UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12

Pioneer Natural Resources Company
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

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PIONEER NATURAL RESOURCES COMPANY
5205 North O'Connor Boulevard
Suite 900
Irving, Texas 75039

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders of Pioneer Natural Resources Company:

Notice is hereby given that the Annual Meeting of Stockholders of Pioneer
Natural Resources Company (the "Company") will be held in the Hudson Room at the
Dallas Marriott Las Colinas Hotel, 223 West Las Colinas Blvd., Irving, Texas
75039, on Wednesday, May 11, 2005,3, 2006, at 9:00 a.m. Central Time (the "Annual
Meeting"). The Annual Meeting is being held for the following purposes:

1. To elect fourthree Class III directors, each for a term of three
years.

2. To ratify the selection of Ernst & Young LLP as the auditors of
the Company for the current year.

3. To consider and vote upon a proposal to adopt the Company's 2006
Long-Term Incentive Plan, which will have 4,600,000 shares of the
Company's common stock reserved for issuance thereunder.

4. To transact such other business as may properly come before the
Annual Meeting.

These proposals are described in the accompanying proxy materials. You will
be able to vote at the Annual Meeting only if you were a stockholder of record
at the close of business on March 15, 2005.23, 2006.

YOUR VOTE IS IMPORTANT

Please date, sign and return the enclosed Proxy promptly so that your
shares may be voted in accordance with your wishes and so we may have a quorum
at the Annual Meeting. Instead of returning the paper proxy, you may vote viaby
internet or phone by following the Internet at www.continentalstock.com, our transfer agent's website. Haveinstructions on your proxy card in hand when you access this website.Proxy.

By Order of the Board of Directors,

/s/ Mark S. Berg
-----------------------------------H. Kleinman
----------------------------------
Mark S. BergH. Kleinman
Secretary

Irving, Texas
April 5, 2005

23, 2006

PIONEER NATURAL RESOURCES COMPANY
5205 North O'Connor Boulevard
Suite 900
Irving, Texas 75039

PROXY STATEMENT

20052006 ANNUAL MEETING OF STOCKHOLDERS

The Board of Directors of the Company requests your Proxy for the Annual
Meeting of Stockholders that will be held Wednesday, May 11, 2005,3, 2006, at 9:00 a.m.
Central Time, in the Hudson Room at the Dallas Marriott Las Colinas Hotel, 223
West Las Colinas Blvd., Irving, Texas 75039. By granting the Proxy, you
authorize the persons named on the Proxy to represent you and vote your shares
at the Annual Meeting. Those persons will also be authorized to vote your shares
to adjourn the Annual Meeting from time to time and to vote your shares at any
adjournments or postponements of the Annual Meeting.

You may grant your Proxy by signing, dating and returning the enclosed
paper proxy card. Instead of returning the paper proxy card, you may complete a
proxy card electronically through the Internet by accessing the website of the
Company's transfer agent at www.continentalstock.com. See "Internet Voting"
below.

If you attend the Annual Meeting, you may vote in person. If you are not
present at the Annual Meeting, your shares may be voted only by a person to whom
you have given a proper proxy, such as the accompanying Proxy or the Internet
Proxy. You may revoke the Proxy in writing at any time before it is exercised at
the Annual Meeting by delivering to the Secretary of the Company a written
notice of the revocation, by signing and delivering to the Secretary of the
Company a Proxy with a later date, or by submitting your vote electronically
through the Internet with a later date.internet or by phone after the grant of the Proxy. Your attendance
at the Annual Meeting will not revoke the Proxy unless you give written notice
of revocation to the Secretary of the Company before the Proxy is exercised or
unless you vote your shares in person at the Annual Meeting.

ThisDELIVERY OF PROXY MATERIALS

Mailing Date

The approximate date on which this Proxy Statement and the accompanying Notice
of Annual Meeting of Stockholders and Proxy are first being sent or given to
stockholders is April 3, 2006.

Stockholders Sharing an Address

Registered Stockholders. Registered stockholders (the stockholder owns
shares in his or her own name on the books of the Company's transfer agent) will
receive one Proxy Statement and one 2006 Annual Report for each account even if
at the same address.

Street name Stockholders. Most banks and brokers are delivering only one
copy of the Proxy Statement and 2006 Annual Report to consenting street name
stockholders (the stockholder owns shares in the name of a bank, broker or other
holder of record on the books of the Company's transfer agent) who share the
same address. This procedure reduces the Company's printing and distribution
costs. Those who wish to receive separate copies may do so by contacting their
bank or broker. Similarly, most street name stockholders who are receiving
multiple copies of the Proxy Statement and 2006 Annual Report at a single
address may request that only a single set of materials be sent to them in the
future by contacting their bank or broker. In the alternative, most street name
stockholders may give instructions to receive separate copies or discontinue
multiple mailings of materials by contacting the third party that mails annual
meeting materials for most banks and brokers by writing to Householding
Department, ADP, 51 Mercedes Way, Edgewood, NY 11717, or telephoning (800)
542-1061. The instructions must include the name of the stockholder's brokerage
firm and account number.

Electronic Delivery Option

Instead of receiving future copies of the proxy materials by mail,
registered stockholders may elect to view future proxy materials on the internet
by following the instructions provided when voting by internet or phone. Street
name stockholders may also have the opportunity to view copies of the proxy
materials electronically. Those who opt to do so may contact their bank or
broker regarding the availability of this service. Opting to view proxy
materials online will save the Company the cost of producing and mailing
documents to stockholders and provides immediate access to the information. The
Notice of Annual Meeting of Stockholders, Proxy Statement and other proxy
materials are also available on or about
April 5, 2005.the Company's website at www.pxd.com. Neither
the Company website nor any other website included in this Proxy Statement is
intended to function as a hyperlink, and the information contained on such
websites is not a part of this Proxy Statement.

QUORUM AND VOTING

Voting Stock. The Company's common stock, par value $.01 per share, is the
only class of securities that entitles holders to vote generally at meetings of
the Company's stockholders. Each share of common stock outstanding on the record
date is entitled to one vote.

Record Date. The record date for stockholders entitled to notice of and to
vote at the Annual Meeting was the close of business on March 15, 2005. At23, 2006. As of
the record date, 143,845,045129,264,022 shares of common stock were outstanding and
entitled to be voted at the Annual Meeting.

Quorum and Adjournments. The presence, in person or by Proxy, of the
holders of a majority of the votes eligible to be cast at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting.

If a quorum is not present, the stockholders entitled to vote who are
present in person or by Proxy at the Annual Meeting have the power to adjourn
the Annual Meeting from time to time, without notice other than an announcement
at the Annual Meeting, until a quorum is present. At any adjourned Annual
Meeting at which a quorum is present, any business may be transacted that might
have been transacted at the Annual Meeting as originally notified.

Vote Required. Directors will be elected by a plurality of the votes
present and entitled to be voted at the Annual Meeting. Ratification of the
selection of the Company's auditors will require the affirmative vote of the
holders of a majority of the shares present and entitled to be voted at the
Annual Meeting. Adoption of the Company's proposed 2006 Long-Term Incentive Plan
will require the affirmative vote of the holders of a majority of the shares
present and entitled to be voted at the Annual Meeting. An automated system that
the Company's transfer agent administers will tabulate the votes. Brokers who
hold shares in street name for

customers are required to vote shares in
accordance with instructions received from the beneficial owners. Brokers are
permitted to vote on discretionary items if they have not received instructions
from the beneficial owners, but they are not permitted to vote (a "broker
non-vote") on non- discretionarynon-discretionary items absent instructions from the beneficial
owner. Abstentions and broker non-votes will count in determining whether a
quorum is present at the Annual Meeting. Both abstentions and broker non-votes
will not have any effect on the outcome of voting on director elections. For
purposes of voting on the ratification of the selection of auditors and adoption
of the Company's 2006 Long-Term Incentive Plan, abstentions will be included in
the number of shares voting and will have the effect of a vote against the
proposal,proposals, and broker non-votes will not be included in the number of shares
voting and therefore will have no effect on the outcome of the voting.

Default Voting. A Proxy that is properly completed and returned will be
voted at the Annual Meeting in accordance with the instructions on the Proxy. If
you properly complete and return a Proxy, but do not indicate any contrary
voting instructions, your shares will be voted as follows:

o FOR the election of the fourthree persons named in this Proxy Statement as
the Board of Directors' nominees for election to the Board of
Directors.as Class III directors.

o FOR the ratification of the selection of Ernst & Young LLP as the
Company's auditors.

o FOR the adoption of the Company's 2006 Long-Term Incentive Plan.

If any other business properly comes before the stockholders for a vote at the
meeting, your shares will be voted in accordance with the discretion of the
holders of the Proxy. The Board of Directors knows of no matters, other than
those previously stated, to be presented for consideration at the Annual
Meeting.

PARTICIPANTS IN THE PIONEER NATURAL RESOURCES USA, INC. 401(k) PLAN

Participants in the Pioneer Natural Resources USA, Inc. 401(k) Plan who
have shares of common stock credited to their plan account as of the record date
will have the right to direct the 401(k) Plan trustee regarding how to vote
those shares. The trustee will vote the shares in a participant's 401(k) Plan
account in accordance with the participant's instructions or, if no instructions
are received prior to April 28, 2006, the shares credited to that participant's
account will be voted by the trustee in the same proportion as it votes shares
for which it did receive timely instructions. Information as to how participants
voted the shares credited to their 401(k) Plan account will not be disclosed to
the Company.

If a participant holds common stock outside of the 401(k) Plan, the
participant will also receive a Proxy relating to those shares, which must be
voted separately.

ITEM ONE

ELECTION OF DIRECTORS

The Board of Directors has nominated the following individuals for election
as Class IIIII Directors of the Company with their terms to expire in 20082009 when
their successors are elected and qualified:

James R. Baroffio
Edison C. Buchanan
ScottAndrew D. Sheffield
JimLundquist
Charles E. Ramsey, Jr.
Robert A. WatsonSolberg

Messrs. Baroffio, Buchanan, SheffieldLundquist, Ramsey and WatsonSolberg are currently serving as Directors of
the Company. Their biographical information is contained in the "Directors and
Executive Officers" section below. Dr. Baroffio will be 75 years
of age before 2008. In accordance with the Company's bylaws, he will not
complete the term for which he is nominated.

The Board of Directors has no reason to believe that any of its nominees
will be unable or unwilling to serve if elected. If a nominee becomes unable or
unwilling to accept nomination or election, either the number of the Company's
directors will be reduced or the persons acting under the Proxy will vote for
the election of a substitute nominee that the Board of Directors recommends.

The Board of Directors recommends that stockholders vote FOR the election
of each of the nominees.

ITEM TWO

SELECTION OF AUDITORS

The Audit Committee of the Board of Directors has selected Ernst & Young
LLP as the auditors of the Company for 2005. Ernst & Young LLP have audited the
Company's financial statements since 1998. The 2004 audit of the Company's
consolidated financial statements and effectiveness of internal control over
financial reporting was completed on February 17, 2005.

The Board of Directors is submitting the selection of Ernst & Young LLP for
ratification at the Annual Meeting. The submission of this matter for approval
by stockholders is not legally required, but the Board of Directors and the
Audit Committee believe the submission provides an opportunity for stockholders
to communicate through their vote with the Board of Directors and the Audit
Committee about an important aspect of corporate governance. If the stockholders
do not ratify the selection of Ernst & Young LLP, the Audit Committee will
reconsider the selection of that firm as the Company's auditors.

The Audit Committee has the sole authority and responsibility to retain,
evaluate and replace the Company's auditors. The stockholders' ratification of
the appointment of Ernst & Young LLP does not limit the authority of the Audit
Committee to change auditors at any time.

Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional
services rendered for the audits of the Company's annual financial statements on
Forms 10-K, audit of the Company's internal control over financial reporting,
reviews of the Company's quarterly financial statements on Forms 10-Q and
reviews of the Company's other filings with the Securities and Exchange
Commission (the "SEC") including comfort letters, consents and other research
work necessary to comply with generally accepted auditing standards for the
years ended December 31, 2004 and 2003 were $960,629 and $505,642, respectively.

Audit-Related Fees. The aggregate fees earned by Ernst & Young LLP for
audit-related services provided to the Company totaled $10,000 during each of
the years ended December 31, 2004 and 2003. Audit-related services were
comprised of audits of the Company's benefit plans.

Tax Services Fees. The aggregate fees earned by Ernst & Young LLP for tax
services provided to the Company totaled $82,140 and $68,903 during the years
ended December 31, 2004 and 2003, respectively. Tax services were primarily
comprised of tax return preparation services for expatriates and the Company's
international subsidiaries.

Other Fees. The aggregate fees earned by Ernst & Young LLP for other
professional services provided to the Company totaled $13,335 during the year
ended December 31, 2003 and were primarily comprised of employee benefit
advisory services. No other services were provided to the Company by Ernst &
Young LLP during the year ended December 31, 2004.

The Charter of the Company's Audit Committee of the Board of Directors
requires that the Audit Committee review and pre-approve the plan and scope of
Ernst & Young LLP audit, audit-related, tax and other services. The Audit
Committee pre-approved 100 percent of the services provided by Ernst & Young
LLP.

The Company expects that representatives of Ernst & Young LLP will be
present at the Annual Meeting to respond to appropriate questions and to make a
statement if they desire to do so.

The audit report of Ernst & Young LLP on the Company's annual financial
statements for 2004, 2003 and 2002 did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to uncertainty or
audit scope. The audit report of Ernst & Young LLP on management's assessment
that the Company maintained effective internal control over financial reporting
as of December 31, 2004 did not contain an adverse opinion or a disclaimer of
opinion and was not qualified or modified as to uncertainty or audit scope.

In connection with the audits of the Company's annual financial statements
for 2004, 2003 and 2002, there were no disagreements with Ernst & Young LLP on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures which, if not resolved to the
satisfaction of such independent accountants, would have caused such independent
accountants to make reference to the matter in their audit report.

The Board of Directors recommends that stockholders vote FOR ratification
of the selection of Ernst & Young LLP.

DIRECTORS AND EXECUTIVE OFFICERS

After the Annual Meeting, assuming the stockholders elect the nominees of
the Board of Directors as set forth in "Item One - Election of Directors" above,
the Board of Directors and executive officers of the Company will be:
Name Age Position
- ---- --- --------

Scott D. Sheffield..... 52 Chairman of the Board and Chief Executive Officer
Timothy L. Dove........ 48 President and Chief Operating Officer
A. R. Alameddine....... 58 Executive Vice President - Worldwide Business
Development
Mark S. Berg .......... 46 Executive Vice President, General Counsel and
Secretary
Chris J. Cheatwood..... 44 Executive Vice President - Worldwide Exploration
Richard P. Dealy....... 39 Executive Vice President and Chief Financial
Officer
Danny L. Kellum........ 50 Executive Vice President - Domestic Operations
James R. Baroffio...... 73

Name Age Position
- ---- --- --------

Scott D. Sheffield..... 53 Chairman of the Board and Chief Executive Officer
Timothy L. Dove........ 49 President and Chief Operating Officer
A. R. Alameddine....... 59 Executive Vice President - Worldwide Negotiations
Mark S. Berg ........ 47 Executive Vice President and General Counsel
Chris J. Cheatwood..... 45 Executive Vice President - Worldwide Exploration
Richard P. Dealy....... 40 Executive Vice President and Chief Financial
Officer
William F. Hannes...... 46 Executive Vice President - Worldwide Business
Development
Danny L. Kellum........ 51 Executive Vice President - Domestic Operations
Darin G. Holderness.... 42 Vice President and Chief Accounting Officer
James R. Baroffio...... 74 Director
Edison C. Buchanan..... 51 Director
R. Hartwell Gardner.... 71 Director
Linda K. Lawson........ 60 Director
Andrew D. Lundquist.... 45 Director
Charles E. Ramsey, Jr.. 69 Director
Frank A. Risch ........ 63 Director
Mark S. Sexton ........ 50 Director
Robert A. Solberg...... 60 Director
Jim A. Watson ........ 67 Director
Edison C. Buchanan..... 50 Director
R. Hartwell Gardner.... 70 Director
James L. Houghton...... 74 Director
Jerry P. Jones......... 73 Director
Linda K. Lawson........ 59 Director
Andrew D. Lundquist.... 44 Director
Charles E. Ramsey, Jr.. 68 Director
Mark S. Sexton......... 49 Director
Robert A. Solberg...... 59 Director
Jim A. Watson.......... 66 Director

The Company has classified its Board of Directors into three classes.
Directors in each class are elected to serve for three-year terms and until
either they are reelected or their successors are elected and qualified. In
addition, the Company's bylaws terminate the term of a director immediately when thatupon
the director reachesreaching 75 years of age, as will occur for Dr. Baroffio will on March 27,21, 2007 if he
is reelected at the Annual Meeting and as will occur for Mr. Houghton on
December 19, 2005
prior to the end of his current term in 2007.2008. Mr. James L. Houghton's service as
director of the Company terminated in December 2005 upon reaching 75 years of
age. Mr. Jerry P. Jones' service as director of the Company will terminate at
the Annual Meeting because the retirement provisions of the Company's bylaws do
not permit him to stand for reelection. Each year, the directors of one class
stand for reelection as their terms of office expire. Messrs. Gardner, HoughtonRisch and
Sexton and Mrs. Lawson are designated as Class I Directors and their terms of
office expire in 2007. Messrs. Baroffio, Buchanan, Sheffield and Watson are
designated as Class II Directors and their terms of office expire at the Annual Meeting.in 2008.
Messrs. Jones, Lundquist, Ramsey and Solberg are designated as Class III Directors and
their terms of office expire in 2006.at the Annual Meeting.

Executive officers serve at the discretion of the Board of Directors.

Set forth below is biographical information about each of the Company's
executive officers and directors named above.

Scott D. Sheffield. Mr. Sheffield, a distinguished graduate of theThe
University of Texas with a Bachelor of Science degree in Petroleum Engineering,
has held the position of Chief Executive Officer since August 1997. He was
President of the Company from August 1997 to November 2004, and assumed the
position of Chairman of the Board of Directors in August 1999. He was the
Chairman of the Board and Chief Executive Officer of Parker & Parsley Petroleum
Company ("Parker & Parsley") from October 1990 until the formation of the Company was formed in
August 1997. Mr. Sheffield joined Parker & Parsley Development Company ("PPDC"),
a predecessor of Parker & Parsley, as a petroleum engineer in 1979. Mr.
Sheffield served as Vice President - Engineering of PPDC from September 1981
until April 1985, when he was elected President and a Director. In March 1989,
Mr. Sheffield was elected Chairman of the Board and Chief Executive Officer of
PPDC. Before joining PPDC, Mr. Sheffield was employed as a production and
reservoir engineer for Amoco Production Company.

Mr. Sheffield also served on the Board of
Directors of Evergreen Resources, Inc. ("Evergreen") from 1996 until Evergreen
merged with the Company, and he was a member of Evergreen's Compensation
Committee.

Timothy L. Dove. Mr. Dove was elected President and Chief Operating Officer
in November 2004. Prior to that, Mr. Dove held the positions of Executive Vice
President and Chief Financial Officer sincefrom February 2000 to November 2004 and
Executive Vice President - Business Development from August 1997 to January
2000. Mr. Dove joined Parker & Parsley in May 1994 as Vice President -
International and was promoted to Senior Vice President - Business Development
in October 1996, in which position he served until August 1997. Before joining
Parker & Parsley, Mr. Dove was employed with Diamond Shamrock Corp., and its
successor, Maxus Energy Corp., in various capacities in international
exploration and production, marketing, refining, and planning and development.
Mr. Dove earned a Bachelor of Science degree in Mechanical Engineering from
Massachusetts Institute of Technology in 1979 and received his M.B.A. in 1981
from the University of Chicago.

A. R. Alameddine. Mr. Alameddine who joined the Company in July of 1997 aswas elected Executive Vice President of Domestic Business Development, has been-
Worldwide Negotiations in November 2005. Prior to that, Mr. Alameddine served as
Executive Vice President - Worldwide Business Development since November 2003.2003,
and upon joining the Company in July 1997, Mr. Alameddine served the Company as
Vice President of Domestic Business Development. Prior to joining the Company,
Mr. Alameddine spent 26 years with Mobil Exploration and Production Company
("Mobil"). At the time of his departure from Mobil, Mr. Alameddine was the
Acquisition, Trade and Sales Manager, a position he had held since 1990. Prior
to1990,to 1990, Mr. Alameddine held several managerial positions in the acquisition and
sales group as well as in the reservoir-engineeringreservoir engineering department. A native of
Lebanon, Mr. Alameddine joined Mobil as an Operations Engineer following his
graduation from Louisiana State University in 1971 with a Bachelor of Science
degree in Petroleum Engineering.

Mark S. Berg. Mr. Berg joinedhas served the Company as Executive Vice President
and General Counsel since joining the Company in April 2005 as Executive Vice
President, General Counsel and Secretary.2005. Prior to that, Mr.
Berg served as Executive Vice President, General Counsel and Secretary of
American General Corporation, a Fortune 200 diversified financial services
company from 1997 through 2002. Subsequent to the sale of American General to
American International Group, Inc., Mr. Berg joined Hanover Compressor Company
as Senior Vice President, General Counsel and Secretary. He served in that
capacity from May of 2002 through April of 2004. Mr. Berg began his career in
1983 with the Houston-based law firm of Vinson & Elkins L.L.P. He was a partner
with the firm from 1990 through 1997. Mr. Berg graduated Magna Cum Laude and Phi
Beta Kappa with a Bachelor or Arts degree from Tulane University in 1980. He
earned his J.D. with honors from the University of Texas Law School in 1983.

Chris J. Cheatwood. Mr. Cheatwood was elected Executive Vice President -
Worldwide Exploration in January 2002. Mr. Cheatwood joined the Company in
August 1997 and was promoted to Vice President - Domestic Exploration in July
1998 and Senior Vice President - Exploration in December 2000. Before joining
the Company, Mr. Cheatwood spent ten years with Exxon Corp. where his focus
included exploration in the Deepwater Gulf of Mexico. Mr. Cheatwood is a
graduate of the University of Oklahoma with a Bachelor of Science degree in
Geology and earned his Master of Science degree in Geology from the University
of Tulsa.

Richard P. Dealy. Mr. Dealy was elected Executive Vice President and Chief
Financial Officer in November 2004. Prior to that time, Mr. Dealy held positions
of Vice President and Chief Accounting Officer sincefrom February 1998 and Vice
President and Controller from August 1997 to January 1998. Mr. Dealy joined
Parker & Parsley in July 1992 and was promoted to Vice President and Controller
in 1995, in which position he served until August 1997. He is a Certified Public
Accountant, and prior to joining Parker & Parsley, he was employed by KPMG Peat
Marwick. Mr. Dealy graduated with honors from Eastern New Mexico University with
a Bachelor of Business Administration degree in Accounting and Finance.

William F. Hannes. Mr. Hannes was elected Executive Vice President -
Worldwide Business Development in November 2005. Mr. Hannes joined the Company
in 1997 as Director of Business Development and was promoted to Vice President -
Engineering and Development in June 2001 and served in this capacity until
November 2005. Prior to joining the Company, Mr. Hannes held engineering
positions with Mobil and Superior Oil. He graduated from Texas A&M University in
1981 with a Bachelor of Science degree in Petroleum Engineering.

Danny L. Kellum. Mr. Kellum, who received a Bachelor of Science degree in
Petroleum Engineering from Texas Tech University in 1979, was elected Executive
Vice President - Domestic Operations in May 2000. From January 2000 until May

2000, Mr. Kellum served as Vice President - Domestic Operations. Mr. Kellum
served as Vice President - Permian Division from August 1997 until December
1999. From 1989 until 1994 he served as Spraberry District Manager and as Vice
President of the Spraberry and Permian Division for Parker & Parsley until
August 1997. Mr. Kellum joined Parker & Parsley as an operations engineer in
1981 after a brief career with Mobil Oil Corporation.

Darin G. Holderness. Mr. Holderness graduated with a Bachelor in Business
Administration in Accounting from Boise State University in 1986. In December
2004, he became Vice President and Chief Accounting Officer of the Company. He
previously served as Chief Financial Officer and various other positions of
Basic Energy Services from March 2004 to November 2004. Earlier in his career,
he served as Vice President - Controller and various other positions with Pure
Resources, Inc. and predecessor entities from January 1998 to February 2004.
From January 1996 to December 1997, he served as Manager of Financial Reporting
for Aquila Gas Pipeline Corporation. From June 1986 to December 1995 he was
employed by KPMG as a Senior Audit Manager.

