NOTE C. Acquisitions and Divestitures

Pioneer Southwest Merger Transaction

On December 17, 2013, the Company completed the acquisition of all of the outstanding common units of Pioneer Southwest not already owned by the Company, through a merger of a wholly-owned subsidiary of the Company into Pioneer Southwest, the result of which was that Pioneer Southwest became a wholly-owned subsidiary of the Company. The merger was effected pursuant to an Agreement and Plan of Merger dated August 9, 2013, as amended on October 25, 2013 (as amended, the "Merger Agreement"), and was approved by the holders of the common units of Pioneer Southwest at a special meeting held on December 17, 2013.

Pursuant to the Merger Agreement, all of the common units outstanding as of the closing of the merger except for the common units owned by the Company, were canceled and converted into the right to receive 0.2325 of a share of common stock of the Company per common unit (the "Conversion Ratio"). In lieu of receiving any fractional share of common stock to which any holder of the Pioneer Southwest's common units would otherwise have been entitled, after aggregating all fractions of shares to which such holder would be entitled, any fractional share was rounded up to a whole share of common stock of the Company. Consequently, in December 2013, the Company issued an aggregate of 3.96 million shares of its common stock to Pioneer Southwest unitholders. The merger is expected to facilitate the Company's plans to fully and optimally develop the Company's properties in the Midland Basin in West Texas utilizing horizontal drilling and is expected to enhance the Company's organizational, operational and administrative efficiencies.

On December 18, 2013, the Company caused Pioneer Southwest, its general partner and all of Pioneer Southwest's subsidiaries to be merged with and into a wholly-owned subsidiary of the Company, the result of which was that all common units of Pioneer Southwest were canceled and the Company no longer holds any common units.

Premier Silica Business Combination

On April 2, 2012, a wholly-owned subsidiary of the Company acquired an industrial sand mining business that is now named Premier Silica LLC ("Premier Silica"). Premier Silica's primary mine operations are in Brady, Texas. The Brady mine facilities primarily produce, process and provide sand to the Company for use as proppant in its fracture stimulation of oil and gas wells in Texas. Premier Silica's sand production that is in excess of the Company's sand needs for fracture stimulation and sand production that is not usable for fracture stimulation is primarily sold to third parties for industrial and recreational purposes. The aggregate purchase price of Premier Silica was $297.1 million, including closing adjustments.

Divestitures Recorded in Continuing Operations

During December 2013, the Company committed to a plan to sell the Company's majority interest in Sendero to Sendero's minority interest owner for $31.0 million, subject to negotiating a definitive sales agreement and the buyer completing its financing arrangements. Associated with the planned sale of Sendero, the Company recorded a noncash loss of $25.5 million in other expense during December 2013 to reduce the carrying value of Sendero's net assets to their estimated fair value. As part of the sales negotiations, the Company plans to commit to lease 12 Sendero rigs through December 31, 2015, and to lease eight Sendero rigs in 2016. The Company has classified Sendero assets and liabilities as held for sale in the accompanying consolidated balance sheet as of December 31, 2013.

The Company recorded net gains on disposition of assets in continuing operations of $209.0 million and $45.9 million during the years ended December 31, 2013 and 2012, respectively, and a net loss on disposition of assets in continuing operations of $3.6 million during the year ended December 31, 2011. The following describes the significant divestitures included in continuing operations:

•

Southern Wolfcamp. In January 2013, the Company signed an agreement with Sinochem Petroleum USA LLC ("Sinochem"), a U.S. subsidiary of the Sinochem Group, an unaffiliated third party, to sell 40 percent of Pioneer's interest in 207,000 net acres leased by the Company in the horizontal Wolfcamp Shale play in the southern portion of the Spraberry field in West Texas for total consideration of $1.8 billion, including normal closing adjustments. In May 2013, the Company completed the sale to Sinochem for net cash proceeds of $623.8 million, including normal closing adjustments, resulting in a gain of $181.3 million related to the unproved property interests conveyed to Sinochem. Sinochem is paying the remaining $1.2 billion of the transaction price by carrying 75 percent of Pioneer's portion of ongoing drilling and facilities costs attributable to the Company's joint operations with Sinochem in the horizontal Wolfcamp Shale play.


•	West Panhandle. During the first quarter of 2013, the Company completed a sale of its interest in unproved oil and gas properties adjacent to the Company's West Panhandle field operations for net cash proceeds of $38.1 million, which resulted in a gain of $22.4 million,


•	Eagle Ford Shale. In January 2012, the Company sold a portion of its interest in an unproved oil and gas property in the Eagle Ford Shale play to unaffiliated third parties for cash proceeds of $54.7 million, which resulted in a gain of $42.6 million.


•	Other. During 2013, 2012 and 2011, the Company sold other proved and unproved properties, inventory and other property and equipment and recorded net gains of $5.3 million and $3.3 million during 2013 and 2012, respectively, and a net loss of $3.6 million during 2011.

Discontinued Operations

Alaska. During the fourth quarter of 2013, the Company committed to a plan to sell 100 percent of the capital stock in Pioneer's Alaska subsidiary, representing all the Company's net assets in Alaska ("Pioneer Alaska"). The sale of Pioneer Alaska continues to be subject to ongoing negotiations and certain other conditions, such as governmental approvals and buyer's arrangement of financing.

The Company has classified (i) Pioneer Alaska assets and liabilities as held for sale in the accompanying consolidated balance sheet as of December 31, 2013 and (ii) Pioneer Alaska results of operations as income (loss) from discontinued operations, net of tax in the accompanying consolidated statements of operations (including a recasting of the Pioneer Alaska results of operations for the years ended December 31, 2012 and 2011, which were originally classified as continuing operations).

