NOTE H. Commitments and Contingencies

Severance agreements. The Company has entered into severance and change in control agreements with its officers and certain key employees. The current annual salaries for the officers and key employees covered under such agreements total $42.6 million.

Indemnifications. The Company has agreed to indemnify its directors and certain of its officers, employees and agents with respect to claims and damages arising from acts or omissions taken in such capacity, as well as with respect to certain litigation.

Legal actions. In addition to the legal action described below, the Company is party to other 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 other 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.

Investigation by the Alaska Oil and Gas Conservation Commission (the "AOGCC"). During the second quarter of 2010, the AOGCC commenced an investigation into allegations by a former Pioneer employee regarding the Company's Oooguruk facility on the North Slope of Alaska. Among the allegations are claims that the Company did not have authorization to inject certain non-hazardous substances into its enhanced oil recovery well, that the Company mishandled disposal of waste products and that the Company's operating practices are harmful to the project's oil reservoirs. Upon initially becoming aware of the allegations, the Company informed the AOGCC and other relevant federal, state and local agencies and commenced its own investigation, which confirmed injections of non-hazardous fluids into the Oooguruk enhanced oil recovery well without prior authorizations to do so. The results of the Company's investigation were reported to the agencies. In December 2010, the AOGCC investigator submitted a report outlining its findings, which (i) found that the Company's operating practices have not harmed the project's oil reservoirs and (ii) raised certain regulatory compliance issues, all of which the Company previously reported or has since taken actions to remedy. Although the Company does not know at this time what action the AOGCC will take in response to the report, based on the facts as known to date, the Company believes that compliance with any order or other action of the AOGCC will not materially and negatively affect the Company's liquidity, financial position or future results of operations.

Obligations following divestitures. In April 2006, the Company provided the purchaser of its Argentine assets certain indemnifications. The Company remains responsible for certain contingent liabilities related to such indemnifications, subject to defined limitations, including matters of litigation, environmental contingencies, royalty obligations and income taxes. The Company has also retained certain liabilities and indemnified buyers for certain matters in connection with other divestitures, including the sale in 2007 of its Canadian assets and the February 2011 sale of Pioneer Tunisia. The Company does not believe that these obligations are probable of having a material impact on its liquidity, financial position or future results of operations.

Drilling commitments. The Company periodically enters into contractual arrangements under which the Company is committed to expend funds to drill wells in the future. The Company also enters into agreements to secure drilling rig services, which require the Company to make future minimum payments to the rig operators. The Company records drilling commitments in the periods in which the well is drilled or rig services are performed.

Lease agreements. The Company leases equipment and office facilities under noncancellable operating leases. Lease payments associated with these operating leases for the years ended December 31, 2011, 2010 and 2009 were $26.9 million, $29.5 million and $30.5 million, respectively. These payments include $513 thousand, $7.2 million and $10.7 million for the years ended December 31, 2011, 2010 and 2009 respectively, of lease payments associated with discontinued operations and included in income from discontinued operations, net of tax, in the accompanying consolidates statement of operations. Future minimum lease commitments under noncancellable operating leases at December 31, 2011 are as follows (in thousands):


2012	$	26,843
2013	$	24,997
2014	$	14,732
2015	$	13,156
2016	$	11,775
Thereafter	$	41,459

Gathering, processing and transportation agreements. The Company is party to contractual commitments with midstream service companies and pipeline carriers for the future gathering, processing, transportation and purchase of oil, NGL and gas production from certain of the Company's asset areas described below:

Permian Basin. The Company has entered into an agreement to sell NGL production that includes a commitment to deliver minimum NGL volumes for transportation and fractionation. Under the terms of the agreement, committed NGL volumes equal 13,900 Bbls per day in 2012, increasing to 16,000 Bbls in 2015 and continuing at this rate until 2021.

The Company has entered into an NGL purchase and sale agreement pursuant to which the Company has committed to sell NGL production at or near the field processing plant in the Spraberry field and repurchase it at the inlet of the fractionation facilities of the counterparty in Mt. Belvieu, Texas. The Company's commitment commences in 2012 for 2,000 Bbls of NGL per day, increasing annually to 15,000 Bbls per day by 2019 and continuing at this rate until 2027. The Company's commitment prior to December 31, 2013, is subject to the completion of certain construction activities by the counterparty to the agreement. The Company also has NGL fractionation commitments with the same counterparty that average 2,000 Bbls of NGL per day commencing in 2014, increasing to 10,000 Bbls per day by 2018 and continuing at this rate until 2023.