James R. Baroffio. Dr. Baroffio received a Bachelor of Arts degree in
Geology at the College of Wooster, Ohio, an M.S. in Geology at Ohio State
University, and a Ph.D. in Geology and Civil Engineering at the University of
Illinois. Before becoming a Director of the Company in December 1997, Dr.
Baroffio enjoyed a long career with Chevron Oil Corporation where he served as
President, Chevron Research and Technology Center and V.P. Exploration and

eventually retired as President of Chevron Canada Resources in 1994. Dr.
Baroffio was Chairman of the U.S. National Committee of the World Petroleum
Congress and is currently a Trustee Associate of the AAPG Foundation. His
community leadership positions included Chairman of the Pacific Symphony of
California and a Director of the Nature Conservancy of Canada, as well as
serving as President of the Alberta Nature Conservancy.

Edison C. Buchanan. Mr. Buchanan received a Bachelor of Science degree in
Civil Engineering from Tulane University in 1977 and an M.B.A. in Finance and
International Business from Columbia University Graduate School of Business in
1981. From 1981 to 1997, Mr. Buchanan was a Managing Director of various groups
in the Investment Banking Division of Dean Witter Reynolds in their New York and
Dallas offices. In 1997, Mr. Buchanan joined Morgan Stanley Dean Witter as a
Managing Director in the Real Estate Investment Banking group. In 2000, Mr.
Buchanan became Managing Director and head of the domestic Real Estate
Investment Banking Group of Credit Suisse First Boston. In 2001, Mr. Buchanan
began working for The Trust for Public Land, a land conservation organization,
in Santa Fe, New Mexico. Mr. Buchanan became a Director of the Company in 2002.
Since 2004, Mr. Buchanan has also served on the Board of Directors of MFA
Mortgage Investments, Inc.

R. Hartwell Gardner. Mr. Gardner became a Director of the Company in August
1997. He served as a Director of Parker & Parsley from November 1995 until
August 1997. Mr. Gardner graduated from Colgate University with a Bachelor of
Arts degree in Economics and then earned an M.B.A. from Harvard University.
Until October 1, 1995, Mr. Gardner was the Treasurer of Mobil Oil Corporation
and Mobil Corporation from 1974 and 1976, respectively. Mr. Gardner is a member
of Financial Executives International where he served as Chairman in 1986/19871986
and1987 and is a Director and Chairman of the Investment Committee of Oil
Investment Corporation Ltd. and Oil Casualty Investment Corporation Ltd. in
Hamilton, Bermuda.

James L. Houghton. Mr. Houghton is a Certified Public Accountant and a
graduate of Kansas University with a Bachelor of Science degree in Accounting,
as well as a J.D. degree. Mr. Houghton has served as a Director of the Company
since August 1997, and as a Director of Parker & Parsley from October 1991 until
August 1997. Until October 1991, Mr. Houghton was the lead oil and gas tax
specialist for the accounting firm of Ernst & Young LLP, was a member of Ernst &
Young LLP's National Energy Group, and had served as its Southwest Regional
Director of Tax. Mr. Houghton is a member of the American Institute of Certified
Public Accountants, a member of the Oklahoma Society of Certified Public
Accountants and a former Chairman of its Federal and Oklahoma Taxation
Committee, and past President of the Oklahoma Institute on Taxation. He has also
served as a Director for the Independent Petroleum Association of America and as
a member of its Tax Committee. Mr. Houghton presently serves as a Trustee of the
J. E. and L. E. Mabee Foundation in Tulsa, Oklahoma.

Jerry P. Jones. Mr. Jones earned a Bachelor of Science degree from West
Texas State College in 1953 and a Bachelor of Laws degree from the University of
Texas School of Law in 1959. Mr. Jones has served as a Director of the Company
since August 1997, and as a Director of Parker & Parsley from May 1991 until
August 1997. Mr. Jones was an attorney with the law firm of Thompson & Knight,
L.L.P. in Dallas, Texas, since September 1959 and was a shareholder in that firm
until January 1998, when he retired and became of counsel to the firm. Mr. Jones
specialized in civil litigation, especially in the area of energy disputes.

Linda K. Lawson. Mrs. Lawson holds a Bachelor of Science degree in
Accounting from the University of Denver. Mrs. Lawson was employed by business
units of The Williams Companies, as well as the parent organization from 1980 to
her retirement in 2001. During her tenure she served in a variety of capacities
including accounting and finance positions of the parent, and Controller of a
FERC regulated energy business unit, Vice President of Investor Relations, Vice
President of Human Resources, and as COO of several telecommunication start-up
businesses. She is a Certified Public Accountant. She serves on the Strategic
Planning and Funding Committee for the School of Accountancy at the University
of Denver, where she is also an adjunct instructor, and has served the Tulsa
community in a variety of nonprofit organizations. Mrs. Lawson became a Director
of the Company in 2002.

Andrew D. Lundquist. Mr. Lundquist received a Bachelor of Science degree
from the University of Alaska and a J.D. from Catholic University Columbus
School of Law. He joined the Company's Board of Directors in September 2004, in
accordance with the terms of the Company's merger with Evergreen, after having

served as an independent director on Evergreen's Board of Directors since
November 2002. During 2001, Mr. Lundquist served as the Director of The White
House National Energy Policy Development Group, which directed the cabinet-level
task force created by the President and headed by the Vice President that
produced the President's National Energy Policy. At that same time, he also
served as Senior Advisor to the President and Vice President on energy issues.
Mr. Lundquist was the Majority Staff Director of the U.S. Senate Energy and
Natural Resources Committee from 1998 to 2001. Since March 2002, Mr. Lundquist
has served as the Managing Partner of Lundquist, Nethercutt & Griles, LLC, a
Washington, D.C.-based consulting firm that provides analytic and strategic
advice to senior executives of corporations. Mr. Lundquist also serves as
Director of Coeur d'Alene Mines Corporation, a company engaged in the operation,
ownership, development and exploration of silver and gold mining property.

Charles E. Ramsey, Jr. Mr. Ramsey is a graduate of the Colorado School of
Mines with a Petroleum Engineering degree and a graduate of the Smaller Company
Management program at the Harvard Graduate School of Business Administration.
Mr. Ramsey has served as a Director of the Company since August 1997. Mr. Ramsey
served as a Director of Parker & Parsley from October 1991 until August 1997.
Since October 1991, he has operated an independent management and financial
consulting firm. From June 1958 until June 1986, Mr. Ramsey held various
engineering and management positions in the oil and gas industry and, for six
years before October 1991, was a Senior Vice President in the Corporate Finance
Department of Dean Witter Reynolds Inc. in theits Dallas, Texas office. His
industry experience includes 12 years of senior management experience with May
Petroleum Inc. in the positions of President, Chief Executive Officer and
Executive Vice President. Mr. Ramsey is also a former director of MBank Dallas,
the Dallas Petroleum Club and Lear Petroleum Corporation.

Frank A. Risch. Mr. Risch earned a B.S. degree in business administration
in 1964 from Pennsylvania State University and an M.S. degree in industrial
administration in 1966 from Carnegie Mellon University. After joining Exxon
Corporation in 1966 as a financial analyst, he held various positions in
finance, planning and marketing with Exxon and its operating affiliates in the
U.S. and abroad for nearly 38 years. Mr. Risch retired as Vice President and
Treasurer of Exxon Mobil Corporation in June 2004 and was appointed to the
Company's Board of Directors in August 2005. He serves on the Business Board of
Advisors of the Tepper School of Business at Carnegie Mellon University. He is
active in civic and community organizations, serving as Chairman of the Finance
Committee and Treasurer of the Dallas Theater Center and as a member of the
Board of Directors of Dallas CASA (Court Appointed Special Advocates). Mr. Risch
is also a member of the Financial Executives Institute, the World Affairs
Council of Greater Dallas and the Dallas Committee on Foreign Relations.

Mark S. Sexton. Mr. Sexton is the Chief Executive Officer and Director of
KFx, Inc. which offers combined energy, environmental and economic solutions to
coal-fired power generating facilities and industrial coal users in the United
States and internationally. Mr. Sexton graduated from Stanford University in
1978 with a Bachelor of Science degree in mechanical engineering and is
registered as a professional engineer in Colorado. He joined the Company's Board
of Directors in September 2004, in accordance with the terms of the Company's
merger with Evergreen. Mr. Sexton was employed in various technical, financial
and management positions with Amoco Production Company, Norwest Bank and energy
companies specifically targeting coal bed methane development until he joined
Evergreen in 1989 where he initially managed the daily operating activities of
Evergreen. UntilBefore Evergreen merged with the Company in September 2004, Mr.
Sexton served as a director of Evergreen from March 1995, President and Chief
Executive Officer from June 1995 and Chairman of the Board of Directors from
1999. Subsequent to the Evergreen merger, he became managing director and Chief
Executive Officer of Evergreen Energy Company. Mr. Sexton was a director of KFx
Inc. from 1999 to 2004 and is a past president of
the Colorado Oil & Gas Association, a board member of the Independent Petroleum
Association of America, an executive committee member of the Independent
Petroleum Association of Mountain States and a member of the Society of
Petroleum Engineers.

Robert A. Solberg. Mr. Solberg earned a Bachelor of Science in Civil
Engineering from the University of North Dakota in 1969, and is a licensed
Petroleum Engineer. Mr. Solberg spent over three decades working for Texaco Inc.
throughout the world. He served his last ten years as a Corporate Vice President
with several management roles including President of International E&P and
President of Upstream Commercial Development. He elected to retire in 2002 and
joined the Company's Board of Directors the following month.in 2002. He continues to live in
Houston, Texas with a focus on investment management and business consultation.

Mr. Solberg recently becameserves as an outside directorDirector and non-executive Chairman of JDR
Cable Systems, Ltd., a privately owned British company. Since December of 2005,
Mr. Solberg has served as Chairman of the Board of Directors for Scorpion
Offshore Ltd, a Bermuda based corporation that owns and operates offshore
drilling rigs. He also enjoys a history of civic leadership and currently serves
on the University of North Dakota Alumni Association Board with a director role
on their investment committee.

Jim A. Watson. Mr. Watson became a directorDirector of the Company in September
2004. He earned a Bachelor of Arts degree from the University of Texas in 1962
and graduated, with honors, from theThe University of Texas School of Law School in 1964.
Mr. Watson has served as Senior Counsel for the law firm of Carrington, Coleman,
Sloman, & Blumenthal, L.L.P. in Dallas, Texas since June 2003. Before then, he
was a partner at the law firm of Vinson & Elkins L.L.P. in Dallas, Texas. From
1987 to 1995, he held the position of Adjunct Professor at theThe University of
Texas School of Law School and from 2000 to 2004, Mr. Watson was Chairman of the
Advisory Board of the Clement Center for Southwestern Studies at Southern
Methodist University. Since 1989, Mr. Watson has been included in the corporate
mergers and acquisitions section of The Best Lawyers in America.

MEETINGS AND COMMITTEES OF DIRECTORS

The Board of Directors of the Company held 17 regularsixteen meetings three
additional telephonic updates and four
meetings of the independent members of the Board of Directors during 2004.2005. No
director attended fewer than 75 percent of the total number of meetings of the
Board of Directors. In addition, no director attended fewer than 75 percent of
the total number of meetings of all committees of the Board of Directors on
which that director served.

The Board of Directors has three standing committees: the Audit Committee,
the Compensation and Management Development Committee and the Nominating and
Corporate Governance Committee.

Information regarding the functions performed by the Audit Committee and
its membership is set forth in the "Audit Committee Report", included herein,
and the "Audit Committee Charter" that is posted on the Company's website at
www.pioneernrc.com.www.pxd.com and attached hereto as Annex A. The members of the Audit Committee
are Messrs. HoughtonGardner (Chairman), Gardner, Jones, Risch, Solberg and Watson and Mrs.
Lawson. The Audit Committee held eight meetings during 2004.2005.

The Compensation and Management Development Committee periodically reviews
the compensation, employee benefit plans and fringe benefits paid to, or
provided for, executive officers of the Company, and approves the annual
salaries, bonuses, stock option awards and restricted stock awards ofto the
Company's executive officers. The Compensation and Management Development
Committee also administers the Company's Long-Term Incentive Plan (the "Plan") and oversees
the Company's succession planning. Additional information regarding the
functions performed by the Compensation and Management Development Committee and
its membership is set forth in the "Compensation and Management Development
Committee Report on Executive Compensation" included herein, and the
"Compensation and Management Development Committee Charter" that is posted on
the Company's website at www.pioneernrc.com.www.pxd.com. The members of the Compensation and
Management Development Committee are Messrs. Buchanan (Chairman), Baroffio,
Lundquist and Ramsey. The Compensation and Management Development Committee held
fiveeleven meetings during 2004.2005.

The Nominating and Corporate Governance Committee assists the Board of
Directors in evaluating potential new members of the Board of Directors,
recommending committee members and structure, and advising the Board of
Directors about corporate governance practices. Additional information regarding
the functions performed by the Nominating and Corporate Governance Committee is
set forth in "Corporate Governance" included herein, and the "Nominating and
Corporate Governance Committee Charter" that is posted on the Company's website
at www.pioneernrc.com.www.pxd.com. The members of the Nominating and Corporate Governance Committee
include all non-employee directors; however, any director whose term
is expiring and who would be eligible for election at the Annual Meeting does
not participate in the meeting(s) called for such nomination.directors. The Nominating and Corporate Governance
Committee was formed in 2003 and held four meetings during 2005.

ITEM TWO

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Audit Committee of the Board of Directors has selected Ernst & Young
LLP as the independent auditors of the Company for 2006. Ernst & Young LLP have
audited the Company's financial statements since 1998. The 2005 audit of the
Company's annual consolidated financial statements and effectiveness of internal
control over financial reporting was completed on February 15, 2006.

Audit Fees. The aggregate fees of Ernst & Young LLP for professional
services rendered for the audits of the Company's annual consolidated financial
statements included in its Annual Report on Form 10-K, audit of the Company's
internal control over financial reporting, reviews of the Company's quarterly
financial statements included in its Quarterly Reports on Form 10-Q and reviews
of the Company's other filings with the Securities and Exchange Commission (the
"SEC") including comfort letters, consents and other research work necessary to
comply with generally accepted auditing standards for the years ended December
31, 2005 and 2004 were $1,187,000 and $987,000, respectively.

Audit-Related Fees. The aggregate fees of Ernst & Young LLP for
audit-related services provided to the Company totaled $46,000 and $42,000
during each of the years ended December 31, 2005 and 2004. Audit-related
services were comprised of audits of the Company's 401(k) plan and certain
affiliated partnerships.

Tax Services Fees. The aggregate fees of Ernst & Young LLP for tax services
provided to the Company totaled $49,000 and $82,000 during the years ended
December 31, 2005 and 2004, respectively. Tax services were primarily comprised
of tax return preparation services for expatriates and the Company's
international subsidiaries.

Other Fees. The aggregate fees of Ernst & Young LLP for other services
provided to the Company during the years ended December 31, 2005 and 2004
totaled $6,500 for each year. The other services were comprised of access to
Ernst & Young LLP's on-line research services.

The Charter of the Company's Audit Committee requires that the Audit
Committee review and pre-approve the plan and scope of Ernst & Young LLP's
audit, audit-related, tax and other services. During 2005, the Audit Committee
pre-approved 100 percent of the services described above under the captions
"Audit-Related Fees," "Tax Services Fees" and "Other Fees."

The Company expects that representatives of Ernst & Young LLP will be
present at the Annual Meeting to respond to appropriate questions and to make a
statement if they desire to do so.

The audit report of Ernst & Young LLP on the Company's annual consolidated
financial statements for 2005, 2004 and 2003 did not contain an adverse opinion
or a disclaimer of opinion and was not qualified or modified as to uncertainty
or audit scope. The audit report of Ernst & Young LLP on management's assessment
that the Company maintained effective internal control over financial reporting
as of December 31, 2005 and 2004 did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to uncertainty or
audit scope.

In connection with the audits of the Company's annual consolidated
financial statements for 2005, 2004 and 2003, there were no disagreements with
Ernst & Young LLP on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures which, if not
resolved to the satisfaction of such independent accountants, would have caused
such independent accountants to make reference to the matter in their audit
report.

The Board of Directors recommends that stockholders vote FOR ratification
of the selection of Ernst & Young LLP.

ITEM THREE

ADOPTION OF THE 2006 LONG-TERM INCENTIVE PLAN

General

The Compensation and Management Development Committee (the "Committee") of
the Board of Directors has recommended, subject to stockholder approval, the
adoption of the Company's 2006 Long-Term Incentive Plan (the "2006 Plan"). A
summary description of the material features of the 2006 Plan is set forth
below. The 2006 Plan document has been filed with the Securities and Exchange
Commission as Appendix A to this Proxy Statement and is incorporated by
reference into this proposal.

The Company currently sponsors the Pioneer Natural Resources Company
Long-Term Incentive Plan, which was adopted in 1997 (the "1997 LTIP"), pursuant
to which 5,064,330 shares of common stock were the subject of outstanding awards
as of March 14, 2006. In addition, 8,127,613 shares remain available for new
awards under the 1997 LTIP (as compared to the 4,600,000 shares that will be
authorized for issuance under the 2006 Plan) as of March 14, 2006. The exercise
prices for outstanding stock options under the 1997 LTIP range from $5.81 to
$42.44 per share. Currently, the 1997 LTIP provides for the granting of options,
performance units, restricted stock awards, restricted stock units and stock
appreciation rights. If the 2006 Plan is approved, no additional awards will be
made under the 1997 LTIP.

With the approval of the 2006 Plan, the Company will be able to continue to
use an array of equity compensation alternatives in structuring compensation
arrangements for Company personnel, directors and consultants. The 2006 Plan
will make available awards through which eligible persons may acquire and
maintain stock ownership in the Company. While the Board of Directors is
cognizant of the potential dilutive effect of compensatory stock awards and the
expense reflected on the Company's statement of operations, it also recognizes
the significant motivational and performance benefits that are achieved from
making such awards. No award may be granted under the 2006 Plan on or after the
ten year anniversary of its effectiveness.

Description of the Proposed Plan

The description of the 2006 Plan set forth below is a summary of the
material features of the 2006 Plan as proposed. This summary does not purport to
be a complete description of all the provisions of the 2006 Plan. The purpose of
the 2006 Plan is to provide a means to enhance the profitable growth of the
Company and its subsidiaries by attracting and retaining employees, directors
and consultants of the Company through affording such individuals a means to
acquire and maintain stock ownership or awards, the value of which is tied to
the performance of the common stock. The 2006 Plan also provides additional
incentives and reward opportunities designed to strengthen such individuals'
concern for the welfare of the Company and their desire to remain in its employ.
The 2006 Plan achieves this purpose by permitting grants of (i) incentive stock
options ("Incentive Options"), (ii) options that do not constitute incentive
stock options ("Nonstatutory Options," and together with Incentive Options,
"Options"), (iii) restricted stock awards ("Restricted Stock Awards"), (iv)
restricted stock units ("Restricted Stock Units"), (v) stock appreciation rights
("SARs"), or (vi) any combination of such awards (collectively referred to as
"Awards"). See "- Securities To Be Offered."

The 2006 Plan, in part, is intended to qualify under the provisions of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The
2006 Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").

Administration of the 2006 Long-Term Incentive Plan

The Board of Directors of the Company has appointed the Committee to
administer the 2006 Plan pursuant to its terms and all applicable state,
federal, or other rules or laws, except in the event the Board of Directors
chooses to take action under the 2006 Plan. Unless otherwise limited by the 2006
Plan, Rule 16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act"), or
any provisions of the Code, the Committee has broad discretion to administer the
2006 Plan, interpret its provisions, and adopt policies for implementing the
2006 Plan. This discretion includes the power to determine when and to whom
Awards will be granted, determine the amount of such Awards (measured in cash,
shares of common stock or as otherwise designated), prescribe and interpret the
terms and provisions of each Award agreement (the terms of which may vary),
delegate duties under the 2006 Plan, terminate, modify or amend the 2006 Plan,
and execute all other responsibilities permitted or required under the 2006
Plan.

Persons Who May Participate in the 2006 Long-Term Incentive Plan

Any individual who provides services to the Company or its subsidiaries,
including non-employee directors of and consultants for the Company (an
"Eligible Person"), and who is designated by the Committee to receive an Award
under the 2006 Plan will be a "Participant." An employee on leave of absence may
be considered still employed by the Company or a subsidiary for purposes of
determining eligibility for participation under the 2006 Plan. Any individual
granted an Award which remains outstanding under the 2006 Plan, including an
individual who is no longer an Eligible Person, will continue to be a
Participant for purposes of the 2006 Plan. The Company currently has 11
non-employee directors, 18 officers and approximately 1,500 other employees who
are eligible to participate in the 2006 Plan.

With respect to a grant of Incentive Options, which comply with Section 422
of the Code, a Participant must be an employee of the Company or one of its
corporate subsidiaries and, immediately before the time the Incentive Option is
granted, the Participant may not own stock possessing more than 10% of the total
combined voting power or value of all classes of stock of the Company or a
subsidiary unless, at the time the Incentive Option is granted, the exercise
price of the Incentive Option is at least 110% of the fair market value of the
common stock underlying the Incentive Option.

Maximum Number of Shares Subject to Award

A Participant under the 2006 Plan will be eligible to receive an Award
pursuant to the terms of the 2006 Plan and subject to any limitations imposed by
appropriate action of the Committee. No Award may be granted if the Award
relates to a number of shares of common stock which exceeds the number of shares
which remain available under the 2006 Plan minus the number of shares issuable
in settlement of or relating to outstanding Awards under the 2006 Plan.
Additionally, in each fiscal year or 12-month period, as applicable, during any
part of which the 2006 Plan is in effect, a "Covered Employee" for purposes of
section 162(m) of the Code (discussed below) may not be granted (i) Awards
(other than Awards designated to be paid only in cash) relating to more than
250,000 shares of common stock, subject to adjustment in a manner consistent
with the other provisions of the 2006 Plan, and (ii) Awards designated to be
paid only in cash having a value determined on the date of grant in excess of
$4,000,000.

Securities to be Offered

Shares Subject to the 2006 Plan. The maximum aggregate number of shares of
common stock that may be granted for any and all Awards under the 2006 Plan
shall not exceed 4,600,000 shares (subject to any adjustment due to
recapitalization or reorganization permitted under the 2006 Plan), and the total
number of shares of common stock received and available for delivery in
connection with Incentive Options under the 2006 Plan will not exceed 4,600,000
shares. If common stock subject to any Award is not issued or transferred, or
ceases to be issuable or transferable for any reason, including (but not
exclusively) because an Award is forfeited, terminated, expires unexercised, is
settled in cash in lieu of common stock or is otherwise terminated without a
delivery of shares to a Participant, the shares of common stock that were
subject to that Award will again be available for issue, transfer or exercise
pursuant to Awards under the 2006 Plan to the extent allowable by law. The

common stock subject to Awards pursuant to the 2006 Plan may be authorized but
unissued shares, shares held by the Company in treasury, or shares that have
been reacquired by the Company, including shares that have been bought on the
market for the purposes of the 2006 Plan. The fair market value of the common
stock on a given date will be the closing price of a share of common stock so
reported by the New York Stock Exchange ("NYSE") on the most recent date on
which shares of common stock were publicly-traded preceding the date with
respect to which the fair market value determination is made. There are no fees,
commissions or other charges applicable to a purchase of common stock under the
2006 Plan.

Awards

Stock Options. The Company may grant Options to Eligible Persons, including
(i) Incentive Options (only to employees of the Company or its subsidiaries),
which comply with section 422 of the Code and (ii) Nonstatutory Options. The
exercise price of each Option granted under the 2006 Plan will be stated in the
Option agreement and may vary; provided, however, that the exercise price for an
Option must not be less than the greater of (a) the par value per share of
common stock or (b) 100% of the fair market value per share of the common stock
as of the date of grant of the Option. Options may be exercised as the Committee
determines, but not later than ten years from the date of grant. Incentive
Options will not be granted more than ten years after the approval of the 2006
Plan by the Company's stockholders. Any Incentive Option that fails to comply
with section 422 of the Code for any reason will result in the reclassification
of the Option as a Nonstatutory Option, which will be exercisable as such. The
Committee will determine the methods and form of payment for the exercise price
of an Option (including, in the discretion of the Committee, payment in common
stock, other Awards, or other property) and the methods and forms in which
common stock (including common stock issuable pursuant to the Option) will be
delivered to a Participant.

