this Agreement in compliance with any applicable laws, including Section 409A of the Code.

25. The Plan . This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan; provided, however, that notwithstanding anything to the contrary herein, any provision of this Agreement that is inconsistent with the provisions of Section 9(c), (e), and (f) of the Plan shall control over such provisions of the Plan.

26. Agreement Respecting Securities Act of 1933 . You represent and agree that you will not sell the Stock that may be issued to you pursuant to your Restricted Stock Units except pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to an exemption from registration under the Securities Act of 1933 (including Rule 144 of the Securities Act).

27. Special Provisions Addressing Section 409A of the Code .

(a) Change in Control . Notwithstanding the provisions of Section 6 that may be to the contrary, if a Change in Control occurs at a time when you have reached the age of 60 or later, no shares of Stock related to the Restricted Stock Units shall be paid to you as a result of that Change in Control unless the event constituting such Change in Control also constitutes a “change in the ownership or effective control” or “in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code and the regulations and other authoritative guidance promulgated thereunder (collectively, the “ Nonqualified Deferred Compensation Rules ”); except that, to the extent permitted under the Nonqualified Deferred Compensation Rules, payment may be made in respect of this Award, upon the occurrence of a Change in Control, as determined by the Committee in its discretion, to the extent necessary to pay employment or other taxes imposed on the Award. To the extent shares of Stock related to the Restricted Stock Units are not paid to you upon a Change in Control as a result of the limitations described in the preceding sentence, the payment date of the Stock related to your Restricted Stock Units shall be the earlier to occur of:

(i) the time or times specified in Section 4 of this Agreement;

(ii) your separation from service with the Company (determined in accordance with the Company’s written and generally applicable policies regarding what constitutes a “separation from service” for purposes of Section 409A of the Code); provided that, if at the time of the Change in Control you are a “specified employee” within the meaning of Section 409A of the Code, as determined in accordance with the procedures specified or established by the Company in accordance with the Nonqualified Deferred Compensation Rules (a “ Specified Employee ”), this date shall be the earlier of (A) the date of your death, or (B) the date that is six months and one day following the date of your separation from service with the Company; or

(iii) a Change in Control that constitutes a “change in the ownership or effective control” or “in the ownership of a substantial portion of the assets” of the Company within the meaning of the Nonqualified Deferred Compensation Rules.

(b) Termination of Employment . Notwithstanding the provisions of Section 7(c) or 7(d) that may be to the contrary, if you have reached the age of 60 or later at the time of the event giving rise to the termination of your employment relationship with the Company and each of its Subsidiaries, any payment that becomes due to you pursuant to Section 7(c) or 7(d) of this Agreement (other than as a result of your Normal Retirement, which shall be governed by Section 5) shall only be paid to you on the earlier to occur of:

(i) the time or times specified in Section 4 of this Agreement; or

(ii) the date of your separation from service with the Company; provided that, if at the time of the Change in Control you are a Specified Employee, this date shall be the earlier of (A) the date of your death, or (B) the date that is six months and one day following the date of your separation from service with the Company;

provided that, to the extent permitted under the Nonqualified Deferred Compensation Rules, payment shall be made in respect of this Award, upon your termination of employment, as determined by the Committee in its discretion, to the extent necessary to pay employment or other taxes imposed on the Award.

28. Electronic Delivery and Acknowledgement . No signature by you is required to accept the award represented by this Agreement. By your acceptance of this Award, you are acknowledging that you have received and read, understood and accepted all the terms, conditions and restrictions of this Agreement and the Plan. The Company may, in its sole discretion, deliver any documents related to this Award and this Agreement, or other awards that have been or may be awarded under the Plan, by electronic means, including prospectuses, proxy materials, annual reports and other related documents, and the Company may, in its sole discretion, engage a third party to effect the delivery of these documents on its behalf and provide other administrative services related to this Award and the Plan. By your acceptance of the award represented by this Agreement, you consent to receive such documents by electronic delivery and to the engagement of any such third party.

Schedule I

The document to which this Schedule I is attached is the form of Restricted Stock Unit Award Agreement between the Company and Scott D. Sheffield.

1. The form of Restricted Stock Unit Award Agreement between the Company and its other executive officers varies from this form by modifying Section 5 to provide, in its entirety, the following:

5. Payment Date . The payment date of the Stock related to your Restricted Stock Units will be the date on which the restrictions on such Restricted Stock Units expire as provided in Section 4, 6 or 7 of this Agreement; provided that, notwithstanding the provisions of Section 7(c) or Section 27, in the event that restrictions on your Restricted Stock Units expire due to the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed as a result of your Normal Retirement, then the payment date of the Stock related to such Restricted Stock Units will be the date on which the restrictions on such Restricted Stock Units would have expired as provided in Section 4 had you remained an employee of the Company or of a Subsidiary continuously from the date of this Agreement through the Vesting Date; provided, further, that, payment of your Restricted Stock Units may be made prior to the payment events specified in this Section 5 or in Section 27 to the limited extent necessary to pay employment or other taxes imposed on the Award.

2. The form of Restricted Stock Unit Award Agreement between the Company and its other executive officers varies from this form by modifying Section 7 to provide, in its entirety, the following:

7. Termination of Employment .

(a) Termination By Employee Without Good Reason . If your employment relationship with the Company or any of its Subsidiaries is terminated voluntarily by you prior to the Vesting Date and such termination is not a Termination for Good Reason (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then all Restricted Stock Units granted pursuant to this Agreement shall become null and void as of the date of such termination.

(c) Other Termination Events . Subject to Section 27 of this Agreement, if your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date as a result of any of the following events:

(i) your death;

(ii) your Disability;

(iii) your Normal Retirement;

(iv) a termination by you that is a Termination for Good Reason; or

(v) a termination by the Company that is not a Termination for Cause;

For purposes of this Section 7(c), “ Disability ” shall have the meaning ascribed to it in the Severance Agreement between you and the Company or one of its Subsidiaries; and “ Normal Retirement ” shall mean the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed due to your retirement on or after the date that you attain age 60.

3. The form of Restricted Stock Unit Award Agreement between the Company and its other executive officers varies from this form by modifying Section 27(b) to provide, in its entirety, the following:

(b) Termination of Employment . Notwithstanding the provisions of Section 7(c) that may be to the contrary, if you have reached the age of 60 or later at the time of the event giving rise to the termination of your employment relationship with the Company and each of its Subsidiaries, any payment that becomes due to you pursuant to Section 7(c) of this Agreement (other than as a result of your Normal Retirement, which shall be governed by Section 5) shall only be paid to you on the earlier to occur of:

(i) the time or times specified in Section 4 of this Agreement; or

EXHIBIT 10.5

NONSTATUTORY STOCK OPTION AGREEMENT

PIONEER NATURAL RESOURCES COMPANY

2006 LONG TERM INCENTIVE PLAN

, 20

To: Scott D. Sheffield

Pioneer Natural Resources Company, a Delaware corporation (the “ Company ”), is pleased to grant you the right and option (the “ Option ”) to purchase all or any part of an aggregate of shares of common stock, par value $0.01, of the Company (the “ Stock ”), subject to certain restrictions and on the terms and conditions contained in this Nonstatutory Stock Option Agreement (the “ Agreement ”) and the Pioneer Natural Resources Company 2006 Long Term Incentive Plan (as amended, the “ Plan ”). A copy of the Plan is available upon request. Except as provided below, to the extent that any provision of this Agreement conflicts with the expressly applicable terms of the Plan, you acknowledge and agree that those terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan. Terms that have their initial letters capitalized, but that are not otherwise defined in this Agreement, shall have the meanings given to them in the Plan in effect as of the date of this Agreement. This Option shall not be treated as an incentive stock option within the meaning of section 422(b) of the Code.