Raton. The Company has firm transportation commitments for 214,000 Mcf per day of gas through 2020, then declining annually to 133,000 Mcf per day in 2026, from the Raton field eastward to Mid-Continent sales points and north to Cheyenne, Wyoming. Of these committed volumes, 75,000 Mcf per day is committed onward to Opal, Wyoming.

Eagle Ford Shale. During 2010, the Company entered into agreements with third parties to gather, transport, process and fractionate certain portions of the Company's future Eagle Ford Shale oil, gas and NGL production. During 2010, the Company entered into a ten-year oil gathering agreement, under which the counterparty is obligated to build a 111-mile oil pipeline that will transport approximately 7,100 Bbls of oil per day in 2012, increasing to approximately 17,400 Bbls per day in 2017, and declining thereafter until the contract term ends in 2022. The Company has firm transportation commitments under this contract upon completion of the pipeline, which is expected during the third quarter of 2012.

During 2010, the Company entered into two five-year gas transportation agreements. Transportation commitments under these agreements in 2012 are approximately 37,000 Mcf per day, increasing to approximately 83,500 Mcf per day in 2015 declining thereafter to 9,700 Mcf per day until terminating in mid-2016.

During 2010, the Company also entered into a ten-year contractual agreement with a third party for the transportation and processing of gas production and the fractionation of recovered NGLs. The firm transportation and processing commitments under this agreement are for approximately 41,800 Mcf per day in 2012 and increasing to approximately 139,100 Mcf per day in 2020. Fractionation commitments under the agreement are for approximately 4,500 Bbls per day of NGLs in 2012 and increasing to approximately 14,900 Bbls per day in 2020.

During 2010, the Company entered into an agreement with its unconsolidated subsidiary EFS Midstream to gather, treat and transport certain Eagle Ford Shale oil and gas production. The agreement has sequential start dates linked to commencement of Eagle Ford Shale production, with a primary term of 20 years and continuing year-to-year thereafter. EFS Midstream is obligated to construct various gathering and field facilities to handle the Eagle Ford Shale area production, and the Company has dedicated the areas' reserves to the contract. The Company has minimum annual revenue commitments payable to EFS Midstream of $46.2 million in 2012 and increasing to $128.0 million in 2016 under the aforementioned agreement. See Notes B and F for additional information about EFS Midstream.

Barnett Shale Combo. During 2011, the Company entered into a gas gathering and processing agreement with a third party commencing in 2013 for 50,000 Mcf of gas per day, increasing to 95,000 Mcf per day in 2016 then decreasing to 70,000 Mcf per day in 2019.The agreement terms provide for annual adjustments based on the prior year's deliveries under the contract. The contract commitment is also subject to commencement of construction of a related plant upon notice given by the Company of its intent to deliver volumes to the plant.

Other. The Company also has a 10-year firm transportation commitment for 75,000 Mcf per day from Opal, Wyoming to Malin, Oregon, which became effective when construction of a 675-mile new pipeline was completed and placed in service during August 2011. The Company does not ship any of its production under this transportation commitment. From time to time, the Company is able to mitigate its exposure to the firm transportation commitments under this agreement by purchasing gas in Cheyenne or Opal, Wyoming and transporting and selling the gas in Malin, Oregon when the spread between the index prices at these two locations is wider than the Company's variable cost to transport the gas. The firm transportation charges, net of any income from the Company's mitigation efforts, are recorded in other expense in the accompanying statements of operations. See Note N for additional information on unused transportation commitments.

Future minimum gathering, processing, transportation and fractionation fees under the Company's oil, NGL and gas gathering, processing and transportation commitments at December 31, 2011 are as follows (in thousands):


2012	$	151,640
2013	$	217,617
2014	$	262,888
2015	$	311,529
2016	$	329,379
Thereafter	$	1,069,159

Certain future minimum gathering, processing, transportation and fractionation fees are based upon rates and tariffs subject to change over the lives of the commitments.