SARs. An SAR is the right to receive an amount equal to the excess of the
fair market value of one share of the common stock on the date of exercise over
the grant price of the SAR, as determined by the Committee. SARs may be awarded
in connection with or separate from an Option. SARs awarded in connection with
an Option will entitle the holder, upon exercise, to surrender the related
Option or portion thereof relating to the number of shares for which the SAR is
exercised. The surrendered Option or portion thereof will then cease to be
exercisable. However, an SAR awarded in connection with an Option is exercisable
only to the extent that the related Option is exercisable. SARs granted
independently of an Option will be exercisable as the Committee determines. The
term of an SAR will be for a period determined by the Committee but will not
exceed ten years. SARs may be paid in cash, stock or a combination of cash and
stock, as the Committee provides in the Award agreement governing the SAR.

Restricted Stock Awards. A Restricted Stock Award is a grant of shares of
common stock subject to a risk of forfeiture, restrictions on transferability,
and any other restrictions imposed by the Committee in its discretion.
Restrictions may lapse at such times and under such circumstances as determined
by the Committee. Except as otherwise provided under the terms of the 2006 Plan
or an Award agreement, the holder of a Restricted Stock Award may have rights as
a stockholder, including the right to vote the common stock subject to the
Restricted Stock Award or to receive dividends on the common stock subject to
the Restricted Stock Award (and subject to any mandatory reinvestment or other
requirements imposed by the Committee). As a condition of a Restricted Stock
Award grant, the Committee may require or permit a Participant to elect that any
cash dividends paid on a share of common stock subject to a Restricted Stock
Award be automatically reinvested in additional Restricted Stock Awards or
applied to the purchase of additional Awards under the 2006 Plan. Unless
otherwise determined by the Committee, common stock distributed in connection
with a stock split or stock dividend, and other property distributed as a
dividend, will be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock Award with respect to which such common stock or
other property has been distributed. During the restricted period applicable to
the Restricted Stock, the Restricted Stock may not be sold, transferred,
pledged, hypothecated, margined or otherwise encumbered by the Participant.

Restricted Stock Units. Restricted Stock Units are rights to receive common
stock, cash, or a combination of both at the end of a specified period. The
Committee may subject Restricted Stock Units to restrictions (which may include
a risk of forfeiture) to be specified in the Award agreement, and those
restrictions may lapse at such times determined by the Committee. Restricted
Stock Units may be satisfied by delivery of common stock, cash equal to the fair
market value of the specified number of shares of common stock covered by the
Restricted Stock Units, or any combination thereof determined by the Committee

at the date of grant or thereafter. Dividend equivalents on the specified number
of shares of common stock covered by Restricted Stock Units will be either (i)
paid with respect to such Restricted Stock Units on the dividend payment date in
cash or in shares of unrestricted common stock having a fair market value equal
to the amount of such dividends, or (ii) automatically deemed reinvested in
additional Restricted Stock Units, other Awards, or other investment vehicles
permitted by the Committee and elected by the Participant, unless otherwise
determined by the Committee on the date of grant.

Bonus Stock and Awards in Lieu of Company Obligations. The Committee is
authorized to grant common stock as a bonus, or to grant common stock or other
Awards in lieu of obligations to pay cash or deliver other property under the
2006 Plan or under other plans or compensatory arrangements, subject to any
applicable provision under Section 16 of the Exchange Act. The Committee will
determine any terms and conditions applicable to grants of common stock or other
Awards, including performance criteria associated with an Award. Any grant of
common stock to an officer of the Company or a subsidiary in lieu of salary or
other cash compensation will be reasonable, as determined by the Committee.

Dividend Equivalents. Dividend equivalents may be granted, entitling a
Participant to receive cash, common stock, other Awards, or other property equal
in value to dividends paid with respect to a specified number of shares of
common stock, or other periodic payments at the discretion of the Committee.
Dividend equivalents may be awarded on a freestanding basis or in connection
with another Award. The Committee may provide that dividend equivalents will be
payable or distributed when accrued or that they will be deemed reinvested in
additional common stock, Awards, or other investment vehicles. The Committee
will specify any restrictions on transferability and risks of forfeiture that
are imposed upon dividend equivalents.

Other Stock-Based Awards. Participants may be granted, subject to
applicable legal limitations and the terms of the 2006 Plan and its purposes,
other Awards related to common stock (in terms of being valued, denominated,
paid or otherwise defined by reference to common stock). Such Awards may
include, but are not limited to, convertible or exchangeable debt securities,
other rights convertible or exchangeable into common stock, purchase rights for
common stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee, and Awards valued by
reference to the book value of common stock or the value of securities of or the
performance of specified subsidiaries. The Committee will determine the terms
and conditions of all such Awards, including without limitation, method of
delivery, consideration to be paid, the timing and methods of payment, and any
performance criteria associated with an Award. Cash awards may granted as an
element of or a supplement to any Awards permitted under the 2006 Plan.

Performance Awards. The Committee may designate that certain Awards granted
under the 2006 Plan constitute "performance" Awards ("Performance Awards") or
may grant separate cash bonus annual incentive awards as Performance Awards. A
Performance Award is any Award, the grant, exercise or settlement of which is
subject to one or more performance standards. Additionally, a Performance Award
is an Award granted to a person designated by the Committee, at the time of
grant of the Performance Award, as likely to be a Covered Employee within the
meaning of section 162(m) of the Code and the regulations thereunder (including
Treasury Regulation ss. 1.162-27 and successor regulations thereto) for the
fiscal year. One or more of the following business criteria for the Company, on
a consolidated basis, and/or for specified subsidiaries or business or
geographical units of the Company (except with respect to the total shareholder
return and earnings per share criteria) shall be used by the Committee in
establishing performance goals: (i) earnings per share; (ii) increase in
revenues; (iii) increase in cash flow; (iv) increase in cash flow return; (v)
return on net assets; (vi) return on assets and/or return on investment; (vii)
return on capital; (viii) return on equity; (ix) economic value added; (x)
operating margin; (xi) contribution margin; (xii) net income; (xiii) pretax
earnings; (xiv) pretax earnings before interest, depreciation, amortization,
exploration and abandonment costs; (xv) pretax operating earnings after interest
expense and before incentives, service fees, and extraordinary or special items,
or operating income; (xvi) total stockholder return; (xvii) debt reduction;
(xviii) production growth; (xix) general and administrative expenses; (xx)
reserve replacement; (xxi) finding and development costs; (xxii) net asset
value; (xxiii) operating costs; and (xxiv) any of the above goals determined on
an absolute or relative basis or as compared to the performance of a published
or special index deemed applicable by the Committee including, but not limited
to, the Standard & Poor's 500 Stock Index or a selected group of companies.

Other Provisions

Tax Withholding. At the discretion of the Committee and subject to
conditions that the Committee may impose, a Participant's minimum statutory tax
withholding with respect to an Award may be satisfied by withholding from any
payment related to an Award or by the withholding of shares of common stock
issuable pursuant to the Award based on the fair market value of the shares.

Merger or Recapitalization. If any change is made to the Company's
capitalization, such as a stock split, stock combination, stock dividend,
exchange of shares or other recapitalization, merger or otherwise, which results
in an increase or decrease in the number of outstanding shares of common stock,
appropriate adjustments will be made by the Committee as to the number and price
of shares subject to an Award under the 2006 Plan.

Change in Control. Upon a Change in Control (as such term is defined in the
2006 Plan), with respect only to Awards held by Participants who are employees
or directors of the Company, (i) all outstanding SARs and Options shall
immediately become fully vested and exercisable in full; (ii) the restriction
period of any Restricted Stock Award or Restricted Stock Unit shall immediately
be accelerated and the restrictions shall expire; and (iii) the performance
goals established under any Performance Award will be deemed to have been met
for all performance periods and the holder will be paid a pro rata portion of
all associated targeted performance goals.

Amendment. Without stockholder or Participant approval, the Board of
Directors may amend, alter, suspend, discontinue or terminate the 2006 Plan or
the Committee's authority to grant Awards under the plan, except that any
amendment or alteration to the 2006 Plan, including any increase in any share
limitation, shall be subject to the approval of the Company's stockholders not
later than the next annual meeting if stockholder approval is required by any
state or federal law or regulation or the rules of the NYSE. The Board of
Directors may otherwise, in its discretion, determine to submit other such
changes to the 2006 Plan to stockholders for approval. The Committee may waive
any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the 2006 Plan; provided, that without
the consent of an affected Participant, no such Committee action may materially
and adversely affect the rights of such Participant under such Award.

Transferability of Awards. In accordance with the rules prescribed by the
Committee, the Committee may permit a person to transfer, in the form of a gift,
Nonstatutory Options or SARs, or may authorize all or a portion of such Awards
to be granted to an Eligible Person on terms which permit transfer by such
Participant (i) to a child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law
(including adoptive relationships), and any person sharing the household of a
holder of such Award ("Immediate Family Members"); (ii) to a trust in which
Immediate Family Members have more than fifty percent of the beneficial
interest; (iii) a foundation in which Immediate Family Members control the
management of assets; or (iv) any other entity in which Immediate Family Members
own more than fifty percent of the voting interests. An Option, SAR, Restricted
Stock Unit or Restricted Stock Award may be transferred pursuant to a domestic
relations order. Other than as described above, Awards will not be transferable
other than by will or the laws of descent and distribution. Notwithstanding any
provision to the contrary, Incentive Options will not be transferable other than
by will or the laws of descent and distribution.

Federal Tax Consequences

The following discussion is for general information only and is intended to
summarize briefly the U.S. federal tax consequences to Participants arising from
participation in the 2006 Plan. This description is based on current law, which
is subject to change (possibly retroactively). The tax treatment of Participants
in the 2006 Plan may vary depending on the particular situation and may,
therefore, be subject to special rules not discussed below. No attempt has been
made to discuss any potential foreign, state, or local tax consequences.

Incentive Options; Nonstatutory Options; SARs. Participants will not
realize taxable income upon the grant of a Nonstatutory Option or an SAR. Upon
the exercise of a Nonstatutory Option or SAR, a Participant will recognize
ordinary compensation income (subject to withholding by the Company) in an
amount equal to the excess of (i) the amount of cash and the fair market value
of the common stock received, over (ii) the exercise price (if any) paid

therefor. A Participant will generally have a tax basis in any shares of common
stock received pursuant to the exercise of an SAR, or pursuant to the cash
exercise of a Nonstatutory Option, that equals the fair market value of such
shares on the date of exercise. Subject to the discussion under "--Tax Code
Limitations on Deductibility" below, the Company (or a subsidiary) will be
entitled to a deduction for federal income tax purposes that corresponds as to
timing and amount with the compensation income recognized by a Participant under
the foregoing rules.

Participants eligible to receive an Incentive Option will not recognize
taxable income on the grant of an Incentive Option. Upon the exercise of an
Incentive Option, a Participant will not recognize taxable income, although the
excess of the fair market value of the shares of common stock received upon
exercise of the Incentive Option ("ISO Stock") over the exercise price will
increase the alternative minimum taxable income of the Participant, which may
cause such Participant to incur alternative minimum tax. The payment of any
alternative minimum tax attributable to the exercise of an Incentive Option
would be allowed as a credit against the Participant's regular tax liability in
a later year to the extent the Participant's regular tax liability is in excess
of the alternative minimum tax for that year.

Upon the disposition of ISO Stock that has been held for the requisite
holding period (generally, at least two years from the date of grant and one
year from the date of exercise of the Incentive Option), a Participant will
generally recognize capital gain (or loss) equal to the excess (or shortfall) of
the amount received in the disposition over the exercise price paid by the
Participant for the ISO Stock. However, if a Participant disposes of ISO Stock
that has not been held for the requisite holding period (a "Disqualifying
Disposition"), the Participant will recognize ordinary compensation income in
the year of the Disqualifying Disposition in an amount equal to the amount by
which the fair market value of the ISO Stock at the time of exercise of the
Incentive Option (or, if less, the amount realized in the case of an arm's
length disposition to an unrelated party) exceeds the exercise price paid by the
Participant for such ISO Stock. A Participant would also recognize capital gain
to the extent the amount realized in the Disqualifying Disposition exceeds the
fair market value of the ISO Stock on the exercise date. If the exercise price
paid for the ISO Stock exceeds the amount realized (in the case of an
arm's-length disposition to an unrelated party), such excess would ordinarily
constitute a capital loss.

The Company and its subsidiaries will generally not be entitled to any
federal income tax deduction upon the grant or exercise of an Incentive Option,
unless a Participant makes a Disqualifying Disposition of the ISO Stock. If a
Participant makes a Disqualifying Disposition, the Company (or a subsidiary)
will then, subject to the discussion below under "--Tax Code Limitations on
Deductibility," be entitled to a tax deduction that corresponds as to timing and
amount with the compensation income recognized by a Participant under the rules
described in the preceding paragraph.

Under current rulings, if a Participant transfers previously held shares of
common stock (other than ISO Stock that has not been held for the requisite
holding period) in satisfaction of part or all of the exercise price of a
Nonstatutory Option or Incentive Option, no additional gain will be recognized
on the transfer of such previously held shares in satisfaction of the
Nonstatutory Option or Incentive Option exercise price (although a Participant
would still recognize ordinary compensation income upon exercise of an
Nonstatutory Option in the manner described above). Moreover, that number of
shares of common stock received upon exercise which equals the number of shares
of previously held common stock surrendered therefor in satisfaction of the
Nonstatutory Option or Incentive Option exercise price will have a tax basis
that equals, and a capital gains holding period that includes, the tax basis and
capital gains holding period of the previously held shares of common stock
surrendered in satisfaction of the Nonstatutory Option or Incentive Option
exercise price. Any additional shares of common stock received upon exercise
will have a tax basis that equals the amount of cash (if any) paid by the
Participant, plus the amount of compensation income recognized by the
Participant under the rules described above.

The 2006 Plan allows the Committee to permit the transfer of Awards in
limited circumstances. See "--Other Provisions - Transferability of Awards." For
income and gift tax purposes, certain transfers of Nonstatutory Options and SARs
generally should be treated as completed gifts, subject to gift taxation.

The Internal Revenue Service (the "IRS") has not provided formal guidance
on the income tax consequences of a transfer of Nonstatutory Options (other than
in the context of divorce) or SARs. However, the IRS has informally indicated

that after a transfer of stock options, the transferor will recognize income,
which will be subject to withholding, and FICA/FUTA taxes will be collectible at
the time the transferee exercises the stock options.

In addition, if the Participant transfers a vested Nonstatutory Option to
another person and retains no interest in or power over it, the transfer is
treated as a completed gift. The amount of the transferor's gift (or
generation-skipping transfer, if the gift is to a grandchild or later
generation) equals the value of the Nonstatutory Option at the time of the gift.
The value of the Nonstatutory Option may be affected by several factors,
including the difference between the exercise price and the fair market value of
the stock, the potential for future appreciation or depreciation of the stock,
the time period of the Nonstatutory Option and the illiquidity of the
Nonstatutory Option. The transferor will be subject to a federal gift tax, which
will be limited by (i) the annual exclusion of $12,000 per donee, (ii) the
transferor's lifetime unified credit, or (iii) the marital or charitable
deductions. The gifted Nonstatutory Option will not be included in the
Participant's gross estate for purposes of the federal estate tax or the
generation-skipping transfer tax.

This favorable tax treatment for vested Nonstatutory Options has not been
extended to unvested Nonstatutory Options. Whether such consequences apply to
unvested Nonstatutory Options is uncertain and the gift tax implications of such
a transfer is a risk the transferor will bear upon such a disposition. The IRS
has not specifically addressed the tax consequences of a transfer of SARs.

Restricted Stock Awards; Restricted Stock Units; Cash Awards. A Participant
will recognize ordinary compensation income upon receipt of cash pursuant to a
cash award or, if earlier, at the time the cash is otherwise made available for
the Participant to draw upon. A Participant will not have taxable income at the
time of grant of a stock Award in the form of Restricted Stock Units denominated
in common stock, but rather, will generally recognize ordinary compensation
income at the time he receives common stock in satisfaction of the Restricted
Stock Units in an amount equal to the fair market value of the common stock
received. In general, a Participant will recognize ordinary compensation income
as a result of the receipt of common stock pursuant to a Restricted Stock Award
or Bonus Stock Award in an amount equal to the fair market value of the common
stock when such stock is received; provided, however, that if the stock is not
transferable and is subject to a substantial risk of forfeiture when received, a
Participant will recognize ordinary compensation income in an amount equal to
the fair market value of the common stock (i) when the common stock first
becomes transferable or is no longer subject to a substantial risk of
forfeiture, in cases where a Participant does not make an valid election under
Section 83(b) of the Code or (ii) when the common stock is received, in cases
where a Participant makes a valid election under Section 83(b) of the Code.

A Participant will be subject to withholding for federal, and generally for
state and local, income taxes at the time he recognizes income under the rules
described above with respect to common stock or cash received. Dividends that
are received by a Participant prior to the time that the common stock is taxed
to the Participant under the rules described in the preceding paragraph are
taxed as additional compensation, not as dividend income. The tax basis in the
common stock received by a Participant will equal the amount recognized by him
as compensation income under the rules described in the preceding paragraph, and
the Participant's capital gains holding period in those shares will commence on
the later of the date the shares are received or the restrictions lapse.

Subject to the discussion immediately below, the Company (or a subsidiary)
will be entitled to a deduction for federal income tax purposes that corresponds
as to timing and amount with the compensation income recognized by a Participant
under the foregoing rules.

Tax Code Limitations on Deductibility. In order for the amounts described
above to be deductible by the Company (or a subsidiary), such amounts must
constitute reasonable compensation for services rendered or to be rendered and
must be ordinary and necessary business expenses.

The ability of the Company (or a subsidiary) to obtain a deduction for
future payments under the 2006 Plan could also be limited by the golden
parachute payment rules of Section 280G of the Code, which prevent the
deductibility of certain excess parachute payments made in connection with a
change in control of an employer-corporation.

Finally, the ability of the Company (or a subsidiary) to obtain a deduction
for amounts paid under the 2006 Plan could be limited by Section 162(m) of the
Code, which limits the deductibility, for federal income tax purposes, of
compensation paid to certain executive officers of a publicly traded corporation
to $1,000,000 with respect to any such officer during any taxable year of the

corporation. However, an exception applies to this limitation in the case of
certain performance-based compensation. In order to exempt performance-based
compensation from the $1,000,000 deductibility limitation, the grant or vesting
of the Award relating to the compensation must be based on the satisfaction of
one or more performance goals as selected by the Committee. Performance-based
Awards intended to comply with Section 162(m) of the Code may not be granted in
a given period if such Awards relate to shares of common stock which exceed a
specified limitation or, alternatively, the performance-based Awards may not
result in compensation, for a Participant, in a given period which exceeds a
specified limitation. If the 2006 Plan is approved at the Annual Meeting, a
Participant who receives an Award or Awards intended to satisfy the
performance-based exception to the $1,000,000 deductibility limitation may not
receive performance-based Awards relating to more than 250,000 shares of common
stock or, with respect to Awards not related to shares of common stock,
$4,000,000, in any given fiscal year. Although the 2006 Plan has been drafted to
satisfy the requirements for the performance-based compensation exception, the
Company may determine that it is in its best interests not to satisfy the
requirements for the exception. See "Awards - Performance Awards."

Long-Term Incentive Plan Benefit Table

As of the date of this Proxy Statement, no director, executive officer or
employee of the Company has been granted any Awards under the 2006 Plan. The
Awards, if any, that will be granted to eligible persons under the 2006 Plan are
subject to the discretion of the Committee and, therefore, are not determinable.
The following table sets forth, for the named executive officers (as defined
below under "Compensation - Summary Compensation Table"), Mr. Richard P. Dealy,
the Company's Executive Vice President and Chief Financial Officer, and certain
groups, all Awards granted in 2005 under the 1997 LTIP:

Name and Principal Position Number of Shares Underlying Awards
--------------------------- ----------------------------------

Scott D. Sheffield 63,000
Chairman and Chief Executive Officer
Timothy L. Dove 24,000
President and Chief Operating Officer
A. R. Alameddine 14,000
Executive Vice President - Worldwide Negotiations
Chris J. Cheatwood 14,000
Executive Vice President - Worldwide Exploration
Danny L. Kellum 14,000
Executive Vice President - Domestic Operations
Richard P. Dealy 14,000
Executive Vice President and Chief Financial Officer

All Executive Officers as a Group (9 persons) 174,500
Non-Executive Director Group (11 persons) 27,746
Non-Executive Officer Employee Group (approximately 1,500 1,209,023
persons)
Total 1,411,269

If the 2006 Plan submitted to stockholders is not approved by stockholders
at the Annual Meeting, the 2006 Plan will not be adopted and no Awards will be
granted under the 2006 Plan.

The Board of Directors recommends that stockholders vote FOR the approval
of the proposed Pioneer Natural Resources Company 2006 Long-Term Incentive Plan.
Because each of the Company's directors and executive officers will be eligible
to receive Awards under the proposed plan, each of the directors and executive
officers of the Company has an interest in, and may benefit from, the adoption
of the proposed plan.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides certain information about common stock that
may be issued upon the exercise of options under the 1997 LTIP, Employee Stock
Purchase Plan and predecessor equity compensation plans. The table does not
reflect the 4,600,000 shares of common stock authorized for issuance under the
2006 Plan if adopted by the stockholders at the Annual Meeting under Item Three.

(b)
(a) Number of Securities
Number of Weighted Remaining Available
Securities to be Average Exercise for Future Issuance
Issued Upon Exercise Price of Under Equity
of Outstanding Compensation Plans
Outstanding Options Options, (Excluding Securities
Warrants, Awards Warrants and Reflected in
Plan Category and Rights Rights (c) Column (a))
- -------------------------------------- -------------------- ---------------- ---------------------

Equity Compensation Plans Approved by
Security holders (d):
Long-Term Incentive Plan 1,922,215 $20.66 8,467,964
Employee Stock Purchase Plan -- -- 513,406
Predecessor plans 763,183 $19.45 --
--------- ---------
2,685,398 8,981,370
========= =========

- -----------
(a) There are no outstanding warrants or equity rights awarded under the
Company's equity compensation plans. The securities do not include
restricted stock awarded under the 1997 LTIP.
(b) The 1997 LTIP provides for the issuance of a maximum number of shares of
common stock equal to ten percent of the total number of shares of common
stock equivalents outstanding less the total number of shares of common
stock subject to outstanding awards under any stock-based plan for the
directors, officers or employees of the Company. The number of remaining
securities available for future issuance under the Company's Employee Stock
Purchase Plan is based on the original authorized issuance of 750,000
shares less 236,594 cumulative shares issued through December 31, 2005.
(c) These amounts represent the weighted average exercise price for the total
number of outstanding options. (d) All equity compensation plans have been
approved by security holders.

COMPENSATION

Compensation of Directors

ForThe Board of Directors believes providing competitive compensation is
necessary to attract and retain qualified non-employee directors. The Board of
Directors believes that the 2004-2005compensation package should require a significant
portion of the total compensation package to be equity based to align the
interests of the Board of Directors and the Company's stockholders but should
also allow each director the flexibility to choose to receive a portion of the
director's compensation in cash. To maintain competitive director compensation,
the Compensation and Management Development Committee (the "Committee")
periodically engages a compensation consultant to conduct a benchmarking review
of outside director pay.

The elements of compensation for the Company's non-employee directors for
the 2005-2006 director year, which runs from the annual meeting of 20042005 to the
annual meeting of 2005, non-employee directors2006, are being compensated as follows:

o Each non-employee director receives an annual base retainer fee of
$40,000 and an annual fee of $10,000 for service on one or more
committees.
o Audit Committee members receivedreceive an additional $7,500 annual fee.
o The geosciences specialist on the Board of Directors receives an
additional $7,500 annual fee.
o The lead director receives an additional fee of $15,000.$15,000 annual fee.
o The chairman of the Audit Committee receives an additional $7,500
annual fee and each other committee chairmen receivechairman receives an additional
$2,500 annual fee.

Additionally, each non-employee director is provided information technology
support by the Company and is also reimbursed for travel expenses to attend
meetings of the Board of Directors or its committees, travel and entertainment
expenses for each director's spouse who is invited to accompany directors to

meetings of the Board meetings,of Directors, director education, seminars and trade
publications. No additional fees are paid for attendance at Board of Directors
or committee meetings. The Company's Chief Executive Officer does not receive
additional compensation for serving on the Board of Directors.

Under the Plan,this compensation program, non-employee directors are eligible to
receive their fees in the form of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units. The Company can
use these awards instead of cash to pay its non-employee directors all or part
of their annual fees. The Board of Directors determines the form (or combination
of forms) of considerationcompensation each year, based on the economic and other
circumstances at the time of award and based on its view of which awards will
best align the interests of the stockholders and the directors.Board of Directors. For
both the 2005-2006 and 2006-2007 director year, the Board of
Directors has determined that non-employee directors can elect to receive their
annual fees 100 percent in cash or restricted stock units or 50 percent cash and
50 percent restricted stock units.