This Agreement sets forth the terms of the agreement between you and the Company with respect to the Option. By accepting this Agreement, you agree to be bound by all of the terms hereof.

1. Purchase Price . The purchase price of Stock purchased pursuant to the exercise of this Option shall be $ per share, which has been determined to be not less than the Fair Market Value of the Stock at the date of grant of this Option, which is , 20 (the “ Date of Grant ”). For all purposes of this Agreement, Fair Market Value of Stock shall be determined in accordance with the provisions of the Plan.

2. Vesting and Exercise of Option .

(a) Vesting Date . Subject to the terms and conditions of this Agreement, this Option will vest and be exercisable, by written notice to the Company at its principal executive office addressed to the attention of its Corporate Secretary (or such other officer or employee of the Company as the Company may designate from time to time), on the third anniversary of the date of this Agreement (the “ Vesting Date ”); provided, however, that this Option will vest and become exercisable on the Vesting Date only if you have been an employee of the Company or of a Subsidiary continuously from the date of this Agreement through the Vesting Date.

(b) Exercise Procedures . Subject to the relevant provisions and limitations contained herein and in the Plan, you may exercise the Option to purchase all or a portion of the shares that vest and become exercisable on the Vesting Date at any time prior to the termination of the Option pursuant to this Agreement. In no event shall you be entitled to exercise the Option for any shares that are not vested. Exercise of the Option shall be made by delivery to the Company by you (or another person entitled to exercise the Option as provided hereunder) of (i) an executed “Notice of Stock Option Exercise,” and (ii) payment of the aggregate purchase price for shares purchased pursuant to the exercise. If you are on leave of absence for any reason, the Company may, in its sole discretion, determine that you will be considered still in the employ of or providing services for the Company, provided that rights to the Option may, in the discretion of the Company, be limited to the extent to which those rights were earned or vested when the leave of absence began.

(c) Payment of Purchase Price . The purchase price of shares as to which this Option is exercised shall be paid in full at the time of exercise, at your election, with the approval of the Company, (i) in cash (including check, bank draft or money order payable to the order of the Company), (ii) by delivering or constructively tendering to the Company shares of Stock having a Fair Market Value equal to the purchase price (provided such shares used for this purpose must have been held by you for such minimum period of time as may be established from time to time by the Committee), (iii) if the Stock is readily tradable on a national securities market, through a “cashless exercise” in accordance with a Company-established policy or program for the same, (iv) if permitted by the Company in its discretion, by a net exercise arrangement pursuant to which the Company will reduce the number of shares of Stock issued upon exercise by the largest whole number of the shares with a Fair Market Value that does not exceed the purchase price; provided, however, that the Company shall accept cash or other payment from you to the extent of any remaining balance of the aggregate purchase price not so satisfied, provided further that the shares of Stock will no longer be outstanding under an Option and will not be exercisable thereafter to the extent so applied or withheld to satisfy tax withholding obligations pursuant to Section 10 below, or (v) any combination of the foregoing. No fraction of a share of Stock shall be issued by the Company upon exercise of an Option or accepted by the Company in payment of the exercise price thereof; rather, you shall provide a cash payment for such amount as is necessary to effect the issuance and acceptance of only whole shares of Stock. Unless and until a certificate or certificates representing such shares shall have been issued by the Company to you, you (or the person permitted to exercise this Option in the event of your death) shall not be or have any of the rights or privileges of a stockholder of the Company with respect to shares acquirable upon an exercise of this Option.

(d) Expiration Date . This Option shall not be exercisable in any event after the expiration of ten (10) years from the Date of Grant (the “ Expiration Date ”).

3. Effect of Change in Control . Notwithstanding Section 2 of this Agreement, upon the occurrence of a Change in Control, this Option shall become fully vested and exercisable as to all shares covered hereby.

4. Effect of Termination of Employment . Except as provided below, this Option may be exercised only while you continue to perform services for the Company or any Subsidiary and will terminate and cease to be exercisable upon termination of your service.

(a) Termination By Employee Without Good Reason .

(i) If your employment relationship with the Company or any of its Subsidiaries is terminated voluntarily by you prior to the Vesting Date and such termination is not a Termination for Good Reason (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then this Option shall terminate as of the date of such termination and shall never become exercisable.

(ii) If your employment relationship with the Company or any of its Subsidiaries is terminated voluntarily by you on or after the Vesting Date and such termination is not a Termination for Good Reason, then this Option, to the extent then vested and exercisable, may be exercised by you at any time during the period ending on the earlier to occur of (A) thirty (30) days following such termination, or (B) the Expiration Date.

(b) Termination By The Company For Cause .

(i) If your employment relationship with the Company or any of its Subsidiaries is terminated by the Company prior to the Vesting Date and such termination is a Termination for Cause (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then this Option shall terminate as of the date of termination and shall never become exercisable.

(ii) If your employment relationship with the Company or any of its Subsidiaries is terminated by the Company on or after the Vesting Date and such termination is a Termination for Cause, then this Option, to the extent then vested and exercisable, may be exercised by you at any time during the period ending on the earlier to occur of (A) thirty (30) days following such termination, or (B) the Expiration Date.

(i) Notwithstanding Section 2 of this Agreement, if your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date (x) by the Company and such Subsidiaries and such termination is not a Termination for Cause or (y) by you and such termination is a Termination for Good Reason, then this Option shall become fully vested and exercisable as to all shares covered hereby.

(ii) If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated (x) by the Company and such Subsidiaries and such termination is not a Termination for Cause or (y) by you and such termination is a Termination for Good Reason, then this Option, to the extent then vested and exercisable (including pursuant to Section 4(c)(i) above), may be exercised by you at any time during the period ending on the earlier to occur of (A) the date that is six (6) months following such termination, or (B) the Expiration Date; provided, that, if any such termination occurs upon or following the occurrence of a Change in Control, then this Option, to the extent then vested and exercisable, may be exercised by you at any time prior to the Expiration Date.

(d) Other Termination Events .

(i) If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date as a result of any of the following events:

A. your death;

B. your Disability; or

C. your Normal Retirement;

then, notwithstanding Section 2 of this Agreement, this Option shall become vested and exercisable as to a number of shares of Stock equal to the product of (I) the total number of shares of Stock initially subject to this Option times (II) a fraction, the numerator of which is the number of full months (counting the month in which your termination of employment occurs as a full month), beginning with the first full month following the date of this Agreement, during which you were employed by the Company and/or any Subsidiary and the denominator of which is 36; provided, that, if application of the foregoing calculation would result in you becoming vested in a fractional number of shares, the number of vested shares shall be rounded up to the nearest whole share. The portion, if any, of this Option that thereby becomes vested and exercisable may be exercised by you at any time during the period specified in Section 4(d)(ii) below. The portion, if any, of this Option that does not thereby become vested and exercisable as of the date of the termination of your employment relationship shall terminate as of the date of termination and shall never become exercisable.

(ii) If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated for one of the reasons specified in clauses (A) or (B) of Section 4(d)(i) above, then this Option, to the extent then vested and exercisable (including pursuant to Section 4(d)(i) above), may be exercised by you at any time during the period ending on the earlier to occur of (A) the date that is six (6) months following such termination, or (B) the Expiration Date. If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated for the reason specified in clause (C) of Section 4(d)(i) above, then this Option, to the extent then vested and exercisable, may be exercised by you at any time prior to the Expiration Date.

