Pioneer Natural Resources looks to gain investment-grade rating through debt reduction

By Sara Rosenberg

New York, Dec. 16 - Pioneer Natural Resources Co. remains focused on returning the company to investment-grade status by reducing its debt, company management said.

The company expects year-end debt-to-book capitalization to be 47% to 48% and is targeting a long-term range for debt-to-book capitalization of 37% to 43%.

The company even closed on a new $700 million unsecured revolving credit facility on Tuesday that incorporates investment-grade terms.

To bring leverage down, the company plans to use a portion of its expected excess cash flow in the coming year to reduce debt by a minimum of $100 million, according to a company news release.

Furthermore, since there is an expectation of generating excess cash flow during 2004 through 2006, the company has approved a plan to begin a dividend program of $0.20 per common share, payable in two semiannual installments of $0.10 per common share beginning in 2004.

After funding capital programs, paying dividends and achieving leverage targets, the company said it intends to use excess cash flow to fund the development of new exploration and to selectively acquire additional interests in its core areas. Pioneer also will look into share repurchases and, in fact, has renewed and approved a $200 million common stock repurchase program, according to the release.

"Having identified and initiated development of the projects that are expected to drive our production growth into 2005, we can focus our attention on building long-term value and growth through the last half of the decade," said Scott Sheffield, chairman and chief executive officer, in the release.

"We expect to generate significant excess cash flow and will strive to invest in only the highest-return projects. We have the flexibility to choose among developing exploration successes, acquiring additional core area assets, repurchasing common shares and/or reducing debt to maximize value for our long-term shareholders."

Pioneer is a Dallas-based independent oil and gas exploration and production company.

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