For the 2004-2005 director year,years, the non-employee directors
were given a
choicecould choose to be compensated for their annual directors' fees in either (i) 100
percent cash, (ii) 100 percent restricted stock units ("RSU") or (iii) a 50/50
combination of any thereof.

The following table summarizes annual director fees earned by the Company's
non-employee directors during the year ended December 31, 2004 (these fee
elements overlap portions of the 2003-2004 director year and the 2004-2005
director year):

Annual Director Fees For the Year Ended December 31, 2004
--------------------------------------------------------------------------
Annual Committee Committee Lead Geosciences Other
Name Retainer Participation Chairman Director Specialist Perquisites (a) Total
- ---- -------- ------------- --------- -------- ----------- --------------- ------------

James R. Baroffio...... $ 40,000 $ 10,000 $ - $ - $ 7,500 $ 4,233 $ 61,733
Edison C. Buchanan..... $ 40,000 $ 10,000 $ 2,500 $ - $ - $ 1,118 $ 53,618 (b)
R. Hartwell Gardner.... $ 40,000 $ 17,500 $ - $ - $ - $ 249 $ 57,749 (b)
James L. Houghton...... $ 40,000 $ 17,500 $ 7,500 $ - $ - $ 943 $ 65,943
Jerry P. Jones......... $ 40,000 $ 17,500 $ - $ - $ - $ 249 $ 57,749
Linda K. Lawson........ $ 40,000 $ 17,500 $ - $ - $ - $ 668 $ 58,168
Charles E. Ramsey, Jr.. $ 40,000 $ 10,000 $ - $ 11,250 $ - $ 1,683 $ 62,933
Robert A. Solberg...... $ 40,000 $ 17,500 $ - $ - $ - $ 249 $ 57,749 (c)
Andrew D. Lundquist.... $ - $ - $ - $ - $ - $ 249 $ 249
Mark S. Sexton......... $ - $ - $ - $ - $ - $ 249 $ 249
Jim A. Watson.......... $ - $ - $ - $ - $ - $ 249 $ 249

- -----------
(a) Other perquisites include travel and entertainment costs of spouses, costs
of attending conferences and seminars and gifts.
(b) Messrs. Buchanan and Gardner chose to receive 100 percent of their annual
fees in restricted stock.
(c) Mr. Solberg chose to receive restricted stock for the equivalent value of
$28,750 of his fees for the year ended December 31, 2004.

Directors who had completed three years of service as a director as of May
2004, inIn addition to their annual base pay retainer fee, directors received an
annual equity award of $60,000 in restricted stock.stock units. The restricted stock
grantsunits vest after one year. Retirement before the first anniversary of the annual
equity award grant results in pro rata vesting based on the number of quarterly
meetings remaining in the director year.

New directors joining the Board of Directors after May 2004 receive2005 received a pro
rata portion of the $60,000 annual equity award in restricted stock units based
on the number of quarterly meetings remaining in the director year. The number
of shares granted is determined by dividing the value of the equity award by the
closing price of one share of Company stock on the last day preceding the day
the director joins the Board of Directors.

Each non-employee director, upon commencement of initial service as a
director, receives $125,000 of restricted stock.stock units. Directors who served on
the Board of Directors of a company whichthat was acquired or merged into the Company
and joined the Company's Board of Directors as a result of the acquisition or
11

merger are not eligible for this award. The price used to calculate the number
of shares to be granted is based on the closing stock price on the day prior to the
day the director is elected to serve on the Board of Directors. The shares
granted are subject to vesting and transfer restrictions that lapse with respect
to one-third of the shares each year following the grant over a three-year
period. Retirement before the third anniversary of the grant results in pro rata
vesting based on the number of quarterly meetings remaining in the three-year
vesting period.

The vesting of ownership and the lapse of transfer restrictions on
restricted stock awardsunits to non- employeenon-employee directors is accelerated in the event of
the death or disability of the director or a change in control of the Company.

The following table summarizes the equivalent values on the dates of grant
of restricted stock awarded toannual director fees and equity awards
earned by the Company's non-employee directors during the year endedending December
31, 2004:2005:

Annual Director Restricted Stock Awards DuringCompensation (Fees + RSU) for the Year endedEnded December 31, 2004
------------------------------------------------------------------------
Equivalent Award Values on Dates of Grant
-----------------------------------------------------
Noncash2005
------------------------------------------------------------------------------
Annual Initial Service SharesCommittee Special Other Annual RSU Underlying RSUs
Name Annual Fees AwardRetainer Participation Fees/Awards (a) Perquisites (b) Award Total Awarded
- ---- ------------------- ------------- --------------- --------------- ---------- --------- ---------------

--------- -------

James R. Baroffio.......... $ -40,000 $ 10,000 $ 7,500 $ 1,752 $ 60,000 $ 119,252 1,586
Edison C. Buchanan (c)..... $ 40,000 $ 10,000 $ 2,500 $ 872 $ 60,000 $ 113,372 2,974
R. Hartwell Gardner (c)(d). $ 40,000 $ 17,500 $ 5,625 $ 88 $ 60,000 $ 123,213 3,304
James L. Houghton (d)...... $ 40,000 $ 17,500 $ 1,875 $ 535 $ 45,000 $ 104,910 1,190
Jerry P. Jones............. $ 40,000 $ 17,500 $ - $ 1,507 $ 60,000 1,912
Edison C. Buchanan......... $ 52,500119,007 1,586
Linda K. Lawson............ $ 40,000 $ 17,500 $ - $ 1,677 $ 60,000 $ 119,177 1,586
Andrew D. Lundquist (c).... $ 40,000 $ 10,000 $ - $ - $ 52,500 1,673
R. Hartwell Gardner........60,000 $ 57,500110,000 2,908
Charles E. Ramsey, Jr (c).. $ 40,000 $ 10,000 $ 15,000 $ 1,672 $ 60,000 $ 126,672 3,304
Frank A. Risch (e)......... $ 20,000 $ 8,750 $125,000 $ - $ 117,500 3,744
James L. Houghton..........45,000 $ 198,750 4,154
Mark S. Sexton............. $ 40,000 $ 7,500 $ - $ 150 $ 60,000 $ 107,650 1,586
Robert A. Solberg (c)...... $ 40,000 $ 17,500 $ - $ 417 $ 60,000 $ 117,917 1,586
Jim A. Watson.............. $ 40,000 $ 17,500 $ - $ - $ 60,000 $ - $ 60,000 1,912
Jerry P. Jones............. $ - $ 60,000 $ - $ 60,000 1,912
Linda K. Lawson............ $ - $ - $ - $ - -
Andrew D. Lundquist........ $ - $ 30,000 $ - $ 30,000 882
Charles E. Ramsey, Jr...... $ - $ 60,000 $ - $ 60,000 1,912
Mark S. Sexton............. $ - $ 30,000 $ - $ 30,000 882
Robert A. Solberg (a)...... $ 28,750 $ - $ - $ 28,750 1,832
Jim A. Watson.............. $ - $ 30,000 $125,000 $ 155,000 4,668117,500 1,586

- -----------------------
(a) Mr. Baroffio received a $7,500 annual fee for acting as the geosciences
specialist on the Board of Directors; Mr. Buchanan received a $2,500 annual
fee for acting as the chairman of the Compensation and Management
Development Committee; Messrs. Gardner and Houghton shared the $7,500
annual fee for chairing the Audit Committee; Mr. Ramsey received a $15,000
annual fee for acting as the Board of Director's lead director and Mr.
Risch received an initial service award of $125,000 in restricted stock
units.
(b) Other perquisites include travel and entertainment costs of spouses.
(c) Each of these directors elected to receive some or all of his annual
retainer in restricted stock or restricted stock units, described as
follows:
o Messrs. Buchanan and Gardner chose to receive 100 percent of their
annual retainer in restricted stock for the 2004-2005 director year
and in restricted stock units for the 2005-2006 director year.
o Messrs. Lundquist and Ramsey chose to receive 100 percent of their
annual retainer in cash for the 2004-2005 director year and 100
percent of their annual retainer in restricted stock units for the
2005-2006 director year.
o Mr. Solberg chose to receive 100 percent of his feesannual retainer in
restricted stock for the 2003-20042004-2005 director year in cash and 100 percent of
his feesannual retainer in cash for the 2004-20052005-2006 director yearyear.
o All other directors received their annual retainer in restricted stock. Restricted stock grantscash.
(d) Mr. Houghton retired from the Board of Directors effective December 19,
2005, and Mr. Gardner assumed Committee Chair for the 2004-2005 director year were awarded during 2004 which were only partially
earned and vested asAudit Committee
effective with the May 10, 2005 Board of December 31, 2004.Directors meeting.
(e) Mr. Risch joined the Board of Directors effective August 10, 2005.

12During 2005, the Committee engaged the services of Hewitt Associates to
conduct a review of the compensation of its non-employee directors. The review
included an analysis of the director compensation practices of a peer group
consisting of independent oil and gas exploration and production companies with
similar asset, revenue and capital investment profiles as the Company's. Based
on the results of Hewitt's benchmarking of the Company's peer group, the Board
of Directors approved the following compensation changes for the 2006-2007
director year, which begins at the Annual Meeting.

o Increase the annual retainer from $40,000 to $50,000.
o Increase the value of the annual equity based award from $60,000 to
$80,000.
o Increase the initial equity based award to attract new directors
from $125,000 to $150,000.

Hewitt concluded these changes resulted in total director compensation that is
competitive but below the 50th percentile of industry peers.

Compensation of Executive Officers

The compensation paid to the Company's executive officers generally
consists of base salaries, annual bonuses, awards under the Plan,1997 LTIP,
contributions to the Company's 401(k) retirement plan, contributions to the
Company's deferred compensation retirement plan and miscellaneous perquisites.
The following table summarizes the total compensation for 2005, 2004 2003 and 20022003
awarded to, earned by or paid to (i) the following persons:Company's Chief Executive Officer, (ii)
the Company's four most highly compensated executive officers other than its
Chief Executive Officer, as determined by reference to total annual salary and
bonus for 2005 (the persons identified in subparagraphs (i) and (ii) are
sometimes referred to herein as the "named executive officers"), and (iii)
although not required by the rules of the Securities and Exchange Commission,
the Company's Chief Financial Officer:

SUMMARY COMPENSATION TABLE

Long-Term
Compensation
Annual Compensation ----------------------
--------------------------------------------------------------
--------------------------------------- Restricted Shares
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary Bonus(b) Compensation(c) Awards(d)Bonus (a) Compensation (b) Awards(c) Options Compensation(e)Compensation(d) Total(e)
- ----------------------------------------- ---- ----------- -------- ------------------------ ---------------- ---------- ---------- --------------- ----------

Scott D. Sheffield 2005 $825,000 $948,750 $ 34,272 $2,455,110 - $106,360 $4,369,492
Chief Executive Officer 2004 $775,000(a)$775,000 $775,000 $ 81,525 $1,522,448 - $127,717
Chief Executive Officer$100,860 $3,254,833
2003 $700,000 $919,000 $ 19,482 $ 302,400 90,000 $ 93,155 2002 $700,000 $971,250 $ 19,211 $1,766,880 150,000 $ 92,797$2,034,037

Timothy L. Dove 2005 $475,000 $464,000 $ 9,968 $ 935,280 - $ 68,500 $1,952,748
President and 2004 $382,417 $364,000 $ 9,468 $ 518,280 - $ 58,742 President and$1,332,907
Chief Operating Officer 2003 $315,000 $302,000 $ 5,004 $ 100,800 30,000 $ 51,500 Chief Operating Officer 2002 $315,000 $349,650 $ 4,954 $ 588,960 50,000 $ 51,531774,304

A.R. Alameddine 2005 $330,000 $247,000 $ 7,750 $ 545,580 - $ 54,000 $1,184,330
Executive Vice President- 2004 $315,000 $189,000 $ 12,955 $ 485,888 - $ 52,000 Executive Vice President -$1,054,843
Worldwide Negotiations 2003 $210,000 $165,375 $ - $ 100,800 20,500 $ 41,000 Worldwide Business 2002 $195,000 $175,500 $ 517,175

Chris J. Cheatwood 2005 $330,000 $247,000 $ 13,272 $ 545,580 - $ 319,020 26,500 $ 38,104
Development

Chris J. Cheatwood54,000 $1,189,852
Executive Vice President- 2004 $315,000 $141,750 $ 19,405 $ 485,888 - $ 52,000 Executive Vice President -$1,014,043
Worldwide Exploration 2003 $315,000 $283,500 $ 5,651 $ 100,800 30,000 $ 51,500 Worldwide Exploration 2002 $260,000 $288,600 $ 5,651 $ 588,960 50,000 $ 46,024756,451

Danny L. Kellum 2005 $330,000 $247,000 $ 6,277 $ 545,580 - $ 54,000 $1,182,857
Executive Vice President- 2004 $315,000 $283,500 $ 9,636 $ 485,888 - $ 52,000 Executive Vice President -$1,146,024
Domestic Operations 2003 $315,000 $283,500 $ 8,981 $ 100,800 30,000 $ 52,125 Domestic Operations 2002 $315,000 $349,650 $ 8,981760,406

Richard P. Dealy 2005 $300,000 $254,000 $ 588,960 50,00013,491 $ 51,531

Mark L. Withrow (f) 2004 $315,000 $189,000 $ 15,158 $ 485,888545,580 - $ 52,00051,000 $1,164,071
Executive Vice President 2004 $226,667 $160,500 $ 14,037 $ 233,226 - $ 42,519 $ 676,949
and Chief Financial Officer 2003 $315,000 $142,000$220,000 $173,250 $ 13,2585,414 $ 100,800 30,00052,920 15,750 $ 51,500
and General Counsel 2002 $315,000 $349,65042,000 $ 10,858 $ 588,960 50,000 $ 52,096493,584

- --------------------------
(a) Mr. Sheffield received $700,000 of his annual salary in cash and $75,000 in
restricted stock.
(b) Represents the amount awarded under the Company's annual bonus program that
was paid during the three months ended March 31, 2006, 2005 and 2004,
and 2003,
respectively.
(c)(b) For 2004,2005, this column represents the following miscellaneous perquisites:

Travel and
Country Entertainment Other Total
Club Vacation Financial Costs of Estimated Miscellaneous
Dues Repurchase Counseling Spouses (1) Perquisites ------- ---------- ---------- ------------- -----------(2) Perquisites

Scott D. Sheffield.......... $ 6,2196,495 $ 13,4632,835 $ 11,74023,486 $ 48,1031,456 $ 2,00034,272
Timothy L. Dove............. $ 5,0045,400 $ -767 $ -3,450 $ 2,799351 $ 1,6659,968
A. R. Alameddine............ $ - $ 7,500 $ 250 $ - $ 12,000 $ 155 $ 8007,750
Chris J. Cheatwood.......... $ 5,651 $ 7,500 $ 121 $ - $ 12,000 $ 1,254 $ 50013,272
Danny L. Kellum............. $ 2,923 $ 6,058 $ - $ 1552,279 $ 500
Mark L. Withrow.............1,075 $ 7,2006,277
Richard P. Dealy............ $ 6,0584,547 $ -7,500 $ 1,0551,053 $ 845391 $ 13,491

(1) Includes the Standard Industry Fare Level value for travel on private
aircraft plus any full travel costs for travel on commercial
aircrafts.

(2) Other estimated perquisites provided during 2005 included the costs of
life insurance, officer physical exams and miscellaneous personal use
of cell phones, computer and computer-related utilities provided for
business use.

Other estimated perquisites provided during 2004 included the costs of life
insurance, officer physical exams and miscellaneous personal use of cell
phones, computer and computer-related utilities provided for business use.

(d)(c) The value of the 20042005 restricted stock reported in this column was
determined using the February 13, 200414, 2005 grant date closing price of $30.85$38.97
per share for the Company's common stock as reported by the New York Stock
Exchange (the "NYSE").NYSE. The
restricted stock grant includes vesting restrictions that lapse on February
16, 2007. The15, 2008. Holders of restricted stock isare entitled to receive dividends, if
any, paid on the Company's common stock. Aggregate unvested restricted
stock grants as of December 31, 20042005 and the corresponding value based on
the closing price of the common stock as reported on the NYSE on December
31, 200430, 2005 ($35.1051.27 per share) are: Mr. Sheffield, 133,350124,350 shares, $4,680,586;$6,375,425;
Mr. Dove, 44,800 shares, $1,572,480;
Mr.$2,296,896; Messrs. Alameddine, 32,705 shares, $1,149,525Cheatwood and
Messrs. Cheatwood, Kellum and
Withrow 43,75033,750 shares each, $1,535,625 each.
(e)$1,730,363 each; and Mr. Dealy, 23,660 shares,
$1,213,048.
(d) For 2004,2005, this column includes (i) contributions to qualified retirement
plans of $20,500$21,000 to each toof Messrs. Sheffield, Dove, Alameddine, Cheatwood,
Kellum and Withrow;Dealy; (ii) contributions to the Company's non-qualified
deferred compensation retirement plan for Mr. Sheffield of $77,500;$82,500; for Mr.
Dove of $38,242;$47,500; for Messrs. Alameddine, Cheatwood and Kellum of $33,000
each; and Withrowfor Mr. Dealy of $31,500 each; a $26,857 distribution to Mr. Sheffield from an affiliated
employee partnership$30,000; and (iii) a $2,860 premium with respect
to a term life insurance policy for the benefit of Mr. Sheffield.
(f) Effective March 7, 2005, Mr. Withrow was no longer an executive officer(e) This column indicates, for the year presented, the sum of the Company.

Directors orvalues set
forth in the columns "Salary," "Bonus," "Other Annual Compensation,"
"Restricted Stock Awards" and "All Other Compensation."

Two of the Company's executive officers, mayMr. Sheffield and Mr. Kellum,
directly or indirectly hold working interests in wells inof which the Company or a
subsidiary is the operator andoperator. These interests were acquired in 1990 or earlier
with the executive officers' personal funds pursuant to a program offered by the
Company's predecessor. As such, holdingsthe holders participate in the costs and
revenues attributable to that working interest in accordance with customary
industry terms. During 2005, the aggregate amounts of the distributions made to
Messrs. Sheffield and Kellum were $33,806 and $13,249, respectively.

Long-Term Incentive Plan. The PlanCompany's 1997 LTIP provides for employee and
non-employee director grants in the form of stock options, stock appreciation
rights, restricted stock, restricted stock units or performance units. The
maximum number of shares of common stock that may be issued under the Plan1997 LTIP
is equal to 10ten percent of the total number of shares of common stock
equivalents outstanding from time to time minus the total number of shares of
stock subject to outstanding grants on the date of calculation under any other
stock-based plan for employees or directors of the Company. The Plan had 8,307,2371997 LTIP has
8,127,613 shares available for additional awards at December 31, 2004. The Company also had
557,335as of March 14, 2006 (compared
to the 4,600,000 shares that will be available for grant underawards if the Employee Stock Purchase2006 Plan ("ESPP") as of December 31, 2004.is
adopted).

The Company's officers are not eligible to
participate in the ESPP.

The Plan1997 LTIP provides that awards may be forfeited or vested at
termination of employment depending on the circumstances of termination and
whether the participant had a written employment agreement.

Messrs. Sheffield, Withrow and
Paulsen have severance agreements that are written employment agreements under
the Plan. Under the Plan and those agreements, their awards will fully vest and
become exercisable if they resign for any reason (including for good cause) or
without reason so long as the resignation is not in breach of their written
agreements with the Company, or if the Company terminates their employment in
breach of the written agreements. In general, the unvested portion of awards for
other participants in the Plan will become void upon termination of employment.

The Plan1997 LTIP provides that the Compensation and Management Development Committee may determine whether a
particular award under the Plan1997 LTIP will have change-of-controlchange in control provisions. In
general, awards under the Plan1997 LTIP contain provisions that provide that options
and restricted stock or restricted stock units will become immediately vested
and exercisable in full upon a change in control and that options will remain
exercisable for their full original term regardless of whether and how the
holder's employment is subsequently terminated.

No stock options, stock appreciation rights or performance units have beenwere
awarded under the 1997 LTIP in 2005. If the Company's 2006 Plan in 2004.

14is adopted at
the Annual Meeting, no further awards will be made under the 1997 LTIP.

The following table sets forth, for each named executive officer and Mr.
Dealy, information concerningas to the exercise of stock options during 2004,2005, and the
value of unexercised stock options as of December 31, 2004:

AGGREGATED OPTIONS EXERCISED DURING THE YEAR ENDED DECEMBER2005:

Aggregated options exercised during the year ended December 31, 2004
AND VALUE OF UNEXERCISED OPTIONS AT DECEMBER2005
and value of unexercised options at December 31, 20042005

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at December 31, 20042005 Options at December 31, 2004(a)2005(a)
Acquired on Value ---------------------------- -------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------

Scott D. Sheffield.... 60,000 $1,537,455 305,927 110,00083,924 $2,296,142 302,000 30,000 $ 4,722,1529,193,460 $ 1,336,000797,300
Timothy L. Dove....... 19,33346,499 $1,882,247 105,334 9,999 $ 386,596 125,167 36,6653,218,669 $ 2,159,427 $ 445,316265,740
A.R. Alameddine....... 6,66610,416 $ 130,487 75,583 22,499318,105 80,833 6,833 $ 1,302,2092,574,298 $ 265,335180,195
Chris J. Cheatwood.... 18,16723,500 $ 314,957 64,501 36,665851,539 67,667 9,999 $ 939,5761,979,384 $ 445,316265,740
Danny L. Kellum....... 77,667 $1,728,246 - 9,999 $ - $ - 51,001 36,665265,740
Richard P. Dealy...... 18,001 $ 708,313492,718 70,998 5,250 $ 445,316
Mark L. Withrow....... 22,4992,296,437 $ 442,012 138,667 36,665 $ 2,538,995 $ 445,316139,527

- --------------------------
(a) Amounts were calculated by multiplying the number of unexercised options
by $35.10,$51.27, which was the closing price of the Company's common stock on
December 31, 2004,30, 2005, and subtracting the aggregate exercise price, which was
determined by multiplying the unexercised options by their respective
exercise prices and summing the result.

Retirement Plan. The Company provides a 401(k) retirement plan and a
non-qualified deferred compensation retirement plan for executive officers of
the Company but does not provide defined benefit retirement plans or restoration
plans. Hewitt Associates has advised the Company that providing only athe retirement benefit
value delivered through the 401(k) retirement plan to its executive officersand the non-qualified
deferred compensation retirement plan is not a competitivewell below the median market retirement
benefit.value.

The non-qualified deferred compensation retirement plan allows each
participant to contribute up to 25 percent of base salary and 100 percent of
annual bonus payments. The Company provides a matching contribution of 100
percent of the participant's contribution limited to the first ten percent of
the executive officer's base salary. The Company's matching contribution vests
immediately. The non-qualified deferred compensation plan permits officers to
make investment allocation choices for both the executive officer's contribution
and the Company match to designated mutual funds or self-directed brokerage
accounts included in the non-qualified deferred compensation plan. The Company
retains the right to maintain these investment choices as hypothetical
investments or to actually invest in the executive officer's investment choices.
To date, the Company has chosen to actually invest the funds in the investment
options selected by the executive officers so that the investment returns are
funded and do not create unfunded liabilities to the Company.

The following table sets forth, for each named executive officer and Mr.
Dealy, information concerningas to the fair values of vested benefits in the Company's
non-qualified deferred compensation retirement plan through December 31, 2004:

FAIR VALUES OF VESTED BENEFITS IN NON-QUALIFIED DEFERRED COMPENSATION
RETIREMENT PLAN THROUGH DECEMBER2005:

Fair Values of Vested Benefits in Non-Qualified Deferred Compensation Retirement
Plan Through December 31, 20042005

Investment
Employee Employer Income (Loss) Fair Value of
Name Contribution + Earnings (a) Match and Distributions+ Contributions (b) Vested Benefits
- ---- ------------ ---------- -------------------------------------------- ------------------------- ---------------

Scott D. Sheffield............. $ 398,710490,843 $ 398,710490,803 $ (55,047)(a) $ 742,373981,646
Timothy L. Dove................ $ 182,742304,690 $ 182,742304,690 $ 102,632 $ 468,116609,380
A.R. Alameddine................ $ 266,808363,547 $ 126,734152,136 $ (27,387) $ 366,155515,683
Chris J. Cheatwood............. $ 135,372236,718 $ 135,372219,225 $ 65,091 $ 335,835455,943
Danny L. Kellum................ $ 165,269241,630 $ 165,269241,630 $ 64,398483,260
Richard P. Dealy............... $ 394,936
Mark L. Withrow................283,664 $ 177,567193,719 $ 177,567 $ (36,725) $ 318,409477,383

- -----------
(a) Includes a $118,344 distribution made during 2001 in accordance with
divorce proceedings.employee contributions and any earnings and/or losses attributable
to these contributions.
(b) Includes employer contributions and any earnings and/or losses attributable
to these contributions.