(iii) For purposes of this Section 4(d) , “ Disability ” shall have the meaning ascribed to it in the Severance Agreement between you and the Company or one of its Subsidiaries; and “ Normal Retirement ” shall mean the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed due to your retirement on or after the date you attain age 60.

5. Adjustment Provisions . In the event there is any change in the Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, the number of shares associated with this Option shall be adjusted in the manner consistent with the adjustment provisions provided in Section 9(b) and 9(c)(ii) of the Plan.

6. Transferability . This Option, and any rights or interests therein, will be transferable by you only to the extent permitted pursuant to the terms of Section 10 of the Plan or approved by the Committee.

7. Furnish Information . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

8. Remedies . The parties to this Agreement shall be entitled to recover from each other reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise. If, due to Section 4 of the Plan, the Company fails or is unable to permit you to exercise all or any part of this Option following your delivery of written notice of exercise to the Company and tender of performance in accordance with this Agreement (which failure shall not be deemed a permitted delay pursuant to Section 24 of this Agreement), as your sole and exclusive remedy for such failure, in addition to the rights provided under the first sentence of this Section 8 , you may require the Company to pay to you an amount in cash equal to the product of (i) the number of shares of Stock with respect to which the Company failed to permit you to exercise your Option, times (ii) the difference of (A) the Fair Market Value of one share of Stock on the date of your exercise minus (B) the purchase price set forth in Section 1 of this Agreement (as adjusted pursuant to this Agreement and the Plan). The Company shall make such payment to you within ten (10) days following receipt of your written demand therefor, subject to compliance with any tax withholding obligations that the Company in its discretion deems to be necessary with respect to such payment. Upon such payment to you, that portion of the Option as to which you tendered a notice of exercise but for which exercise was not permitted shall terminate and cease to be exercisable.

9. Confidential Information and Nonsolicitation .

(a) As further consideration for the granting of the Option hereunder, you hereby agree with the Company that, during and following your employment relationship with the Company and each of its Subsidiaries by which you are employed, you will keep confidential all confidential or proprietary information and materials, as well as all trade secrets, belonging to the Company or one of its Subsidiaries, or their customers or other third parties who furnished such information, materials, and/or trade secrets to the Company or its Subsidiary with

expectations of confidentiality (“ Confidential Information ”). Confidential Information shall not include information that (A) is already properly in the public domain or enters the public domain with the express consent of the Company, or (B) is intentionally made available by the Company to third parties without any expectation of confidentiality. Upon the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed, you promise to promptly return to the Company all Confidential Information, and all documents and materials (including electronically stored information) in your possession, custody or control that constitutes or reflects Confidential Information. Notwithstanding the foregoing, you may disclose information as may be required by law and may disclose information in confidence to your spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan, provided that you ensure that such spouse or advisor or institution treats the information confidentially and does not disclose such information or use it for his, her or its own benefit. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor militating against the advisability of granting any such future award to you. Such consideration shall be in addition to the rights and remedies available to the Company pursuant to paragraph (d) below.

(b) As an incentive for the Company to issue you this Award, and in consideration of the Company’s promise to provide you with Confidential Information and so as to protect the Company’s legitimate business interests, including the protection of its Confidential Information and the goodwill with which you will be associated, and that this Award will encourage you to build, you agree that during your employment relationship with the Company and each of its Subsidiaries by which you are employed, and for a period of twelve (12) months immediately following the time that you are no longer employed by the Company or any of its Subsidiaries, you will not, directly or indirectly (i) solicit or encourage (or assist another in soliciting or encouraging) any employee, contractor, consultant, supplier, or vendor of the Company or any of its Subsidiaries to terminate or lessen his, her or its relationship with the Company or any of its Subsidiaries, or (ii) on behalf of a Competing Business, engage, employ, or solicit or contact for employment or engagement (or assist another in such activity) any employee of the Company or any of its Subsidiaries or any person who was an employee of the Company or any of its Subsidiaries at any time during the last twelve (12) months of your employment with the Company and any of its Subsidiaries (or, if you are employed by the Company and any of its Subsidiaries for less than twelve (12) months, those persons who were employees of the Company or any of its Subsidiaries during your employment with the Company and any of its Subsidiaries). For purposes of this Agreement, “ Competing Business ” means any person, entity, or other business concern (other than the Company or any of its Subsidiaries) that engages in, or is planning to engage in, the business conducted by the Company and any of its Subsidiaries for which you provide services during the term of your employment with the Company and any of its Subsidiaries, including without limitation, the business of oil and gas exploration and production, the gathering and transportation of oil and gas production, and the drilling, completion and/or servicing of oil and gas wells.

(e) Your obligations under this Section shall survive the termination of this Agreement and your employment, regardless of the reason for such termination.

10. Payment of Taxes .

(a) Withholding Requirement . The Committee may, in its discretion, require you to pay to the Company at the time of exercise of an Option or thereafter, the amount that the Committee deems necessary to satisfy the Company’s current or future obligation to withhold federal, state or local income or other taxes that you incur by exercising the Option. In connection with such an event requiring tax withholding, you may (i) direct the Company, in the Company’s discretion, to withhold from the shares of Stock to be issued upon exercise the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ Fair Market Value as of the date of exercise; (ii) deliver to the Company, in the Company’s discretion, sufficient shares of Stock (based upon the Fair Market Value as of the date of such delivery) to satisfy the Company’s tax withholding obligation; or (iii) deliver sufficient cash to the Company to satisfy its tax withholding obligations. If you elect to use a Stock withholding feature, you must make the election at the time and in the manner that the Committee prescribes. The Committee may, at its sole option, deny your request to satisfy withholding obligations through shares of Stock instead of cash.

(b) Deficiency . If you fail to pay the required amount to the Company and fail to make a Stock withholding election pursuant to Section 10(a)(i) or 10(a)(ii) above, the Company is authorized to withhold from any cash remuneration (or, Stock remuneration, including withholding any shares of Stock distributable to you upon exercise of this Option) then or thereafter payable to you any tax required to be withheld by reason of the exercise of this Option or the disposition of shares of Stock acquired by exercise of this Option. If the Committee subsequently determines that the aggregate Fair Market Value of any shares of Stock withheld or delivered as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, you shall pay to the Company, immediately upon the Committee’s request, the amount of the deficiency in the form of payment requested by the Committee.

11. Right of the Company and Subsidiaries to Terminate Employment . Nothing contained in this Agreement shall confer upon you the right to continue in the employ of the Company or any Subsidiary of the Company, or interfere in any way with the rights of the Company or any Subsidiary of the Company to terminate your employment at any time.

12. No Liability for Good Faith Determinations . Neither the Company nor the members of the Board and the Committee shall be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Option granted hereunder.

13. No Guarantee of Interests . The Board and the Company do not guarantee the Stock of the Company from loss or depreciation.

14. Company Records . Records of the Company or its Subsidiaries regarding your period of employment, termination of employment and the reason therefor, leaves of absence, re-employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

15. Severability . If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

16. Notices . Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any such notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third Business Day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company or you may change, at any time and from time to time, by written notice to the other, the address which it or he had previously specified for receiving notices. The Company and you agree that any notices shall be given to the Company or to you at the following addresses:


Company:		Pioneer Natural Resources Company
		Attn: Corporate Secretary
		5205 N. O’Connor Boulevard, Suite 200
		Irving, Texas 75039-3746

Holder:		At your current address as shown in the Company’s records.

