2006

Acquisition of Working Interests in the Gulf of Mexico Oil and Gas Fields from Pioneer

Feb. 24. 2006
Marubeni Corporation

Marubeni hereby announces an agreement with Pioneer Natural Resources Company (‘Pioneer’, hereinafter), one of the large listed US independent oil and gas companies, to acquire working interests in multiple oil and gas assets in the GOM, including several producing and developing fields and various exploration blocks. The purchase and sales agreement was executed between our 100% subsidiary, Marubeni Offshore Production (USA) Inc. and Pioneer’s 100% subsidiary, Pioneer Natural Resources USA Inc. in Dallas,Texas, USA on [February 23, 2006.]

This transaction is scheduled to be completed by the end of March, at the earliest, after fulfilling several customary conditions precedent, such as confirmation of exercise/non-exercise of the preferential rights to purchase by the existing Joint Venture partners for each field and approvals from administrative agencies. The final purchase price shall be determined after fulfillment of all conditions precedent with possible reduction by the amount of the allocated purchase price to any asset for which preferential rights have been exercised. If we acquire all assets, the purchase price at the economic effective date of January 1, 2006 is USD1.3 billion.  After adjusting for interim period cash flow received by Pioneer from the GOM production, which is estimated to be approximately USD0.15 billion, the final cash settlement amount to Pioneer at closing is expected to be approximately USD1.15 billion, equivalent to approximately JPY136 billion at the exchange rate of USD1 = JPY118.

Marubeni will acquire 97 leased blocks, including 6 main producing and developing fields.  The leases cover a broad area, approximately 900km from east to west in US GOM. The current net production rate is over 30,000 BOEPD in total oil and gas. In addition, we intend to progress several future development projects and selectively participate in promising exploration prospects. We are confident that through this acquisition we will obtain high quality assets with a sufficiently higher ROI than our internal hurdle rate.

We, Marubeni, rank upstream investment in E&P business as one of our core business lines and are focused on acquiring good quality assets. We hold working interests in oil and gas fields in UK North Sea, India, Qatar and the US GOM with current production of approximately 50,000 BOEPD. Including additional production through the acquisition from Pioneer, our production rate will increase to approximately 80,000 BOEPD. In addition, we have interests in LNG projects in Qatar and Equatorial Guinea, and we are one of main shareholders in a Japanese joint venture company for the Sakhalin 1 Project. We shall continue to pursue E&P assets at all stages of exploration/development/production in the Middle East, Africa and Latin America as well as our existing core areas aforementioned.

[Outline of Pioneer Natural Resources Company]

Large independent oil and gas company headquartered in Dallas, Texas US. It holds assets in the United States, Canada and Africa.

     Enployees : 1,694

     Revenue : USD2,373Mil

     Net Income :USD535Mil

     Total Assets : USD7,329Mil

     (Consolidated Financial Statement as of Dec. 2005)

Top of Page