1523

Participants may choose to receive distributions of their vested benefits
from the non-qualified compensation plan as soon as administratively practicable
(i) after the date of separation from service with the Company or (ii) after
January 1 of the year next following the date of separation from service with the
Company. Participants vested benefits may, at the option of the participant, be
distributed in one lump sum, in five annual installments or in ten annual
installments.

Severance and Change in Control Agreements. The Company has entered intois party to
severance agreements and change in control agreements with its executive
officers. The forms of severance and change in control agreements were
previously filed as an exhibit to the Company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on August 17, 2005. Salaries and
bonuses are set by the Compensation
and Management Development Committee independent of these agreements and the
Compensation and Management Development Committee can increase or reducedecrease base salaries at its discretion.

EitherOn August 16, 2005, the Company orentered into new severance agreements and
change in control agreements with its executive officers. These new agreements
replaced the severance agreements (which provided for certain severance rights
both before and after a change in control) that the executive officer may terminateofficers
previously had with the officer's
employment under theCompany.

The severance agreement at any time. The Company must pay the
officer an amount equal to one year's base salaryagreements provide that, if the officer'sexecutive terminates
employment is
terminated because of death, disabilityfor good reason (which generally includes a demotion or normal retirement. The Company mustsignificant
pay the officer an amount equal to one year's base salaryreduction, and continue health
insurance for the executive officer's family for one yearMr. Sheffield also includes his not being reelected as a
director) or if the Company terminates the officer's employment withoutof the executive officer
other than for cause, death, disability or ifnormal retirement, the Company must
pay the executive officer terminates
employment for good reason, whicha separation payment in addition to earned salary and
vested benefits. The separation payment is when reductions inan amount equal to the officer's base
annual salary exceed specified limits or whensum of (1) one
times the executive officer's responsibilities have been significantly reduced. If within one year afterbase salary (three times base salary for Mr.
Sheffield and 2.5 times base salary in the case of Mr. Dove), (2) 18 times the
monthly executive officer's cost of coverage for himself and his eligible
dependents under the Company's group medical plans (36 times the monthly cost in
the case of Mr. Sheffield and 30 times the monthly cost in the case of Mr.
Dove), and (3) one-twelfth of the executive officer's base salary if the date of
termination is less than 30 days following the notice of termination and the
executive officer's employment is terminated by the Company. In the case of
Messrs. Sheffield and Dove, the severance agreements also provide for the
immediate vesting of certain awards under the Company's 1997 LTIP. The severance
agreements terminate upon a change in control of the Company, the Company terminates the executive officer
without cause, orCompany.

The change in control agreements provide that, if the executive officer
terminates employment for good reason (which generally includes an adverse
change in duties or a reduction in base salary, target bonus, equity awards or
benefits) or if the Company terminates the employment of the executive officer
other than for cause, death, disability or normal retirement, in either case in
connection with or after a change in control, the Company must pay the executive
officer a separation payment and provide continued group medical coverage for
approximately three years (in the case of Messrs. Sheffield and Dove, until the
date the executive is eligible for full medical benefits under the provisions of
Medicare), in addition to paying earned salary and vested benefits. In addition,
all the executive officer's awards under the Company's 1997 LTIP will fully
vest. The separation payment is an amount equal to the sum of (1) 2.99 times the
sum of the executive officer's base salary plus the greater ofand target bonus, for(2) a pro-rated
portion of the current year or actualtarget bonus forbased on the previousdays elapsed in that calendar year, and
continue health
insurance for one year, or until(3) one-twelfth of the executive officer's base salary if the date of
termination is less than 30 days following the notice of termination and the
executive officer's employment is terminated by the Company. If the Company
terminates an executive officer is eligible for Medicare, forwithout cause following a potential change in
control (as defined in the officeragreements) and their respective family. Ifif a change in control occurs within
12 months, the executive officer terminateswill be entitled upon the change in control to
the payments that would have been made if the executive had continued as an
executive officer until the change in control, as well as to a payment equal to
the value of the executive officer's equity-based awards that did not vest when
his employment with the Company without reason between six months and one yearwas terminated. If, after a change in control, or at any time within one year after a change in control if
thean executive
officer terminates employment because he is required to move,relocate more than 50
miles, but is not otherwise entitled to terminate employment for good reason,
then the Company must pay the executive officer one year'sa reduced separation payment
equal to his annualized base salary, in addition to earned salary and continue health insurancevested
benefits, and provide continued coverage for one year under group medical
benefit plans. The change in control agreements also obligate the Company to
make the executive officer's familyofficers whole (that is, provide a "gross-up") for one year. Executive officers are also entitled to
additional payments for certain tax liabilitiesexcise
taxes that may apply to severancebe imposed on payments under the change in control agreements by
Section 4999 of the Internal Revenue Code. The change in control agreements
continue for two years following a change in control.

Effective March 7, 2005, Mr. Withrow was no longer an executive officercontrol that occurs during the term
of the Company. His employment will terminateagreement. For illustrative purposes, based on his current compensation,
the separation payment payable to Mr. Sheffield upon a change in control would

be the sum of (i) $5,083,000, plus (ii) a pro rata portion of his $850,000 2006
target bonus based on the days elapsed in that calendar year, plus (iii)
$70,833, if the date of termination is less than 30 days following a transition period. As
providednotice
thereof.

Both the severance agreements and the change in his severance agreement, Mr. Withrow will receivecontrol agreements provide
for a severance payment of one year'stimes the executive officer's base salary and in accordance with the Plan conditions,
all stock options will vest and restrictions on all restricted stock will lapse.
Mr. Withrow has not received additional stock options or restricted stock other
than what has already been described in footnote (d) of the Summary Compensation
Table and in the Aggregated Options Exercised during the year ended December 31,
2004 and Valueevent of
Unexercised Options at December 31, 2004 table.his death, disability or retirement.

Indemnification Agreements. The Company has entered into indemnification
agreements with each of its directors and most of its executive officers,
including the named executive officers. Those agreements requireThe form of
indemnification agreement was previously filed as an exhibit to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
August 17, 2005. Each indemnification agreement requires the Company to
indemnify the directors and executive officerseach indemnitee to the fullest extent permitted by the Delaware
General Corporation LawLaw. This means, among other things, that the Company must
indemnify the director or executive officer against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement that are
actually and reasonably incurred in an action, suit or proceeding by reason of
the fact that the person is or was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or other entity if the
indemnitee meets the standard of conduct provided in Delaware law. Also as
permitted under Delaware law, the indemnification agreements require the Company
to advance expenses in connection
with certain claims against directors and officers. The Company expects to enter
into similar agreements with persons selected to be directors and executive
officers indefending such an action provided that the future. Each indemnification agreement also provides that, upon
a potential change in control of the Company and if the indemnified director or
executive officer so requests,undertakes to repay the amounts if the person ultimately is
determined not to be entitled to indemnification from the Company. The Company
will create a trustalso make the indemnitee whole for taxes imposed on the benefit
of the indemnified directorindemnification
payments and for costs in any action to establish indemnitee's right to
indemnification, whether or executive officer in an amount sufficient to
satisfy payment of all liabilities and suits against which the Company has
indemnified the director or executive officer.not wholly successful.

Directors' and Officers' Insurance. The Company maintains customary
directors' and officers' insurance coverage.

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION

TheDuring 2005, no member of the Compensation and Management Development
Committee is responsible for
approving all compensation awards for allalso served as an executive officers, includingofficer of the named executive officers. The committee also approves all long-term incentive
awardsCompany. During 2005, there
were no Compensation and perquisites. The committee operates under a written charter adopted
by the Board.Management Development Committee interlocks with other
companies.

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

The information contained in this Compensation and Management Development
Committee Report on Executive Compensation and in the section of this Proxy
Statement entitled "Company Performance" shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates such information.

The Compensation and Management Development Committee (the "Committee") of
the Board of Directors submits the following report with respect to the
executive compensation program of the Company.

The Committee is responsible for establishing all components of executive
pay, reviewing the performance of the Company's executive officers and approving
all compensation awards for all executive officers, including the named
executive officers. The Committee approves all long-term incentive awards,
benefits and perquisites. The Committee also reviews the leadership development
process to assure the proper emphasis in being placed on executive succession
planning. The Committee operates under a written charter adopted by the Board of
Directors. A copy of the current charter is posted on the Company's website at
www.pxd.com. Members of the Committee are: Messrs. Edison C. Buchanan
(Chairman), James R. Baroffio, Andrew D. Lundquist and Charles E. Ramsey, Jr.

Compensation Principles and Philosophy

The overriding responsibility of the committeeCommittee is to maintain the Company's
executive officers'a
compensation program so that it attracts and retains a capable and highly motivated
senior management team and aligns the compensation of the Company's executive
officers with the Company's strategic business plan to increase stockholder
value. During 2004,The Committee strongly believes it is important to evaluate the
committee retained Hewitt
Associatesperformance of the Company and executive officers each year, in light of oil and
gas industry fundamentals, and assess how effectively management adapts to
assistchanging industry conditions and advise itopportunities during the year. The Committee
does not believe formula-based variable-pay plans effectively drive successful
performance for executives of companies in its efforts to establishthe oil and administer
fairgas industry. The
Committee also believes the portion of an employee's total compensation that
varies with individual, team and competitive compensationCompany performance should increase as that
employee's scope, duties and incentive policies. These policies
emphasize variable compensation and structureresponsibilities increase. The Committee has
structured the annual bonus and long-term incentive awards to be a significant
portion of an executive officer's total compensation so that total compensation
is reflective of both the executive officer's individual performance, andas well as
the Company's overall performance.

Beginning in 2004, the committeeCommittee elected to change the nature of long-term
incentive equity awards from a combination of stock options and restricted stock
to a performance-basedgrants of restricted stock programdetermined by the Committee with reference to the
recipient's performance, in order to further emphasize performance and alignment
of stockholders' and executive officers' interests. The committeeCommittee has adopted a
policy of not repricingre-pricing stock options and incorporated that policy into the
Plan.Company's 1997 LTIP.

Other critical elements of the Company's compensation and incentive policies
provide for:

o Base salaries at or slightly abovenear median levels compared to industry survey
information and peer group proxy analysis.
o Annual bonus target bonus levels slightly aboveat or near median levels with payouts that
areabove
or below target based on both individual and Company performance.
o Long-term incentive target award levels that are at or near median
levels with the actual awards above median.or below target based on both
individual and Company performance.
o Significant stock ownership by directors, the Chief Executive Officer
and all other executive officers.

To assist the Committee in its efforts to establish and administer a fair
and competitive compensation program, consistent with the Company's compensation
philosophy, the Committee has directly engaged Hewitt Associates as the
Committee's compensation consultant to conduct a benchmarking review of
compensation levels for the Chief Executive Officer and other executives. Using
sound and consistent methodologies, the consultant collects and summarizes
compensation data for a predefined peer group. The peer group consists of
independent oil and gas exploration and production companies with similar asset,
revenue and capital investment profiles as the Company. Hewitt Associates has
developed competitive market references for base salary, annual incentives and
long-term incentives (including all forms of equity compensation) based on the
Company's compensation philosophy. Prevalent practices for supplemental benefits
and perquisites are also documented.

To support the commitment to significant stock ownership, the Company's
current common stock ownership guidelines are as follows:

o Non-employee directors' stock value equal to at least five times each
director's annual base retainer fee. The non-employee directors have
three years after joining the boardBoard of directorsDirectors to meet the guideline.
o Chairman of the Board of Directors and Chief Executive Officer stock
value equal to at least five times his annual base salary.
o President and other named executive officers stock value equal to at
least three times their annual base salary. The president and other
named executive officers, generally, have twothree years after becoming an
officer to meet the guideline.

In determining compliance with these guidelines, the committeeCommittee considers
its expectations of the long- termlong-term value of the Company's common stock and the
current trading levels. All named executive officers, including Mr. Sheffield,
and all non-employee directors are in compliance with the ownership guidelines.

The Omnibus Budget Reconciliation Act of 1993 placed restrictions on the
deductibility of executive compensation paid by public companies. Under the
restrictions, the Company is not able to deduct compensation paid to any of the
named executive officers in excess of $1,000,000 unless the compensation meets
the definition of "performance-based compensation" as required in Section 162(m)
of the Internal Revenue Code of 1986, as amended. NondeductibilityNon-deductibility could result
in additional tax costs to the Company. The committeeCommittee generally tries to
preserve the deductibility of all executive compensation if it can do so without
interfering with the Company's ability to attract and retain capable and highly
motivated senior management. The Company's annual incentive bonus plan does not
meet the definition of performance-based compensation as required in Section
162(m) primarily because the annual incentive bonus plan is not formula driven
and the committeeCommittee retains the right to make subjective evaluations of
performance including an assessment of how effectively management adapts to
changing industry conditions and opportunities during the Company's bonus year.
Performance-based sharePioneer's restricted stock awards do not qualify as performance-
basedperformance-based
compensation under Section 162(m). Accordingly, the portions of compensation
paid to our named executive officers in 20042005 that exceeded $1,000,000 (other
than from the exercise of stock options) are generally not deductible. The
committeeCommittee believes it is in the best interest of shareholdersstockholders to continue with a
discretionary element in the annual incentive bonus program and to make
performance share awards in the form of restricted stock to the Company's
officers instead of stock options. The Committee is studying long-term incentive
plan alternatives that will qualify as performance-based compensation under
Section 162(m).

Elements of Compensation

The elements of the compensation program the committeeCommittee administers for
executive officers, including the Chief Executive Officer, consist of base
salaries, annual bonuses, awards made under the Plan,Company's 1997 LTIP,
contributions to the Company's 401(k) retirement plan, contributions to the
Company's non-qualified deferred compensation retirement plan and miscellaneous
perquisites. Base salaries, annual bonuses and long-term incentives are
discussed separately below; however, the committeeCommittee considers the aggregate
remuneration of executives including benefits and perquisites when evaluating
the executive compensation program.

Base Salaries. An executive's base salary is viewed as a fixed component of
total compensation that should be competitive with companies similar in terms of
business strategy to the Company. The committeeCommittee has targeted base salaries at or
slightly abovenear the median level for companies ofwith similar business strategy to
the Company.strategies. The
committeeCommittee evaluates the base salaries of the Company's executive officers on the
basis of competitive base salary survey data provided by Hewitt Associates,
internal pay equity, and consideration of each officer's experience, duties,
responsibilities and responsibilities.knowledge. The committeeCommittee views the executives below the
Chief Executive Officer level as a team with diverse duties but with similar
authority and responsibility. Hewitt Associates historically has providedresponsibility and factors this team approach into final
determination of base salary survey
data on the majority of the Company's peer group companies, a group of
independent exploration and production companies with similar asset, revenue and
capital investment profiles as the Company. While the peer group provided by
Hewitt Associates includes some of the members of the Dow Jones U.S. Exploration
and Production Index (the "DJ E&P Index," formerly known as the Dow Jones
Exploration and Production Index) reflected in the performance graph set forth
under "Company Performance" below, it does not include all of the companies in
that peer group and includes other companies with which the Company competes.pay. The committeeCommittee determines the base salary for all
officers, including Mr. Sheffield, using the same methodology.

For 2005,2006, Mr. Sheffield's annual base salary was increased from $775,000$825,000 to
$825,000.$850,000. Hewitt Associates indicateddetermined that Mr. Sheffield's annual base salary
is atbelow the 50th percentile level. The base salarysalaries of the other named
executive officers waswere increased for 20052006 to a level whichlevels that Hewitt Associates
advises, as a group, are also at approximatelyor near the 50th percentile.

Annual Bonuses. The Company's annual bonus program is designed to provide
added incentive for executives to achieve specific goals that have been
communicated to be of primary importance during the current year. Actual payouts
can vary above or below the target levels based on the Committee's evaluation of
Company and individual performance against corporate and individual goals and
the competitive conditions within the oil and gas exploration and production
industry. Each year the committeeCommittee establishes a target bonus for each executive
officer based on the target bonus median levels of executive officers in similar
positions at peer group companies.

To maintain internal equity, the level of responsibility, scope and
complexity of the executive officer's position are considered. The range of awardsAwards for the
annual incentive bonus plan can range from 0 to 200 percent of target. The 2005 target bonus level for Mr.
Sheffield did not change; however the target bonus levels for the other named
executive officers increased to reflect competitive market conditions. The 2005
target bonus levels for the named executive officers were identified by Hewitt
Associates as being slightly above the median level. In
awarding 20042005 bonuses, the CompanyCommittee reviewed criteria, such as the following, criteria
that are important to the success of the Company's business plan:

o Net asset value per share
o Return on equity
o Return on capital employed
o Operating cost per BOEbarrel of oil equivalent ("BOE")
o Debt/Book capitalization
o Investment grade credit ratings
o Reserve replacement
o Finding and development cost per BOE
o Production growth
o General and administrative costs per BOE
o Growth of share value
o Safety and environmental performance

In determining the executive officers' annual bonus awards, the committeeCommittee
also evaluated the Company's stock performance in relation to its peer group.
The committeeCommittee did not employ a formula or predetermined weighting of the above
financial and operational performance criteria, but doesdid compare actual results
to target goals. The committee evaluates Company performance in light of oil and
gas industry fundamentals and assesses how effectively management adapts to
changing industry conditions and opportunities during the year. The committeeCommittee observes and evaluates the individual performance
of executive officers throughout the year and specifically evaluates Mr.
Sheffield's performance relative to the Company's stock performance in relation
to its peers, the Company's performance in achieving its goals and the strategic
direction provided to the Company. Regarding the award of Mr. Sheffield and Mr.
Dove's bonuses, the Committee considered the factors of net asset value per
share and stock price performance versus the peer group as the most significant
criteria.

For 2005, the target bonuses for the named executives ranged from 65%-100%
of base salary. The 2005 target bonus levels for the named executive officers
were identified by Hewitt Associates as being slightly above the median level.
Following a thorough review of the Company's goals.

For 2004,results versus its goals, the
committeeCommittee concluded that the Company produced good results in light of industry
and external influences and awarded Mr. Sheffield, and onethe other named executive
officerofficers and Mr. Dealy a cash bonus atabove the target level, two named executiveslevel. In addition to the
above target levelstated criteria, the Committee considered the successful execution of the
changes to strategic direction that were initiated during 2005. This
consideration included the preparation for divestitures of non-strategic assets
in Argentina and one named executive below target.the deepwater Gulf of Mexico and the progress of the internal
business realignment plan for most effectively allocating capital to the
higher-return North American development opportunities and emerging resource
plays that are the focus of the new strategy.

Overall costs were appropriately managed in light of the surge in industry
service costs and production levels met expectations. Finding cost and reserve
replacement goals were not achieved, but the Company took significant steps to
improve these results going forward through the strategic changes previously
discussed. The Company successfully completed the
strategic acquisition of Evergreen during 2004 and achieved the following
results:

o Returnprovided a strong return on equity of 14 percent
o Return on capital employed of 9 percent
o Base operating costs of $3.85and acceptable net
asset value per BOE
o Debt to total capitalization ratio of 46 percent
o Received investment grade credit ratings
o Reserve replacement of 441 percent
o Findingshare performance and development cost per BOE of $10.48
o Production growth of 22 percent
o Generalfurther enhanced its safety and
administrative cost of $1.17 per BOE
o 2004 stock price increase of 10 percent

Regarding stock performance, the Company's three-year cumulative total
return based on stock price performance has exceeded the Standard & Poor's 500
Index (the "S&P 500") and isenvironmental record. While slightly below average compared to the DJ E&P Index perpeer group
and the graph
below. In addition,industry, the Company's stock price hitincreased significantly.

Actual basic payouts for bonuses since 1997 have ranged from a five-yearlow of 75%
to a high of $37.50 in
July 2004.

COMPARISON OF THREE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE S&P 500 INDEX
AND THE DJ E&P INDEX (a)

Pioneer
Natural DJ
Year ended Resources S&P E&P
December 31, Company 500 Index
------------ --------- ----- -----

2001 100 100 100
2002 131 78 102
2003 166 100 134
2004 183 111 190

---------------
(a) Assumes $100 invested on December 31, 2001 in stock or
index, including reinvestment of dividends.
185% of target bonus, with 2005 basic payouts being 115% of target.
The basic payout percent is determined by Company performance. Individual
performance determines whether an executive officer receives bonus above or
below the basic payout percent. The 2006 target bonus percent established for
Mr. Sheffield and the other named executive officers did not change from 2005.
Mr. Dealy's target bonus level increased from 65% to 70%.

Long-Term Equity Incentives. The Company's 1997 LTIP is designed to balance
the focus of attaining short-term annual results with achieving long-term three-
to five-year goals that will create long-term value for shareholders. The 1997
LTIP also allows the Company to deliver the majority of an executive officer's
pay as performance-based/variable compensation. The target value of the
long-term incentive awards granted
tofor Mr. Sheffield in 20042005 was determined by a
comparison of long-term incentive grants made to the Chief Executive Officers of
peer group companies. The target value of long-term incentives granted to eachfor the named
executive officerofficers was determined by comparing the value of awards granted to

peer company executives holding similar positions and their individual award levels weretargets
reflecting an averaged approach to determinetake into consideration the actual awardsCompany's
executive team approach to executive officers ofprovide leadership to the Company.

The award levels were not influenced by the current stock holdings of the
executive officers. The Company's philosophy ishas been to target long-term
incentives with values that are above market average. For 2004,near the 60th percentile level relative to peer
group companies. During 2005, Mr. Sheffield was awarded 49,35063,000 shares of
restricted stock, excluding the equivalent value of $75,000 of annual salary
received in restricted stock in lieu of cash.stock. Hewitt Associates concluded the 2004 award levels2005 awards placed Mr.
Sheffield and the other named executive officers as a group at approximately the
60th percentile level for long-term incentive awards among the peer group.
For 2005, Mr. Sheffield was awarded 63,000 shares of restricted
stock.

A significant portion of an executive officer's total compensation
opportunity is comprised ofBeginning with the 2007 awards, the Company has changed its philosophy and will
target long-term incentive awards which are intendedat or near the 50th percentile level, in order
to align executive officer's interests in long-term growth and success more closely
withavoid the interestspotential of inflating targeted total compensation above the point
of being at or near the median of the Company's stockholders.

Beginning in 2004, tomarket.

To achieve this alignment with shareholders and to emphasize long-term performance,
the committee uses performance-basedCommittee determines share awards under the Plan
for executive officers.Company's 1997 LTIP by reference
to the performance of the recipient. No stock options were awarded to Mr.
Sheffield or the other executive officers for 2004. This program establishes restricted stock
award targets for Mr. Sheffield and each executive officer determined by
comparing the value of awards granted to peer company executives holding similar
positions.2005. Restricted stock awarded to
the executive officers under this program will havehas a three-year cliff vesting
requirement.

The number of restricted shares awarded each year as a percentage of target
award levels is determined by a three-step process. First, the committeeCommittee
conducts a subjective evaluation of the internal Company performance against the
following one-metrics over three- and three-year metrics:

One-year metrics Three-year metrics
--------------- ------------------

Production growth Reserve replacement
Operating cost per BOEfive-year periods:

o Production growth
o Reserve replacement
o Finding and development cost per BOE
General and administrative costs per BOE
o Net asset value per share
o Debt statistics

Next, to finalize the award level for the executive group, the committee
consideredCommittee
considers the Company's total shareholder return results compared to the total
shareholder return results of the Company's peer group for each of the last three years.previous three-
and five-year period. Finally, the committeeCommittee conducts an evaluation of each
executive's individual performance. The committee concluded thatperformance and considers total compensation values to
determine if the long-term award should be adjusted so total compensation is
competitive but not excessive. For 2006, the Committee awarded Mr. Sheffield
performed at target
levels61,000 shares of restricted stock, which was near the 60th percentile level as
reported by Hewitt Associates. The Committee considered and was pleased with Mr.
Sheffield's leadership of the Company, the Company's five-year results and the
execution of the changes to strategic direction that were initiated during 2005,
including the preparation for the divestitures of non-strategic assets in
relationArgentina and the deepwater Gulf of Mexico and the progress of plans for
allocating capital to onshore North American opportunities. The Committee also
determined Mr. Sheffield's total compensation, including retirement benefits and
perquisites, was below the internal one and three-year metricsmedian level for Company
performance. The Company's stock price performance compared to the peer group was below target expectations; however, Mr. Sheffield's individual performance
was above target levels reflected by the successful expansion of the Company's
proved reserve base, improvement in the Company's balance sheet to achieve
investment grade credit ratings and the expansion of exploration opportunities
during 2004. Overall, the committee's evaluation of Mr. Sheffield's performance
resulted in a long-term incentive award at 100 percent of target level.companies.