17. Waiver of Notice . Any person entitled to notice hereunder may waive such notice in writing.

18. Successors . This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

19. Headings . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

20. Governing Law . All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of the State of Delaware except to the extent Delaware law is preempted by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock.

21. Execution of Receipts and Releases . Any payment of cash or any issuance or transfer of shares of Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

22. Amendment . This Agreement may be amended at any time unilaterally by the Company, provided that such amendment is consistent with all applicable laws and does not reduce any rights or benefits you have accrued pursuant to this Agreement. This Agreement may also be amended at any time unilaterally by the Company to the extent the Company believes in good faith that such amendment is necessary or advisable to bring this Agreement in compliance with any applicable laws, including Section 409A of the Code.

23. The Plan . This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan; provided, however, that notwithstanding anything to the contrary herein, any provision of this Agreement that is inconsistent with the provisions of Section 9(c), (e), and (f) of the Plan shall control over such provisions of the Plan.

24. Agreement Respecting Securities Laws .

(a) Notwithstanding any provision of this Agreement to the contrary, the grant of the Option and the issuance of Stock will be subject to compliance with all applicable requirements of federal, state, and foreign securities laws and with the requirements of any stock exchange or market system upon which the Stock may then be listed. The Company may delay the exercise of the Option if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state, or foreign securities laws or other laws or regulations or

the requirements of any stock exchange or market system upon which the Stock may then be listed. Until the shares of Stock acquirable upon the exercise of the Option have been registered for issuance under the Securities Act of 1933, as amended (the “ Securities Act ”), the Company will not issue such shares unless you provide the Company with a written opinion of legal counsel, who shall be satisfactory to the Company, addressed to the Company and satisfactory in form and substance to the Company’s counsel, to the effect that the proposed issuance of such shares to you may be made without registration under the Securities Act. YOU ARE CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, YOU MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Except as expressly provided in Section 8 of this Agreement, the inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option will relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority has not been obtained. As a condition to the exercise of the Option, the Company may require you to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company.

(b) Notwithstanding Section 4(c) or (d) , if the exercise of the Option within the applicable time period set forth in Section 4(c) or (d) is prevented by the provisions of Section 24(a) above, the Option will remain exercisable until 30 days after the date you are notified by the Company that the Option is exercisable, but in any event no later than the Expiration Date. The Company makes no representation as to the tax consequences of any such delayed exercise. You should consult with your tax advisor as to the tax consequences of any such delayed exercise.

25. Extension in Connection with Section 16 . Notwithstanding Section 4(c) or (d) , if a sale within the applicable time periods set forth in Section 4(c) or (d) of shares acquired upon exercise of the Option would subject you to suit under Section 16(b) of the Exchange Act, the Option will remain exercisable until the earliest to occur of (a) the 10th day following the date on which a sale of such shares by you would no longer be subject to such suit, (b) the 190th day after your termination of service with the Company and its Subsidiaries, or (c) the Expiration Date. The Company makes no representation as to the tax consequences of any such delayed exercise. You should consult with your tax advisor as to the tax consequences of any such delayed exercise.

26. Status of Stock . You agree that (a) the certificates representing the shares of Stock purchased under this Option may bear such legend or legends as the Committee deems appropriate in order to assure compliance with Section 4 and applicable securities laws, (b) the Company may refuse to register the transfer of the shares of Stock purchased under this Option on the stock transfer records of the Company if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of Section 24 or any applicable securities law, and (c) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the shares of Stock purchased under this Option.

Schedule 1

The document to which this Schedule I is attached is the form of Nonstatutory Stock Option Agreement between the Company and each of Scott D. Sheffield and Timothy L. Dove. The form of Nonstatutory Stock Option Agreement between the Company and its other executive officers varies from this form as follows:

1. The form of Nonstatutory Stock Option Agreement between the Company and its other executive officers varies from this form by modifying Section 4 to provide, in its entirety, the following:

4. Effect of Termination of Employment . Except as provided below, this Option may be exercised only while you continue to perform services for the Company or any Subsidiary and will terminate and cease to be exercisable upon termination of your service.

(a) Termination By Employee Without Good Reason .

(b) Termination By The Company For Cause .

(i) If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated prior to the Vesting Date as a result of any of the following events:

A. your death;

B. your Disability;

C. your Normal Retirement; or

D. a termination by the Company and its Subsidiaries that is not a Termination for Cause or a termination by you that is a Termination for Good Reason;

then, notwithstanding Section 2 of this Agreement, this Option shall become vested and exercisable as to a number of shares of Stock equal to the product of (I) the total number of shares of Stock initially subject to this Option times (II) a fraction, the numerator of which is the number of full months (counting the month in which your termination of employment occurs as a full month), beginning with the first full month following the date of this Agreement, during which you were employed by the Company and/or any Subsidiary and the denominator of which is 36; provided, that, if application of the foregoing calculation would result in you becoming vested in a fractional number of shares, the number of vested shares shall be rounded up to the nearest whole share. The portion, if any, of this Option that thereby becomes vested and exercisable may be exercised by you at any time during the period specified in Section 4(c)(ii) below. The portion, if any, of this Option that does not thereby become vested and exercisable as of the date of the termination of your employment relationship shall terminate as of the date of termination and shall never become exercisable.

(ii) If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated for one of the reasons specified in clauses (A), (B) or (D) of Section 4(c)(i) above, then this Option, to the extent then vested and exercisable (including pursuant to Section 4(c)(i) above), may be exercised by you at any time during the period ending on the earlier to occur of (A) the date that is six (6) months following such termination, or (B) the Expiration Date; provided, that, if any such termination (I) is a termination by the Company and its Subsidiaries that is not a Termination for Cause or a termination by you that is a Termination for Good Reason and (II) occurs upon or following the occurrence of a Change in Control, then this Option, to the extent then vested and exercisable, may be exercised by you at any time prior to the Expiration Date. If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated for the reason specified in clause (C) of Section 4(c)(i) above, then this Option, to the extent then vested and exercisable, may be exercised by you at any time prior to the Expiration Date.

(iii) For purposes of this Section 4(c), “ Disability ” shall have the meaning ascribed to it in the Severance Agreement between you and the Company or one of its Subsidiaries; and “ Normal Retirement ” shall mean the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed due to your retirement on or after the date you attain age 60.

2. The form of Nonstatutory Stock Option Agreement between the Company and its other executive officers varies from this form by modifying Section 24(b) to provide, in its entirety, the following:

(b) Notwithstanding Section 4(c), if the exercise of the Option within the applicable time period set forth in Section 4(c) is prevented by the provisions of Section 24(a) above, the Option will remain exercisable until 30 days after the date you are notified by the Company that the Option is exercisable, but in any event no later than the Expiration Date. The Company makes no representation as to the tax consequences of any such delayed exercise. You should consult with your tax advisor as to the tax consequences of any such delayed exercise.

3. The form of Nonstatutory Stock Option Agreement between the Company and its other executive officers varies from this form by modifying Section 25 to provide, in its entirety, the following:

25. Extension in Connection with Section 16 . Notwithstanding Section 4(c), if a sale within the applicable time periods set forth in Section 4(c) of shares acquired upon exercise of the Option would subject you to suit under Section 16(b) of the Exchange Act, the Option will remain exercisable until the earliest to occur of (a) the 10th day following the date on which a sale of such shares by you would no longer be subject to such suit, (b) the 190th day after your termination of service with the Company and its Subsidiaries, or (c) the Expiration Date. The Company makes no representation as to the tax consequences of any such delayed exercise. You should consult with your tax advisor as to the tax consequences of any such delayed exercise.