Associated with the planned sale of Pioneer Alaska, the Company recorded a noncash impairment charge of $539.8 million in discontinued operations during December 2013 to reduce the carrying value of Pioneer Alaska to its estimated fair value less costs to sell of $350.6 million. See Note D for additional information about the Pioneer Alaska impairment charge. The recasting of Pioneer Alaska results includes the sale of the Company's interest in the Cosmopolitan Unit in the Cook Inlet of Alaska in August 2012 to unaffiliated third parties for cash proceeds of $10.1 million, which, together with certain Company obligations assumed by the purchasers, resulted in a gain of $12.6 million.

Barnett Shale. During the fourth quarter of 2013, the Company committed to a plan to divest of its net assets in the Barnett Shale field in North Texas. The plan is expected to result in the sale of the Barnett Shale net assets during 2014. The Company has classified its (i) Barnett Shale assets and liabilities as held for sale in the accompanying consolidated balance sheet as of December 31, 2013 and (ii) Barnett Shale results of operations as income (loss) from discontinued operations, net of tax in the accompanying consolidated statements of operations (including a recasting of the Barnett Shale results of operations for the years ended December 31, 2012 and 2011, which were originally classified as continuing operations).

Associated with the Company's plan to sell its net assets in the Barnett Shale field, the Company recorded a noncash impairment charge of $189.5 million in discontinued operations in December 2013 to reduce the carrying value of its net assets in the Barnett Shale field to their estimated fair value less costs to sell. See Note D for more information about the impairment of Barnett Shale net assets. Also included in discontinued operations in 2013 is the sale of the Company's interest in certain proved and unproved oil and gas properties in the Barnett Shale field for net cash proceeds of $33.8 million, which resulted in a gain of $8.7 million on the unproved properties sold.

The Company's plans to sell Pioneer Alaska and the Barnett Shale net assets are in differing stages of marketing and negotiation. No assurance can be given that the sales will be completed in accordance with the Company's plans.

South Africa. In December 2011, the Company committed to a plan to exit South Africa and initiated a process to divest its net assets in South Africa ("Pioneer South Africa"). During the first quarter of 2012, the Company agreed to sell its net assets in Pioneer South Africa to an unaffiliated third party, effective January 1, 2012, for $60.0 million of cash proceeds before normal closing and other adjustments, and the buyer's assumption of certain liabilities of the Company's South Africa subsidiaries. In August 2012, the Company completed the sale of Pioneer South Africa for net cash proceeds of $15.9 million, including normal closing adjustments for cash revenues and costs and expenses from the effective date through the date of the sale, resulting in a gain of $28.6 million. The Company classified Pioneer South Africa's results of operations as income from discontinued operations, net of tax in the accompanying consolidated statements of operations.

Tunisia. In February 2011, the Company sold 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") to an unaffiliated third party for cash proceeds of $802.5 million, including normal closing adjustments and excluding cash and cash equivalents sold, resulting in a gain of $645.2 million. Accordingly, the Company has classified the results of operations of Pioneer Tunisia as discontinued operations, net of tax in the accompanying consolidated statements of operations.

The following table represents the components of the Company's discontinued operations for the years ended December 31, 2013, 2012 and 2011:



	Year Ended December 31,
	2013			2012			2011
	(in thousands)
Revenues and other income:
Oil and gas	$	260,503		$	285,542		$	314,124
Interest and other (a)	38,642			29,437			45,145
Gain on disposition of assets, net (b)	8,764			40,735			645,241
	307,909			355,714			1,004,510
Costs and expenses:
Oil and gas production	90,333			79,853			55,698
Production and ad valorem taxes	10,151			9,034			8,239
Depletion, depreciation and amortization (b)	103,787			101,921			130,606
Impairment of oil and gas properties (b) (c)	729,305			532,589			—
Exploration and abandonments	52,707			108,076			44,898
General and administrative	12,261			6,061			13,517
Accretion of discount on asset retirement obligations (b)	831			2,731			3,436
Interest	—			—			829
Other	9,021			2,096			5,849
	1,008,396			842,361			263,072
Income (loss) from discontinued operations before income taxes	(700,487		)	(486,647		)	741,438
Current tax provision	(5,591		)	(10,387		)	(46,012		)
Deferred tax (provision) benefit (b)	256,473			192,824			(221,302		)
Income (loss) from discontinued operations	$	(449,605	)	$	(304,210	)	$	474,124

____________________


(a)	Primarily comprised of Alaskan Petroleum Production Tax credits on qualifying capital expenditures of $38.6 million, $29.3 million and $38.9 million for the years ended December 31, 2013, 2012 and 2011, respectively.


(b)	Represents significant noncash components of discontinued operations.


(c)	Represents a noncash impairment charge of $539.8 million on Pioneer Alaska net assets during the year ended December 31, 2013 and noncash impairment charges of $189.5 million and $532.6 million during the years ended December 31, 2013 and 2012, respectively, on the Company's net assets in the Barnett Shale field. See Note D for additional information regarding the noncash impairment charges.

As of December 31, 2013, the carrying values of the Company's ownership in Pioneer Alaska, the Barnett Shale field and Sendero were included in assets and liabilities held for sale in the accompanying consolidated balance sheet and were comprised of the following (the Company had no assets held for sale as of December 31, 2012):



	December 31, 2013
	(in thousands)
Composition of assets included in assets held for sale:
Current assets (excluding cash and cash equivalents)	$	57,602
Property, plant and equipment	526,148
Total assets	$	583,750

Composition of liabilities included in liabilities held for sale:
Current liabilities	$	28,771
Other liabilities	9,791
Total liabilities	$	38,562