Other Compensation. In addition to base salaries, annual bonuses and
long-term incentive awards, the committeeCommittee reviews all other benefits and
perquisites to determine if the total compensation package for corporateexecutive
officers is fair, reasonable and competitive. Hewitt Associates has reviewed the
Company-provided benefits and perquisites and concluded that the Company's total
retirement value provided to executive officers is well below market, since the
Company does not provide a pension plan or a Supplemental Executive Retirement
Plan, and the Company's perquisite offerings are conservative versuscompared to the
market.

In December 2004, theThe Company acquiredmaintains a fractional ownership interest in atwo private
aircraft. ThisThese aircraft will beare made available for business use to the executive
officers and other employees of the Company. The Company's policy is to
generally not permit employees, including executive officers, to use the
aircraft for personal use. The Company expects there will be occasions when a
personal guest will accompany an employee on a business related flight. In such
instances, the Company will follow the Internal Revenue Service rules and, where
required, impute income to the employeesemployee based on the Standard Industry Fare
Level rates provided by the Internal Revenue Service.

Severance and Change in Control Agreements. The Company decided to enter
into new severance agreements and change in control agreements with its
executive officers after a general review of its severance and change in control

arrangements, performed during early 2005 by the Committee. In connection with
its review, the Committee engaged advisors knowledgeable in the field of
executive compensation to assist it in analyzing current market practices.
Competitive agreements are critical in order to recruit and retain executives
and provide continuity of management in the event of an actual or threatened
change in control. The primary goals of the new agreements were to standardize
the agreements within the Company (including by reducing the number of different
forms used for executives and non-executive personnel) and provide protection
for officers consistent with the Company's perception of market practices after
considering the views of its advisors.

Total Chief Executive Officer Compensation. All compensation arrangements
for Mr. Sheffield and the named executive officers have been tallied up,
reviewed with the Company's compensation consultant and deemed to be fair,
competitive and not excessive. 21

Mr. Sheffield's total compensation is deemed to
be slightly below the median level.

Mr. Sheffield's total compensation paid by the Company for 20042005 is
summarized below:
Base pay................................. $ 775,000825,000
Annual bonus............................. 775,000bonus (a)......................... 948,750
Long-Term Incentive awards (a)(b)........... 1,522,4482,455,110
Retirement plan contributions (b)(c)........ 98,000103,500
Other perquisites (c) (d) (e)................ 84,385
----------37,132
------------
Total................................ $ 3,254,8334,369,492
===========

- ---------------------
(a) Represents the amount awarded under the Company's annual bonus program that
was paid during the three months ended March 31, 2006.
(b) Based on grant date closing price of $30.85$38.97 of restricted stock awarded
during 2004.
(b)2005.
(c) 401(k) plan and non-qualified deferred compensation retirement plan.
(c)(d) Includes the estimated costs of life insurance, country club dues, vacation
repurchase, officer
physical, financial consulting service, travel and entertainment costs of
Mr. Sheffield's spouse, and miscellaneous personal use of a cell phone,
computer and computer-related utilities provided for business use.
(d)(e) Does not include a value for all other broad-based benefits available to
all employees.

In summary, the Company believes a significant portion of executive
compensation should be variable and performance-based so that an executive
officer's total compensation opportunity is linked to the performance of the
individual, the Company and its stock price. The majority of an executive
officer's total compensation is variable and at-risk. This structure allows the
Company to administer overall compensation that rises or falls based on the
Company's performance while maintaining a balance between the Company's
short-term and long-term objectives.

Compensation and Management Development Committee of
The Board of Directors

Edison C. Buchanan, Chairman
James R. Baroffio, Member
Andrew D. Lundquist, Member
Charles E. Ramsey, Jr., Member

2230

AUDIT COMMITTEE REPORT

The information contained in this Audit Committee Report and references in
this Proxy Statement to the independence of the Audit Committee members shall
not be deemed to be "soliciting material" or to be "filed" with the Securities
and Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates such information by reference in such filing.

The Audit Committee's purpose is to assist the Board of Directors in its
oversight of the Company's internal controls, financial statements and the audit
process. The Board of Directors, in its business judgment, has determined that
all members of the committeeAudit Committee are independent as required under the listing
standards of the NYSE.New York Stock Exchange. The committeeAudit Committee operates pursuant
to a charter adopted by the Board of Directors. A copy of the current charter is
posted on the Company's website at www.pioneernrc.com.www.pxd.com and attached hereto as Annex A.

Management is responsible for the preparation, presentation and integrity
of the Company's financial statements, accounting and financial reporting
principles, and internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. The independent
auditors, Ernst & Young LLP, are responsible for performing an independent audit
of the consolidated financial statements in accordance with generally accepted
auditing standards.

In performing its oversight role, the committeeAudit Committee has reviewed and
discussed the audited financial statements with management and the independent
auditors. The committeeAudit Committee has also discussed with the independent auditors
the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as currently in effect. The committeeAudit Committee
has received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, Independent
Discussions with Audit Committees, as currently in effect. The committeeAudit Committee
has also considered whether the performance of other non-audit services by the
independent auditors is compatible with maintaining the auditors' independence
and has discussed with the auditors the auditors' independence.

Based on the reports and discussions described in this Audit Committee
Report, and subject to the limitations on the roles and responsibilities of the
committeeAudit Committee referred to below and in the charter, the committeeAudit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2004,2005,
for filing with the SEC. The committeeAudit Committee has also recommended the selection ofselected Ernst & Young LLP
as the Company's independent auditors.

Theauditors for 2006.

Although determined to be financially literate (as defined by the SEC
rules), the members of the committeeAudit Committee are not professionally engaged in the
practice of auditing or accounting for the Company and are not experts in
auditor independence standards. Members of the committeeAudit Committee rely, without
independent verification, on the information provided to them and on the
representations made by management and the independent auditors. Accordingly,
the committee'sAudit Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the committee'sAudit Committee's considerations and discussions referred to
above do not assure that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards, that
the financial statements are presented in accordance with generally accepted
accounting principles or that Ernst & Young LLP is in fact independent.

Audit Committee of
The Board of Directors

James L. Houghton, Chairman
R. Hartwell Gardner, MemberChairman
Jerry P. Jones, Member
Linda K. Lawson, Member
Frank A. Risch, Member
Robert A. Solberg, Member
Jim A. Watson, Member

2331

CORPORATE GOVERNANCE

Corporate Governance Principles

The Board of Directors believes that sound governance practices and
policies provide an important framework to assist it in fulfilling its duty to
shareholders. In March 2003,The Company's Corporate Governance Principles as adopted by the
Board of Directors, formally adopted the
Company's Corporate Governance Principles, which covercovers the following principal subjects:

o Role and functions of the Board of Directors
o Qualifications and independence of directors
o Size of the Board of Directors and selection process
o Committee functions and independence of committee members
o Meetings of non-employee directors
o Self-evaluation
o Ethics and conflicts of interest (a copy of the current Code"Code of
Business Conduct and EthicsEthics" is posted on the Company's website at
www.pioneernrc.com)www.pxd.com)
o Reporting of concerns to non-employee directors or the Audit Committee
o Compensation of the Board of Directors and stock ownership requirements
o Succession planning and annual compensation review of senior management
o Access to senior management and to independent advisors
o Director orientation and continuing education
o Evaluation of corporate governance principles

The Corporate"Corporate Governance PrinciplesPrinciples" are posted on the Company's website
at www.pioneernrc.com/www.pxd.com/governance. The Corporate Governance Principles will be reviewed
periodically and as necessary by the Company's Nominating and Corporate
Governance Committee, and any proposed additions to or amendments of the
Corporate Governance Principles will be presented to the Board of Directors for
its approval.

The NYSE has adopted rules that require listed companies to adopt
governance guidelines covering certain matters. The Company believes that the
Corporate Governance Principles comply with the NYSE rules.

Director Independence

The Company's standards for determining director independence require the
assessment of directors' independence each year. A director cannot be considered
independent unless the Board of Directors affirmatively determines that he or
she does not have any relationship with management or the Company that may
interfere with the exercise of his or her independent judgment, including any of
the relationships that would disqualify the director from being independent
under the rules of the NYSE. As contemplated by the NYSE rules, the Board of
Directors has also adopted categorical standards to assist in determining
whether any material relationship with the Company or its management exists.
Directors who have any of the relationships outlined in the categorical
standards are considered to have relationships that require the Board of
Directors' review of the full facts and circumstances in order to determine
whether the relationship impairs the independence of the director. The
categorical standards are set forth under "Independence of Directors" in the
Company's "CorporateCorporate Governance Principles"Principles and are:

1. Thethe director has no material relationship with the Company, either directly
or as a partner, shareholder or officer of an organization that has a
relationship with the Company;
2. the director, or any member of the director's family, has not been employed
by the Company in the last fivethree years;
3. the director, or any member of the director's family, has not been employed
by, or affiliated with, the Company's auditor in the last fivethree years;
4. the director, or any member of the director's family, has not been part of
an interlocking directorate in the last fivethree years;
5. the director, or any member of the director's family, doeshas not receivereceived
non-director fee compensation from the Company;

24Company in the last three years;

6. the director is not an executive officer or employee, or any member of the
director's family is not an executive officer, of a company that makes
payments to, or receives payments from the Company for property or services
in an amount which, in any single fiscal year, exceeds the greater of $1
million or 2% of such other company's consolidated gross revenues in the
last three years;
7. the director does not own more than 4.9 percent of the Company's shares;
7.8. the director does not serve on more than three other public company boards;
and
8.9. the director does not serve on the board of another E&Poil and gas exploration
and production company.

In MarchMay 2005, the Board of Directors assessed the independence of each
non-employee director under the Company's guidelines. In August 2005, upon Mr.
Risch's appointment as director, the Board of Directors assessed the
independence of Mr. Risch under the Company guidelines. The Board of Directors
affirmatively determined that all eleven non-employee directors (Dr. Baroffio,
Mr. Buchanan, Mr. Gardner, Mr. Houghton, Mr. Jones, Mrs. Lawson, Mr. Lundquist, Mr. Ramsey,
Mr. Risch, Mr. Sexton, Mr. Solberg and Mr. Watson) are independent.

The Board of Directors reviewed the facts and circumstances of Mr.
Lundquist's and Mr. Sexton's interests in the Company's transaction with2004 acquisition of
Evergreen, of which Mr. Lundquist was an independent director and Mr. Sexton was
the Chairman of the Board, President and Chief Executive Officer, as well as Mr.
Sexton's payments under his change ofin control agreement with Evergreen and his
non-competition agreement with the Company. The Board of Directors concluded
that Mr. Lundquist's economic interest in the Evergreen transaction was limited
to his holdings as a security holder and that his prior activities as an
independent director of Evergreen would not impair his independence as a
director of the Company. The Board of Directors similarly concluded that Mr.
Sexton wasis an independent director because Mr. Sexton ceased to be an employee of
Evergreen at the time of the merger, because his economic interest in that
transaction existed as an employee and stockholder of Evergreen (both of which
ceased at the merger or upon settlement of the dispute relating to the amount of
change ofin control payments due him because of the merger), and because the
payment for his new non-competition agreement and his continuation of health
care and other insurance benefits for two years following the merger did not
constitute payment for services to the Company since it was not contingent on
continuing service.

The Board of Directors also reviewed the facts and circumstances of Mr.
Jones' relationship with a law firm from which he had retired in January 1998
and in which he holds the title "of counsel." Because Mr. Jones has no role in
or economic interest in that firm and receives payments only under a retirement
savings plan, the Board of Directors concluded that Mr. Jones' limited
relationship with that firm was not material and that it would not impair his
independent judgment.

In connection with its assessment of the independence of each non-employee
director, the Board of Directors also determined that each member of the Audit
Committee meets the additional independence standards of the NYSE and SEC
applicable to members of the Audit Committee. Those standards require that the
director not be an affiliate of the Company and that the director not receive
from the Company, directly or indirectly, any consulting, advisory or other
compensatory fees except for fees for services as a director.

Certifications

The Company submitted a Section 12(a) Chief Executive Officer ("CEO")
Certification to the NYSE in 2004 regarding the Company's compliance with the
NYSE corporate governance listing standards. The certification was not
qualified. The Company also filed the CEO and Chief Financial Officer
certifications required under Section 302 of the Sarbanes-Oxley Act of 2002 as
exhibits to its Annual Report on Form 10-K for the year ended December 31, 2004.

Election of Lead Director

In February 2004,May 2005, the Board of Directors reelected Mr. Ramsey, a non-employee
director, to serve as the Lead Director, meaning he is chairman of the regular
private meetings of the independent directors and of the Nominating and
Corporate Governance Committee. Utilizing input from all directors, the Lead
Director will (i) workworks with the CEOChief Executive Officer (the "CEO") and Chairman of
the Board of Directors to determine the appropriate agenda and information
package for Board of Director meetings; (ii) meetmeets with the CEO and Chairman of
the Board of Directors, senior management and individual directors, as required,
to facilitate effective communications and information flow; (iii) taketakes a
leadership role in CEO succession and seniorexecutive management development; (iv)
taketakes a leadership role in director evaluation, continuing education, recruiting
and orientation; and (v) serveserves as the Board of Directors' contact for direct
employee and stockholder communications with the Board of Directors.

2533

Financial Literacy of Audit Committee and Designation of Financial Experts

In FebruaryMay 2005, the Board of Directors evaluated the members of the Audit
Committee for financial literacy and the attributes of a financial expert. In
August 2005, upon Mr. Risch's appointment as a member of the Audit Committee,
the Board of Directors evaluated Mr. Risch for financial literacy and the
attributes of a financial expert. The Board of Directors determined that each of
the Audit Committee members is financially literate and that three of the Audit
Committee members (Mrs. Lawson and Messrs. Gardner and Houghton)Risch) are financial
experts as defined by the SEC.

Attendance at Annual Meetings

The Board of Directors encourages all directors to attend the annual
meetings of stockholders, if practicable. All of the directors attended the 2005
Annual Meeting of Stockholders held on May 11, 2005.

Procedure for Directly Contacting the Board of Directors and Whistleblower
Policy

A means for stockholders and employees to contact the Board of Directors
directly (including the Lead Director) has been established and is published on
the Company's website at www.pioneernrc.com.www.pxd.com. Matters for which this contact may be used
include allegations about actions of the Company or its directors, officers or
employees involving (i) questionable accounting, internal controls and auditing
matters; (ii) materially misleading statements or omissions in SEC reports,
press releases, or other public statements or other forms of wire, mail or
securities fraud or (iii) dishonest or unethical conduct, conflicts of interest,
violations of the Company's code of ethics or business conduct, or violation of
laws. All complaints and concerns will be received and processed by the
Company's Corporate Secretary's Office. Complaints relating to the Company's
accounting, internal accounting controls or auditing matters will be referred to
the Audit Committee of the Company's Board of Directors and other concerns will
be referred to the Lead Director of the Company's Board of Directors.
Information may be submitted confidentially and anonymously, although the
Company may be obligated by law to disclose the information or identity of the
person providing the information in connection with government or private legal
actions and in some other circumstances. The Company's policy is not to
retaliate against any director, officer or employee who provides truthful
information relating to a violation of law or Company policies.

2634

COMPANY PERFORMANCE

The following graph and chart compare the Company's cumulative total
stockholder return on common stock during the five-year period ended December
31, 2004,2005, with cumulative total stockholder return during the same period for
the Standard & Poors 500 Index ("S&P 500 Index") and the Dow Jones U.S.
Exploration and Production Index ("DJ E&P IndexIndex"), as prescribed by the SEC
rules. The following graph and chart show the value, at December 31 in each of
2000, 2001, 2002, 2003, 2004 and 20042005 of $100 invested at December 31, 1999,2000, and
assume the reinvestment of all dividends:

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE S&P 500 INDEX
AND THE DJ E&P INDEX (a)

Pioneer
Natural DJ
Year ended Resources S&P E&P
December 31, Company 500 Index
------------ --------- ----- -----

1999 100 100 100
2000 220 91 160
2001 215 80 147
2002 283 62 150
2003 357 80 196
2004 395 89 279
[LINE GRAPH REFLECTING THE VALUES SHOWN BELOW]

Year ended December 31,
--------------------------------------------
1999-------------------------------------------------
2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----

Pioneer Natural Resources Company 100 220 215 283 357 39598 128 162 179 263
S&P 500 100 91 80 62 80 8988 69 88 98 103
DJ E&P Index 100 160 147 150 196 27992 94 123 174 288

---------------
(a) Assumes $100 invested on December 31, 19992000 in stock or index,
including reinvestment of dividends.

2735

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of common stock as of March 15, 2005,23, 2006, by (i) each person who is known
by the Company to own beneficially more than five percent of the outstanding
shares of common stock, (ii) each director of the Company, (iii) each named
executive officer of the Company and (iv) all directors and executive officers
as a group:

Number of Percentage
Name of Person or Identity of Group Shares Of Class (a)
- ----------------------------------- ---------- ------------

Southeastern Asset Management, Inc. (c)........................ 13,619,600 9.5................................. 16,710,000 12.9
Longleaf Partners Fund
O. Mason Hawkins
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119

NuebergerNeuberger Berman, Inc. (d)..................................... 11,528,291 8.0
Nueberger.............................................. 13,065,777 10.1
Neuberger Berman, LLC
NuebergerNeuberger Berman Management, Inc.
605 Third Ave.
New York, New York 10158-3698

Highfields Capital Management LP (e)........................... 9,390,211 6.5
Highfields GP LLC
Jonathan S. Jacobson
Richard L. Grubman
Highfields Capital I LP
Highfields Capital II LP
Highfields Capital Ltd
c/o Highfields Capital Management
John Hancock Tower
200 Clarendon Street, 51st Floor
Boston, Massachusetts 02116

Scott D. Sheffield (e) (f) (g) (h)................................. 678,233.......................................... 737,009 (b)

Timothy L. Dove (f)(e) (g) (h) (i).................................... 241,900............................................. 228,868 (b)

A.R.A. R. Alameddine (f)(e) (g) (h) (i) ................................... 128,785........................................... 136,118 (b)

Chris J. Cheatwood (f)(e) (g) (h) (i) (j)............................. 147,681...................................... 146,063 (b)

Danny L. Kellum (f)(e) (g) (h) (i).................................... 86,954............................................. 80,204 (b)

James R. Baroffio (f) (h) (k).................................. 39,621(e) (g) (j)........................................... 36,529 (b)

Edison C. Buchanan (h)......................................... 10,898(g).................................................. 13,872 (b)

R. Hartwell Gardner (f) (h).................................... 56,353 (b)

James L. Houghton (f) (h) (l).................................. 27,943(e) (g)............................................. 55,701 (b)

Jerry P. Jones (f) (h)......................................... 27,464(g)...................................................... 19,050 (b)

Linda K. Lawson (h) (m)........................................ 6,781(g) (k)................................................. 8,367 (b)

Andrew D. Lundquist (f) (h).................................... 22,369(e) (g)............................................. 25,277 (b)

Charles E. Ramsey, Jr. (f) (h)................................. 38,265(e) (g).......................................... 37,416 (b)

Frank A. Risch (g)...................................................... 4,154 (b)

Mark S. Sexton (f) (h) (m)..................................... 225,371(e) (g) (k).............................................. 229,599 (b)

Robert A. Solberg (h) ......................................... 9,413(g) .................................................. 10,999 (b)

Jim A. Watson (h).............................................. 6,168(g)....................................................... 7,754 (b)

All directors and executive officers as a group (43(20 persons) (h) (n)..... 2,752,867 1.9(e) (g).... 2,025,785 1.6

- --------------------------
(a) Based on 143,845,045129,264,022 shares of common stock outstanding.
(b) Does not exceed one percent of class.
(c) The Schedule 13G/A filed with the SEC on February 6, 2006, which is a joint
statement on Schedule 13G/A filed by Southeastern Asset Management, Inc.
("Southeastern"), Longleaf Partners Fund and O. Mason Hawkins ("Hawkins"),
states that the statement is being filed by Southeastern as a registered
investment adviser, and that all of the securities covered by the statement
are owned legally by Southeastern's investment advisory clients and none
are owned directly or indirectly by Southeastern. The Schedule 13G/A
further states that the statement is also being filed by Hawkins, Chairman
of the Board and CEO of Southeastern, in the event he could be deemed to be
a controlling person of that firm as the result of his official positions
with or ownership of its voting securities. The existence of such control
is expressly disclaimed. Hawkins does not own directly or indirectly any
securities covered by the Schedule 13G/A for his own account.
(d) The Schedule 13G/A filed with the SEC on March 7, 2006, which is a joint
statement on Schedule 13G/A filed by Neuberger Berman, Inc., Neuberger
Berman LLC and Neuberger Berman Management, Inc., states that Neuberger

Berman, LLC and Neuberger Berman Management, Inc. are deemed to be
beneficial owners since they both have shared power to make decisions
whether to retain or dispose and vote the securities that are actually
owned by clients of Neuberger Berman, LLC. Neuberger Berman, Inc. owns 100
percent of both Neuberger Berman LLC and Neuberger Berman Management, Inc.
and does not own over one percent of the Company.
(e) Includes the following number of shares subject to stock options that were
exercisable at or within 60 days after March 23, 2006: Mr. Sheffield,
322,000; Mr. Dove, 112,000; Mr. Alameddine, 84,333; Mr. Cheatwood, 74,333;
Mr. Kellum, 6,666; Dr. Baroffio, 21,978 (including 1,978 shares subject to
stock options held in a trust over which Dr. Baroffio is the trustee); Mr.
Gardner, 31,873; Mr. Lundquist, 13,924; Mr. Ramsey, 20,000; and Mr. Sexton,
100,000; and all directors and executive officers as a group, 898,855.
(f) Includes 5,000 shares held in Mr. Sheffield's investment retirement account
and 12,627 shares held in Mr. Sheffield's 401(k) account.
(g) Includes the following number of unvested restricted shares: Mr. Sheffield,
185,350; Mr. Dove, 68,900; Mr. Alameddine, 43,750; Mr. Cheatwood, 45,750;
Mr. Kellum, 45,750; Dr. Baroffio, 1,586; Mr. Buchanan, 2,974; Mr. Gardner,
3,304; Mr. Jones, 1,586; Mrs. Lawson, 1,586; Mr. Lundquist, 2,908; Mr.
Ramsey, 3,304; Mr. Risch, 4,154; Mr. Sexton, 1,586; Mr. Solberg, 1,586; Mr.
Watson, 4,096; and all directors and executive officers as a group,
525,090.
(h) Includes the following number of shares held in each respective officer's
401(k) account: Mr. Dove, 341; Mr. Alameddine, 7; Mr. Cheatwood, 504 and
Mr. Kellum, 516.
(i) Includes 2,000 shares held in Mr. Cheatwood's investment retirement
account.
(j) Includes 11,053 shares held in trust that are shares beneficially owned by
Dr. Baroffio.
(k) Mrs. Lawson's beneficial shares include 1,700 shares held in Mrs. Lawson's
investment retirement accounts. Mr. Sexton's beneficial shares include
7,478 shares held in Mr. Sexton's investment retirement accounts.