EXHIBIT 10.6

RESTRICTED STOCK AWARD AGREEMENT

PIONEER NATURAL RESOURCES COMPANY

2006 LONG TERM INCENTIVE PLAN

February 22, 2012

To:

This Agreement sets forth the terms of the agreement between you and the Company with respect to the Restricted Shares. By accepting this Agreement, you agree to be bound by all of the terms hereof.

1. Escrow of Restricted Shares . The Company shall, at its sole election, either issue in your name a certificate for the Restricted Shares and retain that certificate for the period during which the restrictions described in Section 3 are in effect, or issue the Restricted Shares in your name electronically and control the Restricted Shares electronically during the period of restriction. You shall, if requested, execute and deliver to the Company a stock power in blank for the Restricted Shares and deliver such stock power to the Company. You hereby agree that the Company shall hold the certificate for, or control electronically, the Restricted Shares and the related stock power pursuant to the terms of this Agreement until such time as the restrictions described in Section 3 lapse as described in Sections 4, 5 and 6, or the Restricted Shares are cancelled pursuant to the terms of Section 3.

4. Expiration of Restrictions and Risk of Forfeiture . Subject to the terms and conditions of this Agreement, the restrictions described in Section 3 shall lapse in full as follows:

(a) Restrictions will lapse on one-third of the Restricted Shares on the third anniversary of the date of this Agreement;

(b) Restrictions will lapse on one-third of the Restricted Shares on the fourth anniversary of the date of this Agreement; and

provided, however, that such restrictions will expire on the above dates only if you have been an employee of the Company or of a Subsidiary continuously from the date of this Agreement through the applicable vesting date.

6. Termination of Employment .

(a) Termination By Employee Without Good Reason . If your employment relationship with the Company or any of its Subsidiaries is terminated voluntarily by you and such termination is not a Termination for Good Reason (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then that portion, if any, of the Restricted Shares granted pursuant to this Agreement for which restrictions have not yet lapsed as of the date of termination shall become null and void as of the date of such termination; provided, however, that the portion, if any, of the Restricted Shares granted pursuant to this Agreement for which restrictions have lapsed as of the date of such termination will survive the termination of employment.

(b) Termination By The Company For Cause . If your employment relationship with the Company or any of its Subsidiaries is terminated by the Company and such termination is a Termination for Cause (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then that portion, if any, of the Restricted Shares granted pursuant to this Agreement shall become null and void as of the date of termination; provided, however, that the portion, if any, of the Restricted Shares granted pursuant to this Agreement for which restrictions have lapsed as of the date of such termination will survive the termination of employment.

(c) Other Termination Events . If your employment relationship with the Company and each of its Subsidiaries by which you are employed is terminated as a result of any of the following events:

(i) your death;

(ii) your Disability;

(iii) your Normal Retirement;

(iv) a termination by you that is a Termination for Good Reason; or

(v) a termination by the Company that is not a Termination for Cause,

then the restrictions on a number of Restricted Shares shall automatically lapse as of the termination date as follows:

A. if such termination occurs prior to the third anniversary of the date of this Agreement, then all of the Restricted Shares granted pursuant to this Agreement shall become null and void as of the date of termination; and

B. if such termination occurs on or after the third anniversary of the date of this Agreement and if restrictions shall not have lapsed on Restricted Shares granted pursuant to this Agreement prior to termination, then restrictions will lapse on a number of such Restricted Shares equal to the product of (i) the total number of Restricted Shares as to which restrictions shall not have lapsed as of the date of termination, times (ii) a fraction, (X) the numerator of which is the difference equal to the number of full months (counting the month in which your termination of employment occurs as a full month), beginning with the first full month following the date of this Agreement, during which you were employed by the Company and/or any Subsidiary minus 36 and (Y) and the denominator of which is 24.

The portion, if any, of your Restricted Shares for which restrictions have not lapsed as of the date of the termination of your employment relationship shall become null and void as of the date of termination; provided, however, that the portion, if any, of this Award for which forfeiture restrictions have lapsed as of the date of termination will survive.

7. Adjustment Provisions . In the event there is any change in the Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, the number of shares associated with this Award of Restricted Shares subject to this Agreement shall be adjusted in the manner consistent with the adjustment provisions provided in Section 9(b) and 9(c)(ii) of the Plan. Unless otherwise determined by the Committee, Stock distributed in connection with a stock split or stock divided shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Stock has been distributed.

8. Delivery of Stock . Promptly following the expiration of the restrictions on the Restricted Shares as contemplated in Sections 4, 5 and 6 of this Agreement, the Company shall cause to be issued and delivered to you or your designee a certificate representing the number of Restricted Shares as to which restrictions have lapsed, free of any restrictive legend relating to the lapsed restrictions, upon receipt by the Company of any tax withholding as may be requested. The value of such Restricted Shares shall not bear any interest owing to the passage of time.

9. Furnish Information . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

11. Confidential Information and Nonsolicitation .

(a) As further consideration for the granting of the Restricted Shares hereunder, you hereby agree with the Company that, during and following your employment relationship with the Company and each of its Subsidiaries by which you are employed, you will keep confidential all confidential or proprietary information and materials, as well as all trade secrets, belonging to the Company or one of its Subsidiaries, or their customers or other third parties who furnished such information, materials, and/or trade secrets to the Company or its Subsidiary with expectations of confidentiality (“ Confidential Information ”). Confidential Information shall not include information that (A) is already properly in the public domain or enters the public domain with the express consent of the Company, or (B) is intentionally made available by the Company to third parties without any expectation of confidentiality. Upon the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed, you promise to promptly return to the Company all Confidential Information, and all documents and materials (including electronically stored information) in your possession, custody or control that constitutes or reflects Confidential Information. Notwithstanding the foregoing, you may disclose information as may be required by law and may disclose information in confidence to your spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan, provided that you ensure that such spouse or advisor or institution treats the information confidentially and does not disclose such information or use it for his, her or its own benefit. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor militating against the advisability of granting any such future award to you. Such consideration shall be in addition to the rights and remedies available to the Company pursuant to paragraph (d) below.

(b) As an incentive for the Company to issue you this Award, and in consideration of the Company’s promise to provide you with Confidential Information and so as to protect the Company’s legitimate business interests, including the protection of its Confidential Information and the goodwill with which you will be associated, and that this Award will encourage you to build, you agree that during your employment relationship with the Company and each of its Subsidiaries by which you are employed, and for a period of twelve (12) months immediately following the time that you are no longer employed by the Company or any of its Subsidiaries, you will not, directly or indirectly (i) solicit or encourage (or assist another in soliciting or encouraging) any employee, contractor, consultant, supplier, or vendor of the Company or any of its Subsidiaries to terminate or lessen his, her or its relationship with the Company or any of its Subsidiaries, or (ii) on behalf of a Competing Business, engage, employ, or solicit or contact for employment or engagement (or assist another in such activity) any employee of the Company or any of its Subsidiaries or any person who was an employee of the Company or any of its Subsidiaries at any time during the last twelve (12) months of your employment with the Company and any of its Subsidiaries (or, if you are employed by the Company and any of its Subsidiaries for less than twelve (12) months, those persons who were employees of the Company or any of its Subsidiaries during your employment with the Company and any of its Subsidiaries). For purposes of this Agreement, “ Competing Business ” means any person, entity, or other business concern (other than the Company or any of its Subsidiaries) that engages in, or is planning to engage in, the business conducted by the Company and any of its Subsidiaries for which you provide services during the term of your employment with the Company and any of its Subsidiaries, including without limitation, the business of oil and gas exploration and production, the gathering and transportation of oil and gas production, and the drilling, completion and/or servicing of oil and gas wells.