(c) The Schedule 13G/A filed with the SEC on February 8, 2005, which is a joint
statement on Schedule 13G/A filed by Southeastern Asset Management, Inc.
("Southeastern"), Longleaf Partners Fund and O. Mason Hawkins ("Hawkins"),
states that the statement is being filed by Southeastern as a registered
investment adviser, and that all of the securities covered by the statement
are owned legally by Southeastern's investment advisory clients and none
are owned directly or indirectly by Southeastern. The Schedule 13G/A
further states that the statement is also being filed by Hawkins, Chairman
of the Board and CEO of Southeastern, in the event he could be deemed to be
a controlling person of that firm as the result of his official positions
with or ownership of its voting securities. The existence of such control
is expressly disclaimed. Hawkins does not own directly or indirectly any
securities covered by the Schedule 13G/A for his own account.
(d) The Schedule 13G filed with the SEC on February 14, 2005, which is a joint
statement on Schedule 13G filed by Neuberger Berman, Inc., Neuberger Berman
LLC and Neuberger Berman Management, Inc., states that Neuberger Berman,
LLC and Neuberger Berman Management, Inc. are deemed to be beneficial
owners since they both have shared power to make decisions whether to
retain or dispose and vote the securities that are actually owned by
clients of Neuberger Berman, LLC. Neuberger Berman, Inc. owns 100 percent
of both Neuberger Berman LLC and Neuberger Berman Management, Inc. and does
not own over one percent of the Company.
(e) The Schedule 13G/A filed with the SEC on February 14, 2005, which is a
joint statement on Schedule 13G/A filed by Highfields Capital I LP,
Highfields Capital II LP and Highfields Capital Ltd. (collectively, the
"Funds"), Highfields Capital Management LP, Highfields GP LLC, Jonathan S.
Jacobson and Richard L. Grubman (collectively, "Highfields"), states that
the shares beneficially owned by Highfields Capital Management LP,
Highfields GP LLC, Jonathan S. Jacobson and Richard L. Grubman are shares
beneficially owned by the Funds and such beneficial owners have the power
to direct the dividends from or the proceeds of the sale of the shares
owned by the Funds. The Funds individually do not own five percent or more
of the Company's outstanding securities. On a March 25, 2005 Schedule
13G/A, Highfields reported an increase in their holdings of 1,820,000
shares on March 16, 2005. Such shares are not reflected in the table above.
(f) Includes the following number of shares subject to stock options that were
exercisable at or within 60 days after March 15, 2005: Mr. Sheffield,
298,000; Mr. Dove, 141,834; Mr. Alameddine, 74,000; Mr. Cheatwood, 81,168;
Mr. Kellum, 16,667; Dr. Baroffio, 23,956 (including 3,956 shares subject to
stock options held in a trust over which Dr. Baroffio is the trustee); Mr.
Gardner, 37,807; Mr. Houghton, 16,000; Mr. Jones, 10,000; Mr. Lundquist,
13,924; Mr. Ramsey, 24,153 and Mr. Sexton, 100,000.
(g) Includes 5,000 shares held in Mr. Sheffield's investment retirement account
and 12,607 shares held in Mr. Sheffield's 401(k) account.
(h) Includes the following number of unvested restricted shares: Mr. Sheffield,
196,350; Mr. Dove, 68,800; Mr. Alameddine, 46,750; Mr. Cheatwood, 57,750;
Mr. Kellum, 57,750; Dr. Baroffio, 1,912; Mr. Buchanan, 2,111; Mr. Gardner,
2,370; Mr. Houghton, 1,912; Mr. Jones, 1,912; Mrs. Lawson, 1,693; Mr.
Lundquist, 441; Mr. Ramsey, 1,912; Mr. Sexton, 441; Mr. Solberg, 2,151; Mr.
Watson, 4,217 and all directors and officers as a group, 977,931.
(i) Includes the following number of shares held in each respective officer's
401(k) account: Mr. Dove, 341; Mr. Alameddine, 7; Mr. Cheatwood, 505 and
Mr. Kellum, 517.
(j) Includes 2,000 shares held in Mr. Cheatwood's investment retirement
account.
(k) Includes 13,753 shares held in trust that are shares beneficially owned by
Dr. Baroffio.
(l) Includes 8,031 shares held by two trusts of which Mr. Houghton is a
co-trustee and over which he has shared voting and investment power and
2,000 shares held in Mr. Houghton's investment retirement account.
(m) Mrs. Lawson's beneficial shares include 1,700 shares held in Mrs. Lawson's
investment retirement accounts. Mr. Sexton's beneficial shares include
7,477 shares held in Mr. Sexton's investment retirement accounts.
(n) Includes 1,202,209 shares of common stock subject to stock options that
were exercisable at or within 60 days after March 15, 2005.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The executive officers and directors of the Company are required to file
reports with the SEC, disclosing the amount and nature of their beneficial
ownership in common stock, as well as changes in that ownership.

Based solely on its review of reports and written representations that the
Company has received, the Company is aware that Larry N. Paulsen,Darin G. Holderness, the
Company's Vice President Administration and Risk Management, and David McManus, the
Company's Vice President of International Operations,Chief Accounting Officer, did not timely file one
report each on Form 4 covering transactionsone transaction effected during 2004, Todd
Dillabough, the President of the Company's Canadian subsidiaries, did not timely
file one Form 3 during 2004, and Mark S. Sexton, a director, did not accurately
report all of the Company's securities in which he is deemed to have a pecuniary
interest on his Form 3 filed in 2004.2005. The Company
believes that all other required reports were timely filed during 2004.

2005.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On May 3,In 2004, the Company and Evergreen entered into an Agreement and
Plan of Merger pursuant to which the Company acquired Evergreen on September 28,
2004.in a merger. Before the completion
of the merger, Mark S. Sexton was Evergreen's Chairman of the Board, President,
and Chief Executive Officer; Andrew D.
Lundquist was an independent director of Evergreen; and Scott D. Sheffield (the
Company's Chairman of the Board, Chief Executive Officer and then President) was
an independent director of Evergreen. As a result of the merger, Messrs. Sexton
and Lundquist were appointed to the Company's Board of Directors as Class I and
Class III directors, respectively. On May 3, 2004, the Company also entered into
a Non-Competition Agreement with Mr. Sexton and Consulting and Non-Competition
Agreements with two other officers of Evergreen. The aggregate number of shares
of Company common stock issued in the merger to Evergreen stockholders was
approximately 25.4 million, and the aggregate amount of cash paid in the merger
to Evergreen stockholders was approximately $863.2 million, including the
consideration for Evergreen's Kansas properties.

Mr. Sheffield owned 6,400 shares of Evergreen common stock, options to
purchase 4,800 shares of Evergreen common stock that were exercisable, options
to purchase 19,200 shares of Evergreen common stock that were not fully
exercisable, and a restricted stock award for 9,600 shares of Evergreen common
stock. As a result of the merger, Mr. Sheffield received 9,307 shares of Company
common stock, options to acquire 27,924 shares of Company common stock, and
$319,713 in cash with respect to his equity interests in Evergreen.

Mr. Lundquist owned 3,402 shares of Evergreen common stock, options to
purchase 4,800 shares of Evergreen common stock that were exercisable, options
to purchase 19,200 shares of Evergreen common stock that were not fully
exercisable, and a restricted stock award for 9,600 shares of Evergreen common
stock. As a result of the merger, Mr. Lundquist received 7,563 shares of Company
common stock, options to acquire 27,924 shares of Company common stock, and
$259,810 in cash with respect to his equity interests in Evergreen.

Mr. Sexton owned 243,234 shares of Evergreen common stock; options for
507,578 shares of Evergreen common stock, including options for 75,000 shares
that vested in the merger prior to the time they would otherwise have vested;
restricted stock awards for 75,000 shares of Evergreen common stock that vested
prior to the time they would otherwise have vested. As a result of the merger,
Mr. Sexton received 185,130 shares of Company common stock, options to acquire
590,568 shares of Company common stock, and $6,358,368 in cash with respect to
his equity interests in Evergreen. In addition, underOfficer. Under the terms of Mr. Sexton's change in control
agreement with Evergreen, the Company is providing Mr. Sexton continuation of
his health care and other insurance benefits for two years following the merger.

Before completion of the merger in September 2004, a dispute arose
concerning the amounts that would be payable to the Evergreen executives
pursuant to their change in control agreements upon completion of the merger.
The Company believed the aggregate amount that would be payable was
approximately $7.6 million based on the Company's analysis of the historical
cash salaries and cash bonuses and estimated tax gross-ups for the three
Evergreen executives. The executives asserted that the change in control payment
calculation must also take into account the executives' restricted stock awards
granted when their annual compensation was set and that the aggregate cash
payable to them would be up to $30.0 million, depending on the value attributed
to Evergreen common stock for purposes of the calculation. The Company disagreed
with the methodology and stock valuations the executives used to calculate the
cash amount that would be payable to them. The Company and the three Evergreen
executives had a number of discussions to attempt to resolve the disagreement
before the completion of the merger on September 28, 2004, but their efforts
were unsuccessful.

During October 2004, the Company and the three executives settled their
disputes. Associated therewith, the Company paid to the three executives $6.4
million of aggregate non-competition payments and $7.6 million of change in
control payments determined in accordance with the change in control agreements,
including a $2.6 million change in control payment to Mr. Sexton. On October 29,
2004, the Company entered into a new Non-Competition Agreement with Mr. Sexton.
Mr. Sexton's new Non-Competition Agreement has a two-year term and replaced the

Non-Competition Agreement dated May 3, 2004 between the Company and Mr. Sexton.
The Non-Competition Agreement provides that Mr. Sexton will not:

(i) engage in or be involved with a competing activity with the Company
in the Raton Basin of Colorado or New Mexico,

(ii) solicit with respect to hiring any employee of the Company, and

(iii) acquire any oil and gas interests within 20 miles of any oil and
gas interests owned by Evergreen in three areas generally described
as the Uinta and Piceance Basin in Utah and Colorado and the
Western Sedimentary Basin in Canada without providing the Company
30 days prior written notice and offering the Company the right to
acquire up to 50 percent of the oil and gas interests at cost.

Mr. Sexton was paid $3.1 million as compensation for entering into the new
Non-Competition Agreement.

Tom Sheffield, the brother of Scott D. Sheffield, is employed at a
subsidiary of the Company as the Raton Asset Team Manager. For 2004,2005, Tom
Sheffield was paid $121,658$139,750 in base salary and $28,406$38,931 in bonus and received
restricted stock awards for 6203,997 shares of Company common stock with a fair
market value on the date of grant of $19,127.$156,802. Scott D. Sheffield disclaims any
interest in Tom Sheffield's compensation.

Kevin Spratlen, the husband of Susan Spratlen (an officer of the Company
responsible for corporate communications), is employed at a subsidiary of the
Company as Senior Support Analyst. For 2004, Kevin Spratlen was paid $55,800 in
base salary and $8,999 in bonus and received restricted stock awards for 135
shares of Company common stock with a fair market value on the date of grant of
$4,165.

Mr. Jones is of counsel to the firm of Thompson & Knight, L.L.P. since his
retirement from the firm in January 1998. Thompson & Knight, L.L.P. provides
periodic legal services to the Company. Thompson & Knight, L.L.P. customarily
gives the "of counsel" title to retired partners of the firm. Mr. Jones has no
role in, and receives no pay from, Thompson & Knight, L.L.P. except payments
under a retirement savings plan.

STOCKHOLDER PROPOSALSPROPOSALS; IDENTIFICATION OF DIRECTOR CANDIDATES

Any stockholder of the Company who desires to submit a proposal for action
at the 20062007 annual meeting of stockholders and wishes to have such proposal (a
"Rule 14a-8 Proposal") included in the Company's proxy materials, must submit
such Rule 14a-8 Proposal to the Company at its principal executive offices no
later than December 13, 2005,4, 2006, unless the Company notifies the stockholders
otherwise. Only those Rule 14a-8 Proposals that are timely received by the
Company and proper for stockholder action (and otherwise proper) will be
included in the Company's proxy materials.

Any stockholder of the Company who desires to submit a proposal for action
at the 20062007 annual meeting of stockholders, but does not wish to have such
proposal (a "Non-Rule 14a-8 Proposal") included in the Company's proxy
materials, must submit such Non-Rule 14a-8 Proposal to the Company at its
principal executive offices so that it is received no later than February 19,
2006,2007, unless the Company notifies the stockholders otherwise. If a Non-Rule
14a-8 Proposal is not received by the Company on or before February 19, 2006,2007,
then the Company intends to exercise its discretionary voting authority with
respect to such Non- RuleNon-Rule 14a-8 Proposal.

"Discretionary voting authority" is the ability to vote proxies that
stockholders have executed and returned to the Company, on matters not
specifically reflected in the Company's proxy materials, and on which
stockholders have not had an opportunity to vote by proxy.

It is the responsibility of the Nominating and Corporate Governance
Committee to identify, evaluate and recommend to the Board the Directors
nominees for election at the annual meeting of stockholders, as well as for
filling vacancies or additions on the Board of Directors that may occur between
annual meetings. The Nominating and Corporate Governance Committee endeavors to
recommend only director candidates who possess the highest personal values and
integrity; who have experience and have exhibited achievements in one or more of
31

the key professional, business, financial, legal and other challenges that face
a large global U.S. independent oil and gas company; who exhibit sound judgment,
intelligence, personal character, and the ability to make independent analytical
inquiries; who demonstrate a willingness to devote adequate time to Board of
Director duties; and who are likely to be able to serve on the Board of
Directors for a sustained period. Consideration will also be given to the Board
of Directors' overall balance of diversity of perspectives, backgrounds and
experiences.

In identifying potential director candidates, the Nominating and Corporate
Governance Committee relies on any source available for the identification and
recommendation of candidates, including current directors and officers. In
addition, the Nominating and Corporate Governance Committee from time to time
will engage a third party search firm to identify or evaluate, or assist in
identifying or evaluating potential candidates, for which the third party search
firm will be paid a fee.

The Nominating and Corporate Governance Committee will also consider any
nominee recommended by stockholders for election at the annual meeting of
stockholders to be held in 20062007 if that nomination is submitted in writing, not
later than December 13, 2005,4, 2006, to the Corporate Secretary, Pioneer Natural Resources
Company, 5205 North O'Connor Boulevard, Suite 900, Irving, Texas 75039. With
respect to each such nominee, the following information must be provided to the
Company with the written nomination:

a) the nominee's name, address and other personal information;

b) the number of shares of each class and series of stock of the Company
held by such nominee;

c) the nominating stockholder's name, residential address and telephone
number, business address and telephone number; and

d) all other information required to be disclosed pursuant to Regulation
14A of the Securities and Exchange Act of 1934.

Each submission must also include a statement of the qualifications of the
nominee, a notarized consent signed by the nominee evidencing a willingness to
serve as a director, if elected, and a commitment by the nominee to meet
personally with members of the Nominating and Corporate Governance Committee and
the Board of Directors.

Stockholders desiring to propose action at the annual meeting of
stockholders must also comply with Article Nine of the Amended and Restated
Certificate of Incorporation of the Company. Under Article Nine, a stockholder
must submit to the Company, no later than 60 days before the annual meeting or
ten days after the first public notice of the annual meeting is sent to
stockholders, a written notice setting forth (i) the nature of the proposal with
particularity, including the written text of the proposal, (ii) the
stockholder's name, address and other personal information, (iii) any interest
of the stockholder in the proposed business, (iv) the name of any persons

nominated to be elected or reelected as a director by the stockholder and (v)
with respect to each such nominee, the nominee's name, address and other
personal information, the number of shares of each class and series of stock of
the Company held by such nominee, all information required to be disclosed
pursuant to Regulation 14A of the Securities and Exchange Act of 1934, and a
notarized letter containing such nominee's acceptance of the nomination, stating
his or her intention to serve as a director, if elected, and consenting to be
named as a nominee in any proxy statement relating to such election. The person
presiding at the annual meeting will determine whether business is properly
brought before the meeting and will not permit the consideration of any business
not properly brought before the meeting.

Written requests for inclusion of any stockholder proposal should be
addressed to Corporate Secretary, Pioneer Natural Resources Company, 5205 North O'Connor
Boulevard, Suite 900, Irving, Texas 75039. The Company suggests that any such
proposal be sent by certified mail, return receipt requested.

SOLICITATION OF PROXIES

Solicitation of Proxies may be made by mail, personal interview telephone
or
telegraphtelephone by officers, directors and regular employees of the Company. The
Company may also request banking institutions, brokerage firms, custodians,
nominees and fiduciaries to forward solicitation material to the beneficial
owners of the common stock that those companies or persons hold of record, and
the Company will reimburse the forwarding expenses. In addition, the Company has
retained D.F. King & Co., Inc. to assist in solicitation for a fee estimated not
to exceed $7,500.$9,000. The Company will bear all costs of solicitation.

STOCKHOLDER LIST

In accordance with the Delaware General Corporation Law, the Company will
maintain at its corporate offices in Irving, Texas, a list of the stockholders
entitled to vote at the Annual Meeting. The list will be open to the examination
of any stockholder, for purposes germane to the Annual Meeting, during ordinary
business hours for ten days before the Annual Meeting.

ANNUAL REPORT AND OTHER INFORMATION

The Company's Annual Report to Stockholders for the year ended December 31,
2004,2005, is being mailed to stockholders concurrently with this Proxy Statement and
does not form part of the proxy solicitation material.

A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2004,2005, as amended and filed with the SEC, will be sent to any stockholder
without charge upon written request addressed to Investor Relations, Pioneer
Natural Resources Company, 5205 North O'Connor Boulevard, Suite 900, Irving,
Texas 75039. A copy of this Proxy Statement or our Annual Report on Form 10-K
will also be sent upon written or oral request to any stockholder of a shared
address to which a single copy of this Proxy Statement or Annual Report on Form
10-K was delivered. Requests may be made by writing to Investor Relations,
Pioneer Natural Resources Company, 5205 North O'Connor Boulevard, Suite 900,
Irving, Texas 75039 or by calling 972-969-3583. The Annual Report on Form 10-K
is also available at the SEC's website in its EDGAR database at www.sec.gov.

Stockholders may request copies of the Company's Corporate Governance
Principles, Code of Business Conduct and Ethics and any charter for a committee
of the Board of Directors by writing to Investor Relations at the address set
forth in the previous paragraph.

3339

INTERNET AND PHONE VOTING

For shares of stock that are registered in your name, you have the
opportunity to vote by the Internetinternet or phone using a programprocedures provided by the
Company's transfer agent, Continental Stock Transfer & Trust Company
("Continental"). Votes submitted electronically by the Internet under this programinternet or phone must be received by 5:00
p.m., Eastern Time, on Tuesday, May 10, 2005.2, 2006. The giving of such a proxy will not
affect your right to vote in person should you decide to attend the Annual
Meeting. The Company has been advised by counsel that the
Internet voting procedures that have been made available through Continental are
consistent with the requirements of applicable law.

To vote by internet or phone, please follow the Internet, please haveinstructions on your
proxy card in hand when you
access Continental's website at www.continentalstock.com. Under "ContinentaLink"
on the right side, select "Proxy Voting Log In." You will be prompted to
complete an electronic ballot. Follow the prompts to vote your shares.card.

The Internetinternet and phone voting procedures are designed to authenticate
stockholder identities, to allow stockholders to give their voting instructions
and to confirm that stockholders' instructions have been recorded properly.
Stockholders voting through the Internetby internet should remember that the stockholder must bear
costs associated with electronic access, such as usage charges from Internetinternet
access providers and telephone companies.

For shares of stock that are registered in a street name (the stockholder
owns shares in the name of a bank, broker or other holder of record on the books
of the Company's transfer agent), you will receive instructions with your proxy
materials that you must follow in order to have your shares voted. Please review
your Proxy or voting instruction card to determine whether you can vote by phone
or electronically.

******

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO VOTE THROUGH THEBY INTERNET, BY
PHONE OR TO COMPLETE, SIGNBY COMPLETING, SIGNING AND RETURNRETURNING THE PROXY IN THE ENCLOSED
POSTAGE-PAID, ADDRESSED ENVELOPE.

By Order of the Board of Directors,

/s/ Mark S. Berg
----------------------------------H. Kleinman
------------------------
Mark S. BergH. Kleinman
Secretary

Irving, Texas
April 5, 2005

343, 2006

ANNEX A

PIONEER NATURAL RESOURCES COMPANY
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER

I Purpose

The Board of Directors (the "Board") of Pioneer Natural Resources Company
(the "Company") has established the Audit Committee (the "Committee") of the
Board. The purposes of the Committee are to assist the Board in fulfilling its
oversight responsibilities by:

A. overseeing the reliability and integrity of the Company's financial
statements, accounting policies, and financial reporting and
disclosure practices,

B. overseeing the Company's compliance with legal and regulatory
requirements,

C. overseeing the independent auditor's qualifications and independence,

D. overseeing the performance of the Company's internal audit function
and any independent internal auditors,

E. overseeing the Company's systems of internal controls regarding
finance, accounting, legal compliance and ethics that management and
the Board have established,

F. reviewing and appraising the audit efforts of the Company's
independent auditors and internal auditing department (reference to
internal auditors or the internal audit department in this Charter
shall include both internal audit activities and functions conducted
by employees of the Company or by outside auditors engaged for such
purposes) and, where appropriate, replacing the independent auditors
or internal audit department,

G. providing an open avenue of communication among the independent
auditors, financial and senior management, the internal auditors or
department, and the Board, always emphasizing that the independent
auditors are ultimately accountable to the Committee and the Board,
and

H. preparing annually the report the SEC rules require be included in
the proxy statement relating to the Company's annual meeting of
stockholders, and

I. performing such other duties as are directed by the Board.

Consistent with this Purpose, the Committee should encourage continuous
improvement of, and should foster adherence to, the Company's policies,
procedures and practices at all levels. The Committee will primarily fulfill
these responsibilities by carrying out the activities enumerated in Section V of
this Charter.

II Composition

The Committee shall be comprised of three or more Directors, as determined
by the Board or a nominating committee of the Board, none of whom shall be an
affiliate of the Company or an employee or a person who receives any
compensation from the Company other than fees paid for service as a Director.
The members of the Committee shall be elected by the Board or a nominating
committee of the Board annually and shall serve until their successors shall be
duly elected and qualified. Each member shall be "independent" as defined from
time to time by the listing standards of the New York Stock Exchange (the
"NYSE") and by applicable regulations of the Securities and Exchange Commission
(the "SEC") and shall meet any other applicable independence requirements of the
NYSE and SEC. Accordingly, the Board shall determine annually whether each
member is free from any relationship that may interfere with his or her
independence from management and the Company. No member shall serve on an audit

A-1

committee of more than two other public companies unless the Board determines
that such simultaneous service would not impair the ability of such director to
effectively serve on the Committee.

Each member shall be (or shall become within a reasonable time after
appointment) financially literate, and at least one member shall be a "financial
expert" as defined from time to time by applicable regulations of the SEC.
Members of the Committee may enhance their familiarity with finance and
accounting principles by participating in educational programs that the Company
or an outside consultant conducts.

Notwithstanding the foregoing membership requirements, no action of the
Committee shall be invalid by reason of any such requirement not being met at
the time such action is taken.

III Meetings and Structure

The Committee shall meet at least four times per year to review the
financial information of the Company, consistent with its duties and
responsibilities, and as many additional times as the members deem necessary. As
a part of its effort to foster open communications, the Committee should meet at
least annually with management, the director of the internal auditing
department, and the independent auditors in separate executive sessions to
discuss any matters that the Committee or each of these groups believe should be
discussed privately.

Unless the Board designates a Chair of the Committee, the members of the
Committee shall, by majority vote of the full Committee membership, appoint one
member of the Committee as chairperson. He or she shall be responsible for
leadership of the Audit Committee, including preparing the agenda, presiding
over the meetings, making committee assignments and reporting to the Board. The
chairperson will also maintain regular liaison with the Chief Executive Officer,
the Chief Financial Officer, the lead audit partner of the Company's independent
auditors and the Company's internal auditor.

IV Accountability of the Independent Auditors

The independent auditors are accountable to the Committee. The Committee
shall have the sole authority and responsibility with respect to the selection,
engagement, compensation, oversight, evaluation and, where appropriate,
dismissal of the Company's independent auditors. The Committee, or a member
thereof, must pre-approve any non-audit service provided to the Company by the
Company's independent auditors.

V Authority and Responsibilities

The Committee shall have the authority to take all actions it deems
advisable to fulfill its responsibilities and duties. The Committee shall have
the authority to retain professional advisors including, without limitation,
special legal counsel, accounting experts, or other consultants to advise the
Committee, which may be the same as or different from the Company's primary
legal counsel, accounting experts and other consultants as the Committee deems
necessary or advisable in connection with the exercise of its powers and
responsibilities as set forth in this Audit Committee Charter, all on such terms
as the Committee deems necessary and advisable. The Committee may require any
officer or employee of the Company or any of its subsidiaries, the Company's
outside legal counsel, and the Company's external auditors to attend a meeting
of the Committee or to meet with any member of, or consultant to, the Committee.
The Committee chairperson, or other designee of the Committee, may also meet
with the Company's investment bankers or financial analysts who follow the
Company.

The Committee shall be responsible for the resolution of any disagreements
between the independent auditors and management regarding the Company's
financial reporting.

The Company shall provide for appropriate funding, as determined by the
Committee, for payment of compensation to the independent auditors employed by
the Company for the purpose of rendering or issuing an audit report and to any
special legal counsel, accounting experts or other consultants employed by the
Committee.