(e) Your obligations under this Section shall survive the termination of this Agreement and your employment, regardless of the reason for such termination.

12. Payment of Taxes . The Company may from time to time require you to pay to the Company (or the Company’s Subsidiary if you are an employee of a Subsidiary of the Company) the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s current or future obligation to withhold federal, state or local income or other taxes that you incur as a result of this Award. With respect to any required tax withholding, unless another arrangement is permitted by the Company in its discretion, the Company shall withhold from the shares of Stock to be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ Fair Market Value, as defined in the Plan, at the time as of which such determination is made. In the event the Company subsequently determines that the aggregate Fair Market Value, as defined in the Plan, of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency.

15. No Guarantee of Interests . The Board and the Company do not guarantee the Stock of the Company from loss or depreciation.

The Company and you agree that any notices shall be given to the Company or to you at the following addresses:


Company:		Pioneer Natural Resources Company
		Attn: Corporate Secretary
		5205 N. O’Connor Boulevard, Suite 200
		Irving, Texas 75039-3746

Holder:		At your current address as shown in the Company’s records.

19. Waiver of Notice . Any person entitled to notice hereunder may waive such notice in writing.

20. Successors . This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

21. Headings . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

EXHIBIT 10.7

RESTRICTED STOCK UNIT AWARD AGREEMENT

PIONEER NATURAL RESOURCES COMPANY

2006 LONG TERM INCENTIVE PLAN

February 22, 2012

To:

1. No Shareholder Rights . The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle you to any rights of a stockholder of the Company prior to the date shares of Stock are issued to you in settlement of this Award. Your rights with respect to Restricted Stock Units shall remain forfeitable at all times prior to the date on which rights become vested and the restrictions with respect to the Restricted Stock Units lapse in accordance with Section 4, 6 or 7.

2. Dividend Equivalents . In the event that the Company declares and pays a dividend in respect of its outstanding shares of Stock and, on the record date for such dividend, you hold Restricted Stock Units granted pursuant to this Agreement that have not been settled, the Company shall pay to you an amount in cash equal to the cash dividends you would have received if you were the Beneficial Owner, as of such record date, of the number of shares of Stock related to the portion of your Restricted Stock Units that have not been settled as of such record date, such payment to be made on or promptly following the date that the Company pays such dividend (however, in no event shall the dividend equivalent payment be made later than 30 days following the date on which the Company pays such dividend).

3. Conversion of Restricted Stock Units; Issuance of Stock; Payment of Stock . No shares of Stock shall be issued to you prior to the date on which the Restricted Stock Units vest and the restrictions with respect to the Restricted Stock Units lapse, in accordance with Section 4, 6 or 7. Neither this Section 3 nor any action taken pursuant to or in accordance with this Section 3 shall be construed to create a trust of any kind. After any Restricted Stock Units vest pursuant to Section 4, 6 or 7 the Company shall, on or promptly following the applicable dates set forth in Section 5, cause to be issued Stock in book entry form registered in your name in payment of such vested Restricted Stock Units upon receipt by the Company of any required tax withholding with respect to such shares. The value of any fractional Restricted Stock Units shall be paid in cash at the time Stock is issued to you in connection with the Restricted Stock Units. The value of the fractional Restricted Stock Units shall equal the percentage of a Restricted Stock Unit represented by a fractional Restricted Stock Unit multiplied by the Fair Market Value of the Stock. The value of such shares of Stock shall not bear any interest owing to the passage of time.

(a) Restrictions will lapse on one-third of the Restricted Stock Units on the third anniversary of the date of this Agreement;

(b) Restrictions will lapse on one-third of the Restricted Stock Units on the fourth anniversary of the date of this Agreement; and

(c) Restrictions will lapse on the remaining Restricted Stock Units on the fifth anniversary of the date of this Agreement;

provided, however , that such restrictions will expire on the above dates only if you have been an employee of the Company or of a Subsidiary continuously from the date of this Agreement through the applicable vesting date.

5. Payment Date . The payment date or dates of the Stock related to your Restricted Stock Units will be the date or dates on which the restrictions on such Restricted Stock Units expire as provided in Section 4, 6 or 7 of this Agreement; provided that, payment of your Restricted Stock Units may be made prior to the payment events specified in this Section 5 or in Section 27 to the limited extent necessary to pay employment or other taxes imposed on this Award.

6. Change in Control of the Company . Notwithstanding Section 4 of this Agreement, but subject to Section 27 of this Agreement, upon the occurrence of a Change in Control, all of the Restricted Stock Units subject to this Award shall become immediately and unconditionally vested and the shares of Stock related to such Restricted Stock Units shall be paid to you immediately.

7. Termination of Employment .

(a) Termination By Employee Without Good Reason . If your employment relationship with the Company or any of its Subsidiaries is terminated voluntarily by you and such termination is not a Termination for Good Reason (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then that portion, if any, of the Restricted Stock Units granted pursuant to this Agreement for which restrictions have not yet lapsed as of the date of termination shall become null and void as of the date of such termination; provided, however, that the portion, if any, of the Restricted Stock Units granted pursuant to this Agreement for which restrictions have lapsed as of the date of such termination will survive the termination of employment.

(b) Termination By The Company for Cause . If your employment relationship with the Company or any of its Subsidiaries is terminated by the Company and such termination is a Termination for Cause (as such term is defined in the Severance Agreement between you and the Company or one of its Subsidiaries), then that portion, if any, of the Restricted Stock Units granted pursuant to this Agreement for which restrictions have not lapsed as of the date of the termination shall become null and void as of the date of termination; provided, however, that the portion, if any, of the Restricted Stock Units granted pursuant to this Agreement for which restrictions have lapsed as of the date of such termination will survive the termination of employment.

(i) your death;

(ii) your Disability;

(iii) your Normal Retirement;

(iv) a termination by you that is a Termination for Good Reason; or

(v) a termination by the Company that is not a Termination for Cause,

then the restrictions on a number of the Restricted Stock Units shall automatically lapse as of the termination date as follows:

A. if such termination occurs prior to the third anniversary of the date of this Agreement, then all of the Restricted Stock Units granted pursuant to this Agreement shall become null and void as of the date of termination; and

B. if such termination occurs on or after the third anniversary of the date of this Agreement and if restrictions shall not have lapsed on Restricted Stock Units granted pursuant to this Agreement prior to termination, then restrictions will lapse on a number of such Restricted Stock Units equal to the product of (i) the total number of Restricted Stock Units as to which restrictions shall not have lapsed as of the date of termination, times (ii) a fraction, (X) the numerator of which is the difference equal to the number of full months (counting the month in which your termination of employment occurs as a full month), beginning with the first full month following the date of this Agreement, during which you were employed by the Company and/or any Subsidiary minus 36 and (Y) the denominator of which is 24.

The portion, if any, of your Restricted Stock Units for which the restrictions have not lapsed as of the termination date of your employment relationship shall become null and void as of the termination date; provided, however, that the portion, if any, of this Award for which forfeiture restrictions have lapsed as of the date of termination shall survive.

8. Adjustment Provisions . In the event there is any change in the Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares or otherwise, the number of shares associated with this Award of Restricted Stock Units subject to this Agreement shall be adjusted in the manner consistent with the adjustment provisions provided in Section 9(b) and 9(c)(ii) of the Plan.

11. Confidential Information and Nonsolicitation .

Information shall not include information that (A) is already properly in the public domain or enters the public domain with the express consent of the Company, or (B) is intentionally made available by the Company to third parties without any expectation of confidentiality. Upon the termination of your employment relationship with the Company and each of its Subsidiaries by which you are employed, you promise to promptly return to the Company all Confidential Information, and all documents and materials (including electronically stored information) in your possession, custody or control that constitutes or reflects Confidential Information. Notwithstanding the foregoing, you may disclose information as may be required by law and may disclose information in confidence to your spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan, provided that you ensure that such spouse or advisor or institution treats the information confidentially and does not disclose such information or use it for his, her or its own benefit. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor militating against the advisability of granting any such future award to you. Such consideration shall be in addition to the rights and remedies available to the Company pursuant to paragraph (d) below.

(b) As an incentive for the Company to issue you this Award, and in consideration of the Company’s promise to provide you with Confidential Information and so as to protect the Company’s legitimate business interests, including the protection of its Confidential Information and the goodwill with which you will be associated, and that this Award will encourage you to build, you agree that during your employment relationship with the Company and each of its Subsidiaries by which you are employed, and for a period of twelve (12) months immediately following the time that you are no longer employed by the Company or any of its Subsidiaries, you will not, directly or indirectly (i) solicit or encourage (or assist another in soliciting or encouraging) any employee, contractor, consultant, supplier, or vendor of the Company or any of its Subsidiaries to terminate or lessen his, her or its relationship with the Company or any of its Subsidiaries, or (ii) on behalf of a Competing Business, engage, employ, or solicit or contact for employment or engagement (or assist another in such activity) any employee of the Company or any of its Subsidiaries or any person who was an employee of the Company or any of its Subsidiaries at any time during the last twelve (12) months of your employment with the Company and any of its Subsidiaries (or, if you are employed by the Company and any of its Subsidiaries for less than twelve (12) months, those persons who were employees of the Company or any of its Subsidiaries during your employment with the Company and any of its Subsidiaries). For purposes of this Agreement, “ Competing Business ” means any person, entity, or other business concern (other than the Company or any of its Subsidiaries) that engages in, or is planning to engage in, the business conducted by the Company and any of its Subsidiaries for which you provide services during the term of your employment with the Company and any of its Subsidiaries, including without limitation, the business of oil and gas exploration and production, the gathering and transportation of oil and gas production, and the drilling, completion and/or servicing of oil and gas wells.

might experience by complying with its terms. You further acknowledge and agree that the restrictions set forth in this Section are not adverse to the public interest. You further agree that the limitations as to time and scope of activity to be restrained contained herein are reasonable and are not greater than necessary to protect the Confidential Information, goodwill and other legitimate business interests of the Company. Although the Company and you believe the limitations as to time and scope of activity contained in this Section are reasonable and do not impose a greater restraint than necessary to protect the Company’s legitimate business interests, if this is judicially determined not to be the case, the Company and you specifically request that the limitations contained in this Section be reformed to the extent necessary to make this Section enforceable.

(e) Your obligations under this Section shall survive the termination of this Agreement and your employment, regardless of the reason for such termination.

12. Payment of Taxes . The Company may from time to time require you to pay to the Company (or the Company’s Subsidiary if you are an employee of a Subsidiary of the Company) the amount that the Company deems necessary to satisfy the Company’s or its Subsidiary’s current or future obligation to withhold federal, state or local income or other taxes or social security or other obligations that you incur as a result of this Award, including without limitation with respect to any payment pursuant to Section 2 of this Agreement. With respect to any required tax withholding, unless another arrangement is permitted by the Company in its discretion, the Company shall withhold from the shares of Stock to be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ Fair Market Value at the time as of which such determination is made. In the event the Company subsequently determines that the aggregate Fair Market Value of any shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you shall pay to the Company, immediately upon the Company’s request, the amount of that deficiency.

15. No Guarantee of Interests . The Board and the Company do not guarantee the Stock of the Company from loss or depreciation.

The Company and you agree that any notices shall be given to the Company or to you at the following addresses:


Company:		Pioneer Natural Resources Company
		Attn: Corporate Secretary
		5205 N. O’Connor Boulevard, Suite 200
		Irving, Texas 75039-3746

Holder:		At your current address as shown in the Company’s records.

19. Waiver of Notice . Any person entitled to notice hereunder may waive such notice in writing.

20. Successors . This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

21. Headings . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

26. Agreement Respecting Securities Act of 1933 . You represent and agree that you will not sell the Stock that may be issued to you pursuant to your Restricted Stock Units except pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to an exemption from registration under the Securities Act of 1933 (including Rule 144 of the Securities Act).

27. Special Provisions Addressing Section 409A of the Code .

pay employment or other taxes imposed on this Award. To the extent shares of Stock related to the Restricted Stock Units are not paid to you upon a Change in Control as a result of the limitations described in the preceding sentence, the payment date of the Stock related to your Restricted Stock Units shall be the earlier to occur of:

(i) the time or times specified in Section 4 of this Agreement;

(b) Termination of Employment . Notwithstanding the provisions of Section 7(c) that may be to the contrary, if you have reached the age of 60 or later at the time of the event giving rise to the termination of your employment relationship with the Company and each of its Subsidiaries, any payment that becomes due to you pursuant to Section 7(c) of this Agreement shall only be paid to you on the earlier to occur of:

(i) the time or times specified in Section 4 of this Agreement; or

28. Electronic Delivery and Acknowledgement . No signature by you is required to accept the award represented by this Agreement. By your acceptance of this Award, you are acknowledging that you have received and read, understood and accepted all the terms, conditions and restrictions of this Agreement and the Plan. The Company may, in its sole discretion, deliver any documents related to this Award and this Agreement, or other awards that have been or may be awarded under the Plan, by electronic means, including prospectuses, proxy materials, annual reports and other related documents, and the Company may, in its sole

discretion, engage a third party to effect the delivery of these documents on its behalf and provide other administrative services related to this Award and the Plan. By your acceptance of the award represented by this Agreement, you consent to receive such documents by electronic delivery and to the engagement of any such third party.

EXHIBIT 10.8

AMENDMENT NO. 7 TO THE

PIONEER NATURAL RESOURCES USA, INC.

401(k) AND MATCHING PLAN

(Amended and Restated Effective as of January 1, 2008)

THIS AMENDMENT NO. 7 is made and entered into by Pioneer Natural Resources USA, Inc. (the “ Company ”):

WITNESSETH:

WHEREAS , the Company maintains the Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan (the “ Plan ”);

WHEREAS , pursuant to Section 8.3 of the Plan, the Benefit Plan Design Committee (the “Committee”) of the Company maintains the authority to amend the Plan at any time; and

WHEREAS , the Committee desires to amend the Plan to make certain discretionary changes including (i) adding a new participating employer; (ii) providing for prior service for purposes of eligibility and vesting; and (iii) allowing direct rollovers of outstanding loans.

NOW THEREFORE , the Plan is hereby amended effective April 2, 2012 as follows.

1. Section 1.1(e) of the Plan is hereby amended in its entirety as follows:

“Basic Compensation” means, for all Participants who are not members of the Orange County Union and the Glass Rock/Millwood Union, the sum of (i) the base salary or wages and any overtime payable by an Employer to an Employee for personal services rendered to the Employer (including sick and vacation pay), but excluding any amount payable pursuant to an Employer’s salary continuation program, (ii) any contributions made by an Employer on behalf of the Employee to a qualified cash or deferred arrangement (within the meaning of Code Section 401(k)) maintained by such Employer, including any Catch-Up Contributions, Pre-Tax Contributions and Pre-Tax Bonus Contributions made by an Employer to this Plan on behalf of such Employee, (iii) any compensation reduction amounts elected by such Employee for the purchase of benefits pursuant to a cafeteria plan (within the meaning of Code Section 125(d)) maintained by an Employer, (iv) any elective amounts that are not includible in the gross income of an Employee by reason of Code Section 132(f)(4), and (v) any military differential wage payments made by the Employer; provided, however, that the Basic Compensation of an Employee taken into account under the Plan for any Plan Year shall not exceed $200,000 (as adjusted to take into account any cost-of-living increases authorized pursuant to Code Section 401(a)(17)(B)) and bonuses to be paid on April 15, 2012 for services performed for a previous employer and any quarterly bonus paid will be excluded.

For all Participants who are members of the Orange County Union and the Glass Rock/Millwood Union, “Basic Compensation” means “Compensation” as defined under Section 1.1(k) of the Plan with the following exclusions:

(a) reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation, and welfare benefits;

(b) amounts earned but not paid during the Plan Year solely because of the timing of pay periods and pay dates (the “administrative delay rule”);

(c) salary continuation payments paid to a Participant who is permanently and totally disabled (as defined by Code Section 22(e)(3));

(d) bonuses to be paid on April 15, 2012 for services performed for a previous employer; and

(e) any quarterly bonus paid.

2. The following sentence is hereby added to the first paragraph of Section 1.1(ff) of the Plan as follows:

Solely for the purpose of determining the Period of Service completed by a Covered Employee who was in the employ of Carmeuse Lime, Inc. (or a subsidiary thereof) on April 1, 2012, and who became an employee of an Employer on April 2, 2012 and a Participant in this Plan on April 2, 2012, service with Carmeuse Lime, Inc. or a subsidiary thereof prior to April 2, 2012 shall be considered to be service with an Employer.

3. The following sentence is hereby added to the end of Section 1.1(iii) as follows:

Solely for the purpose of determining a Year of Eligibility Service completed by a Covered Employee who was in the employ of Carmeuse Lime, Inc. (of a subsidiary thereof) on April 1, 2012, and who became an employee of an Employer on April 2, 2012 and a Participant in this Plan on April 2, 2012, service with Carmeuse Lime, Inc. or a subsidiary thereof prior to April 2, 2012 shall be considered to be service with an Employer for purposes of determining eligibility to participate in the Plan.

4. Section 3.9(a) of the Plan is hereby amended in its entirety as follows:

(a) a direct rollover of an eligible rollover distribution, including a distribution consisting of Roth Rollover Property and outstanding loans only from the Carmeuse Lime Inc. 401(k) Plan, from: (i) a qualified plan described in Code Section 401(a) or 403(a), including after tax employee contributions, (ii) an annuity contract described in Code Section 403(b), excluding after tax employee contributions, or (iii) an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; or

5. Section 3.2(a) of the Plan shall be amended in its entirety as follows:

(a) Unless provided otherwise in subsection (d) of the Section below, for each pay period an Employer shall make to the Plan for each Participant in its employ a Matching Contribution equal to 200% of the Pre-Tax Contributions and Pre-Tax Contributions designated as Roth Contributions made by the Employer on such Participant’s behalf during such pay period which are not in excess of 5% of such Participant’s Basic Compensation for such pay period.

6. Subsection (d) shall be added to Section 3.2 of the Plan as follows:

(d) For each Participant who was employed by Carmeuse Lime, Inc. or a subsidiary thereof and part of a collective bargaining unit as of April 1, 2012, for each pay period an Employer shall make to the Plan for each such Participant in its employ a Matching Contribution as set forth below:

(i) Orange County Union. A Matching Contribution equal to 100% of the first 4% and 50% of the next 2% of Pre-Tax Contributions and Pre-Tax Contributions designated as Roth Contributions made by the Employer on such Participant’s behalf during such pay period which are not in excess of 5% of such Participant’s Basic Compensation for such pay period.

(ii) Glass Rock/Millwood Union. A Matching Contribution equal to 50% of the first 6% of Pre-Tax Contributions and Pre-Tax Contributions designated as Roth Contributions made by the Employer on such Participant’s behalf during such pay period which are not in excess of 3% of such Participant’s Basic Compensation for such pay period.

7. The introduction to the table in Section 5.2 of the Plan is hereby amended in its entirety as follows:

The amounts credited to the Employer Account and Matching Plan Account of a Participant shall become fully vested upon the occurrence of any of the following events while the Participant is in the employ of, on authorized leave of absence from an Employer or Affiliated Company: (1) the completion of an Hour of Service by the Participant on or after the date he or she attains age 60, (2) the Participant’s death, or (3) the Participant’s Permanent Disability. Further, the amounts credited to the Employer Account and Matching Plan Account of a Participant who dies while performing qualified military service (as defined in

Code Section 414(u)) on or after January 1, 2007 also shall become fully vested as if an Employee. Unless sooner vested pursuant to the preceding sentence, and except as provided in subsections (b) and (c) of this Section and Section 5.3, the amounts credited to a Participant’s Employer Account and Matching Plan Account shall vest in accordance with the following schedule:

8. Subsection (c) is hereby added to Section 5.2 of the Plan as follows:

(c) Unless sooner vested pursuant to subsection (a) of this Section, for Participants who were employed by Carmeuse Lime, Inc. or a subsidiary thereof and part of a collective bargaining unit as of April 1, 2012, the amounts credited to that Participant’s Employer Account and Matching Plan Account shall vest in accordance with the following schedule:


Period of Service Completed by Participant	Percentage Vested
Less than 1 year		0	%
1 year but less than 2 years		33	%
2 years but less than 3 years		67	%
3 or more years		100	%

NOW, THEREFORE , be it further provided that except as provided above, the Plan shall continue to read in its current state.

* * * * * * * *

IN WITNESS WHEREOF , the Company has executed this Amendment No. 7 this 2nd day of April, 2012, to be effective as specified above.


PIONEER NATURAL RESOURCES USA, INC.

By:	/s/ Larry N. Paulsen
	Name:	Larry N. Paulsen
	Title:	Vice President, Administration and Risk Management

EXHIBIT 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Scott D. Sheffield, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Pioneer Natural Resources Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 7, 2012

/s/ Scott D. Sheffield

Scott D. Sheffield, Chairman and

Chief Executive Officer

EXHIBIT 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Richard P. Dealy, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Pioneer Natural Resources Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 7, 2012

/s/ Richard P. Dealy

Richard P. Dealy, Executive Vice President

and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

OF PIONEER NATURAL RESOURCES COMPANY

PURSUANT TO 18 U.S.C. § 1350

I, Scott D. Sheffield, Chairman and Chief Executive Officer of Pioneer Natural Resources Company (the “Company”), hereby certify that the accompanying Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 and filed with the Securities and Exchange Commission pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of that section.

I further certify that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



		/s/ Scott D. Sheffield
Name:		Scott D. Sheffield, Chairman and
		Chief Executive Officer
Date:		May 7, 2012

EXHIBIT 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

OF PIONEER NATURAL RESOURCES COMPANY

PURSUANT TO 18 U.S.C. § 1350

I, Richard P. Dealy, Executive Vice President and Chief Financial Officer of Pioneer Natural Resources Company (the “Company”), hereby certify that the accompanying Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 and filed with the Securities and Exchange Commission pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of that section.

I further certify that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



		/s/ Richard P. Dealy
Name:		Richard P. Dealy, Executive Vice
		President and Chief Financial Officer
Date:		May 7, 2012