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To further fulfill the purpose, powers and responsibilities set forth
above, the Committee shall also:

A. Independent Auditors

o Annually select and engage the Company's independent auditors
retained to audit the financial statements of the Company with
such selection to be submitted to the stockholders for
ratification, if the Board of Directors so chooses.

o Review the performance of the independent auditors and approve
any proposed discharge of the independent auditors when
circumstances warrant.

o Review and pre-approve the plan and scope of the independent
auditors' auditing services (including comfort letters),
non-audit services and related fees. The Company shall disclose
any non-audit services approved by the Audit Committee in the
Company's periodic reports filed with the SEC.

o Ensure that the lead audit partner and reviewing audit partner of
the Company's independent auditors are rotated at least every
five years.

o Set clear hiring policies for employees or former employees of
the Company's independent auditors.

o Periodically obtain and review a report from the independent
auditors regarding all relationships between the independent
auditors and the Company that may affect the independent
auditors' objectivity and independence, and discuss the report
with the independent auditors. The Committee shall also recommend
any appropriate action to the Board in response to the written
report necessary to satisfy itself of the independence and
objectivity of the independent auditors.

o Periodically obtain and review reports from the independent
auditors that include (i) all alternative treatments of financial
information within generally accepted accounting principles
("GAAP") that have been discussed with management, their
ramifications and the preferences of the independent auditors,
and (ii) other material written communications between the
independent auditors and management.

o Review and approve the appointment, termination or replacement by
management of a Director of Internal Auditing or, at the
discretion of the Board, select and contract with outside
auditors to perform the function of an internal audit department.

o Direct the scope of the duties and activities of the Director of
Internal Auditing or any outside auditors serving as internal
auditors, who shall report directly to the Audit Committee.

B. Review

o Periodically obtain and review reports from the independent
auditors that include all critical accounting policies and
practices used.

o Review with management and the independent auditors the Company's
quarterly or annual financial information including matters
required to be reviewed under applicable legal, regulatory or
NYSE requirements prior to the filing of the Company's Quarterly
Report on Form 10-Q or Annual Report on Form 10-K, as the case
may be, or prior to the release of earnings.

o Discuss with financial management the Company's earnings
releases, including the use of "pro forma", "adjusted" or other

A-3

non-GAAP measures, as well as financial information and earnings
guidance, if any, provided to the public, analysts or rating
agencies.

o Review and discuss with management and the independent auditors
the disclosures made in management's discussion and analysis of
financial condition and results of operations in any of the
Company's reports on Form 10-Q or Form 10-K.

o Upon completion of any annual audit, meet separately with the
independent auditors and management and review the Company's
financial statements and related notes, the results of their
audit, any report or opinion rendered in connection therewith,
any significant difficulties encountered during the course of the
audit, including any restrictions on the scope of work or access
to required information, any significant disagreements with
management concerning accounting or disclosure matters and any
significant adjustment proposed by the independent auditors.

o Regularly review with the Company's independent auditors any
audit problems or difficulties and management's response.

o Review and consider with the independent auditors and management
the matters required to be discussed by Statement of Auditing
Standards No. 61. These discussions shall include consideration
of the quality of the Company's accounting principles as applied
in its financial reporting, including review of estimates,
reserves and accruals, review of judgmental areas, review of
audit adjustments whether or not recorded and such other
inquiries as may be appropriate.

o Based on the foregoing review, make recommendation to the Board
as to the inclusion of the Company's audited financial statements
in the Company's annual report on Form 10-K.

o Review any disclosures provided by the Chief Executive Officer or
the Chief Financial Officer to the Committee regarding
significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to
record, process, summarize, and report financial data.

o Review with management and the independent auditors any
significant transactions that are not a normal part of the
Company's operations and changes, if any, in the Company's
accounting principles or their application.

o At least annually, obtain and review a report by the independent
auditors describing the firm's internal quality-control
procedures; any material issues raised by the most recent
internal quality-control review, or peer review, of the firm, or
by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps
taken to deal with any such issues.

o Periodically meet and review with the Director o f Internal
Auditing the regular internal reports to management prepared by
the internal auditing department and the progress of activities
and any findings of major significance stemming from internal
audits.

C. Financial Reporting Processes

o Periodically discuss separately with management, the independent
auditors and the internal auditors the adequacy and integrity of
the Company's accounting policies and procedures and internal
accounting controls, the completeness and accuracy of the
Company's financial disclosure and the extent to which major

A-4

recommendations made by the independent auditors or the internal
auditors have been implemented or resolved.

o Consider and approve, if appropriate, major changes to the
Company's auditing and accounting principles and practices as
suggested by the independent auditors, management, or the
internal auditing department.

o Review with the independent auditors, the internal auditing
department and management the extent to which such changes have
been implemented. This review should be conducted at an
appropriate time subsequent to implementation of changes, as the
Committee determines.

D. Process Improvement

o Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent auditors and the
Director of Internal Auditing regarding any significant judgments
made in management's preparation of the financial statements and
the view of each as to appropriateness of such judgments.

o Conduct annual evaluation with the Board regarding the
performance of the Audit Committee.

o Discuss with management and the Director of Internal Accounting
policies with respect to risk assessment and risk management.

o Regularly apprise the Board, through minutes and special
presentations as necessary, of significant developments in the
course of performing these duties.

E. Ethical and Legal Compliance

o Establish procedures for the receipt, retention and treatment of
complaints received regarding accounting, internal accounting
controls, auditing matters and the confidential, anonymous
submissions by employees of concerns regarding questionable
accounting or auditing matters.

o Review any disclosures provided by the Chief Executive Officer or
the Chief Financial Officer to the Committee regarding (i)
significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to
record, process, summarize and report financial data; and (ii)
any fraud, including that which involves management or other
employees who have a significant role in the Company's internal
controls.

o Investigate at its discretion any matter brought to its attention
by, without limitation, reviewing the books, records and
facilities of the Company and interviewing Company officers or
employees.

o Review management's monitoring of the Company's compliance
programs and evaluate whether management has review systems in
place designed to ensure that the Company's financial statements,
reports and other financial information disseminated to
governmental organizations and the public satisfy applicable
legal, regulatory or NYSE requirements.

o Review with the Company's in-house or outside legal counsel any
legal matter that could have a significant effect on the
Company's financial statements, including the status of pending
litigation, taxation matters and other areas of oversight to the
legal and compliance area as may be appropriate.

A-5

o Review with management and the independent auditors the Company's
policies and procedures regarding compliance with its internal
policies as well as applicable laws and regulations, including
without limitation with respect to maintaining books, records and
accounts and a system of internal accounting controls in
accordance with Section 13(b)(2) of the Securities Exchange Act
of 1934.

F. General

o Perform any other activities consistent with this Charter, the
Company's Certificate of Incorporation and Bylaws, the rules of
the NYSE applicable to its listed companies, and governing law as
the Audit Committee or the Board deems necessary or appropriate.

VI Review of Committee Charter

At least annually, the Committee shall review and reassess the adequacy of
this Charter. The Committee shall report the results of the review to the Board
and, if necessary, make recommendations to the Board to amend this Charter.

VII Limitations

While the Committee has the responsibilities and powers set forth in this
Charter and management and the independent auditors for the Company are
accountable to the Committee, it is not the duty of the Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with GAAP. This is the
responsibility of management.

A-6

PIONEER NATURAL RESOURCES COMPANY

PROXY SOLICITED FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 20053, 2006

VOTE BY INTERNET * PHONE * MAIL

TO VOTE BY INTERNET
- -------------------
www.continentalstock.com
Have this proxy card in hand when you access the above website. At
"ContinentaLink" on the right side, select "Proxy Voting Log In." Follow the
instructions on the screen to vote your shares.

TO VOTE BY PHONE
- ----------------
Call toll-free (in the U.S.) 1-866-894-0537.
Have this proxy card in hand when you call and follow the instructions.

Your internet or telephonephone vote works in the same manner as if you marked, signed
and returned your proxy card by mail. Internet and telephonephone votes must be received
by 5:00 p.m., Eastern Time, on May 10, 2005.2, 2006.

If you vote via theby internet or by telephone,phone, please do not return the card below.

TO VOTE BY MAIL
- ---------------
Mark, sign and date the proxy card below, detach it and return in the
postage-paid envelope provided.

FOLD AND DETACH HERE AND READ THE REVERSE SIDE
-
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PROXY BY MAIL
Please mark your votes like this [ X ]

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS INDICATED, WILL BE VOTED "FOR" THE PROPOSALS. THIS PROXY IS
SOLICITED BY THE BOARD OF DIRECTORS. TO BE VALID, THIS PROXY MUST BE SIGNED.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2 AND 2.3.

ITEM 1 - ELECTION OF DIRECTORS [ ] FOR ALL [ ] WITHHELD FOR ALL
Nominees:
01 James R. BaroffioAndrew D. Lundquist 03 Scott D. SheffieldRobert A. Solberg
02 Edison C. Buchanan 04 Jim A. WatsonCharles E. Ramsey, Jr.

WITHHELD FOR: (List below each nominee for whom you do not wish to vote.)
- -------------------------------------------------------------------------

ITEM 2 - RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTSAUDITORS

[ ] FOR [ ] AGAINST [ ] ABSTAIN

ITEM 3 - ADOPTION OF THE 2006 LONG-TERM INCENTIVE PLAN

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IN THEIR DISCRETION, THE PROXIES MAY VOTE ON ANY OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.

IF YOU WISH TO VOTE BY INTERNET OR BY TELEPHONEPHONE PLEASE READ THE INSTRUCTIONS ABOVE.

Signature _____________________ Signature _______________________ Date ------------------- ------------------- --------________

Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation or partnership, sign in full corporate or
partnership name by duly authorized officer and give title.

Access to Pioneer shareholderstockholder account information and
other shareholderstockholder services are available on the Internet!internet!

Visit Continental Stock Transfer's website at
www.continentalstock.com
for their Internet ShareholderStockholder Service -
ContinentaLink

Through this service, shareholdersstockholders can change addresses, receive
electronic forms, view account transaction history and dividend
history.

To access this service, visit the website listed above. At
"ContinentaLink" on the right side of the home page, select
"Shareholder Log In." From there, you can either "View a Sample
Account" or you can sign-up (choose "First Time Visitor" then
"New Member Sign-Up"). Guidance is provided on the website.

FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

PIONEER NATURAL RESOURCES COMPANY

The undersigned hereby appoints Scott D. SheffieldRichard P. Dealy and Mark S. Berg, and each of
them, as attorneys in fact and proxies for the undersigned with full power of
substitution and revocation as to each of them, to represent the undersigned and
to vote all the shares of common stock of Pioneer Natural Resources Company that
the undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held on May 11, 2005,3, 2006, and any adjournment or postponement thereof, upon the
matters set forth on the reverse side.

(Continued, and to be marked, dated and signed, on the other side)

PIONEER NATURAL RESOURCES COMPANY

PROXY SOLICITED FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 20053, 2006

VOTE BY INTERNET * PHONE * MAIL

TO VOTE BY PHONE
- ----------------
Call toll-free (in the U.S.) 1-866-894-0537.
Have this proxy card in hand when you call and follow the instructions.

Your internet or telephonephone vote works in the same manner as if you marked, signed
and returned your proxy card by mail.

If you vote via theby internet or by telephone,phone, please do not return the card below.

TO VOTE BY MAIL
- ---------------
Mark, sign and date the proxy card below, detach it and return in the
postage-paid envelope provided.

FOLD AND DETACH HERE AND READ THE REVERSE SIDE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PROXY BY MAIL
Please mark your votes like this [ X ]

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS INDICATED, WILL BE VOTED IN ACCORDANCE WITH THE TERMS OF THE TRUST
AGREEMENT. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. TO BE VALID, THIS
PROXY MUST BE SIGNED.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2 AND 2.3.

WITHHELD FOR: (List below each nominee for whom you do not wish to vote.)
- -------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 2 - RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTSAUDITORS

[ ] FOR [ ] AGAINST [ ] ABSTAIN

ITEM 3 - ADOPTION OF THE 2006 LONG-TERM INCENTIVE PLAN

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IN THEIR DISCRETION, THE PROXIES MAY VOTE ON ANY OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.

IF YOU WISH TO VOTE BY INTERNET OR BY TELEPHONEPHONE PLEASE READ THE INSTRUCTIONS ABOVE.

Signature _____________________ Signature _______________________ Date ---------------------- ------------------ ------________

The Annual Meeting of Stockholders will be held on May 11, 2005.3, 2006.
Your voting instruction must be received by 5:00 p.m. Eastern
Time, on May 6, 2005April 28, 2006 to allow Vanguard to vote according to
your instruction.

FOLD AND DETACH HERE AND READ THE RESERVE SIDE
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PROXY

PIONEER NATURAL RESOURCES USA, INC. 401(k) PLAN

TO: THE VANGUARD FIDUCIARY TRUST COMPANY, TRUSTEE FOR THE EMPLOYER MATCHING
CONTRIBUTION (STOCK ACCOUNT) OF THE PIONEER NATURAL RESOURCES USA, INC. 401(k)
AND MATCHING PLAN

In connection with the proxy materials I received relating to the Annual Meeting
of Stockholders of Pioneer Natural Resources Company to be held on May 11, 2005,3, 2006,
I direct you to execute a proxy with respect to all shares of common stock of
Pioneer to which I have the right to give voting directions under the 401(k)
plan upon the matters set forth on the reverse side. I understand you will hold
these directions strictly confidential.

(Continued, and to be marked, dated and signed, on the other side)

- --------------------------------------------------------------------------------

APPENDIX A

PIONEER NATURAL RESOURCES COMPANY

2006 LONG TERM INCENTIVE PLAN

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TABLE OF CONTENTS

1. Purpose.................................................................1

2. Definitions.............................................................1

3. Administration..........................................................4
(a) Authority of the Committee.....................................4
(b) Manner of Exercise of Committee Authority......................5
(c) Limitation of Liability........................................5

4. Stock Subject to Plan...................................................5
(a) Overall Number of Shares Available for Delivery................5
(b) Application of Limitation to Grants of Awards..................5
(c) Availability of Shares Not Issued under Awards.................5
(d) Stock Offered..................................................6

5. Eligibility; Per Person Award Limitations...............................6

6. Specific Terms of Awards................................................6
(a) General........................................................6
(b) Options........................................................6
(c) Stock Appreciation Rights......................................7
(d) Restricted Stock...............................................8
(e) Restricted Stock Units.........................................8
(f) Bonus Stock and Awards in Lieu of Obligations..................9
(g) Dividend Equivalents...........................................9
(h) Other Stock-Based Awards.......................................9

7. Certain Provisions Applicable to Awards.................................9
(a) Termination of Employment......................................9
(b) Stand-Alone, Additional, Tandem, and Substitute Awards........10
(c) Term of Awards................................................10
(d) Form and Timing of Payment under Awards; Deferrals............10
(e) Exemptions from Section 16(b) Liability.......................10
(f) Non-Competition Agreement.....................................10

8. Performance and Annual Incentive Awards................................10
(a) Performance Conditions........................................10
(b) Performance Awards Granted to Designated Covered
Employees.....................................................11
(c) Annual Incentive Awards Granted to Designated
Covered Employees.............................................12
(d) Written Determinations........................................13
(e) Status of Section 8(b) and Section 8(c) Awards under
Section 162(m) of the Code....................................13

9. Recapitalization or Reorganization; Change in Control..................13
(a) Existence of Plans and Awards.................................13
(b) Subdivision or Consolidation of Shares........................13
(c) Corporate Recapitalization....................................14
(d) Additional Issuances..........................................14
(e) Change in Control.............................................19
(f) Change in Control Price.......................................20

10. General Provisions.....................................................16
(a) Transferability...............................................16
(b) Taxes.........................................................17

(c) Changes to this Plan and Awards...............................18
(d) Limitation on Rights Conferred under Plan.....................18
(e) Unfunded Status of Awards.....................................18
(f) Nonexclusivity of this Plan...................................18
(g) Severability..................................................18
(h) Governing Law.................................................19
(i) Conditions to Delivery of Stock...............................19

PIONEER NATURAL RESOURCES COMPANY

2006 Long-Term Incentive Plan

1. Purpose. The purpose of the Pioneer Natural Resources Company 2006
Long-Term Incentive Plan (the "Plan") is to provide a means through which
Pioneer Natural Resources Company, a Delaware corporation (the "Company"), and
its Subsidiaries may attract and retain able persons as employees, directors and
consultants of the Company and to provide a means whereby those persons upon
whom the responsibilities of the successful administration and management of the
Company rest, and whose present and potential contributions to the welfare of
the Company are of importance, can acquire and maintain stock ownership, or
awards the value of which is tied to the performance of the Company, thereby
strengthening their concern for the welfare of the Company and their desire to
remain in its devoted employ. A further purpose of this Plan is to provide such
employees and directors with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company. Accordingly, this Plan
primarily provides for the granting of Incentive Stock Options, options which do
not constitute Incentive Stock Options, Restricted Stock Awards, Restricted
Stock Units, Stock Appreciation Rights or any combination of the foregoing, as
is best suited to the circumstances of the particular individual as provided
herein.

2. Definitions. For purposes of this Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:

(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified year.

(b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock Award, Restricted Stock Unit, Dividend Equivalent, Other Stock-Based
Award, Performance Award or Annual Incentive Award, together with any other
right or interest granted to a Participant under this Plan.

(c) "Beneficiary" means one or more persons, trusts or other entities
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under this Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(a)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the persons,
trusts or other entities entitled by will or the laws of descent and
distribution to receive such benefits.

(d) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act and any successor to such Rule.

(e) "Board" means the Company's Board of Directors.

(f) "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in the state of Texas are authorized or
obligated by law or executive order to close.

(g) "Change in Control" means the occurrence of any of the following
events:

(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 40% or more of either (x) the then outstanding shares of Stock
of the Company (the "Outstanding Company Stock") or (y) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of Control: (A) any

acquisition directly from the Company, (B) any acquisition by the Company, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of paragraph (iii) below; or

(ii) A majority of the members of the Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members constituting the Board prior to the date of the
appointment or election; or

(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company or an acquisition of assets of another corporation (a "Business
Combination"), in each case, unless, following such Business Combination, (A)
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any employee benefit
plan (or related trust) of the Company or the corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 40% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership results solely from ownership of the Company that existed prior
to the Business Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

(iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.

(i) "Committee" means a committee of two or more directors designated
by the Board to administer this Plan; provided, however, that, unless otherwise
determined by the Board, the Committee shall consist solely of two or more
directors, each of whom shall be (i) a "nonemployee director" within the meaning
of Rule 16b-3 under the Exchange Act, and (ii) an "outside director" as defined
under section 162(m) of the Code, unless administration of this Plan by "outside
directors" is not then required in order to qualify for tax deductibility under
section 162(m) of the Code.

(j) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of this Plan.

(k) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g), to receive cash, Stock, other Awards or other property equal
in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.

(l) "Effective Date" means May 3, 2006.

(m) "Eligible Person" means all officers and employees of the Company
or of any Subsidiary, and other persons who provide services to the Company or
any of its Subsidiaries, including directors of the Company. An employee on
leave of absence may be considered as still in the employ of the Company or a
Subsidiary for purposes of eligibility for participation in this Plan.

-2-

(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.

(o) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.

(p) "Fair Market Value" means, for a particular day the value equal to
the closing price of a share of Stock on the most recent date on which shares of
Stock were publicly traded preceding the date with respect to which the Fair
Market Valuation determination is made. In the event shares of Stock are not
publicly traded at the time a determination of their value is required to be
made hereunder, the determination of their Fair Market Value shall be made by
the Committee in such manner it deems appropriate.

(q) "Incentive Stock Option" or "ISO" means any Option intended to be
and designated as an incentive stock option within the meaning of section 422 of
the Code or any successor provision thereto.

(r) "Incumbent Board" shall mean individuals who, as of the Effective
Date, constitute the Board and any other individual who becomes a director of
the Company after that date and whose election or appointment by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board.

(s) "Non-Surviving Event" means an event of Restructure as described
in either subsection (ii) or (iii) of Section 1(bb).

(t) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.

(u) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(i) hereof.

(v) "Participant" means a person who has been granted an Award under
this Plan which remains outstanding, including a person who is no longer an
Eligible Person.

(w) "Performance Unit" means a right, granted to a Participant under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.

(x) "Person" means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a limited liability company, a trust or other entity; a Person,
together with that Person's Affiliates and Associates (as those terms are
defined in Rule 12b-2 under the Exchange Act), and any Persons acting as a
partnership, limited partnership, joint venture, association, syndicate or other
group (whether or not formally organized), or otherwise acting jointly or in
concert or in a coordinated or consciously parallel manner (whether or not
pursuant to any express agreement), for the purpose of acquiring, holding,
voting or disposing of securities of the Company with such Person, shall be
deemed a single "Person."

(y) "Qualified Member" means a member of the Committee who is a
"nonemployee Director" within the meaning of Rule 16b-3(b)(3) and an "outside
director" within the meaning of Treasury Regulation 1.162-27 under section
162(m) of the Code.

(z) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.

(aa) "Restricted Stock Unit" means a right, granted to a Participant
under Section 6(e) hereof, to receive Stock, cash or a combination thereof at
the end of a specified deferral period.

(bb) "Restructure" means the occurrence of any one or more of the
following:

-3-

(i) The merger or consolidation of the Company with any Person,
whether effected as a single transaction or a series of related transactions,
with the Company remaining the continuing or surviving entity of that merger or
consolidation and the Stock remaining outstanding and not changed into or
exchanged for stock or other securities of any other Person or of the Company,
cash, or other property;

(ii) The merger or consolidation of the Company with any Person,
whether effected as a single transaction or a series of related transactions,
with (A) the Company not being the continuing or surviving entity of that merger
or consolidation or (B) the Company remaining the continuing or surviving entity
of that merger or consolidation but all or a part of the outstanding shares of
Stock are changed into or exchanged for stock or other securities of any other
Person or the Company, cash, or other property; or

(iii) The transfer, directly or indirectly, of all or substantially
all of the assets of the Company (whether by sale, merger, consolidation,
liquidation or otherwise) to any Person whether effected as a single transaction
or a series of related transactions.

(cc) "Rule 16b-3" means Rule 16b-3, promulgated by the Securities and
Exchange Commission under section 16 of the Exchange Act, as from time to time
in effect and applicable to this Plan and Participants.

(dd) "Securities Act" means the Securities Act of 1933 and the rules
and regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.

(ee) "Stock" means the Company's Common Stock, par value $.01 per
share, and such other securities as may be substituted (or resubstituted) for
Stock pursuant to Section 9.

(ff) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.

(gg) "Subsidiary" means with respect to any Person, any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by that Person.

3. Administration.

(a) Authority of the Committee. This Plan shall be administered by the
Committee except to the extent the Board elects to administer this Plan, in
which case references herein to the "Committee" shall be deemed to include
references to the "Board." Subject to the express provisions of the Plan and
Rule 16b-3, the Committee shall have the authority, in its sole and absolute
discretion, to (i) adopt, amend, and rescind administrative and interpretive
rules and regulations relating to the Plan; (ii) determine the Eligible Persons
to whom, and the time or times at which, Awards shall be granted; (iii)
determine the amount of cash and the number of shares of Stock, Stock
Appreciation Rights, Restricted Stock Units or Restricted Stock Awards, or any
combination thereof, that shall be the subject of each Award; (iv) determine the
terms and provisions of each Award agreement (which need not be identical),
including provisions defining or otherwise relating to (A) the term and the
period or periods and extent of exercisability of the Options, (B) the extent to
which the transferability of shares of Stock issued or transferred pursuant to
any Award is restricted, (C) except as otherwise provided herein, the effect of
termination of employment of a Participant on the Award, and (D) the effect of
approved leaves of absence (consistent with any applicable regulations of the
Internal Revenue Service); (v) accelerate the time of exercisability of any
Award that has been granted; (vi) construe the respective Award agreements and
the Plan; (vii) make determinations of the Fair Market Value of the Stock
pursuant to the Plan; (viii) delegate its duties under the Plan to such agents
as it may appoint from time to time, provided that the Committee may not
delegate its duties with respect to making Awards to, or otherwise with respect
to Awards granted to, Eligible Persons who are subject to section 16(b) of the
Exchange Act or section 162(m) of the Code; (ix) terminate, modify or amend the
Plan; and (x) make all other determinations, perform all other acts, and
exercise all other powers and authority necessary or advisable for administering
the Plan, including the delegation of those ministerial acts and
responsibilities as the Committee deems appropriate. Subject to Rule 16b-3 and
section 162(m) of the Code, the Committee may correct any defect, supply any

-4-

omission, or reconcile any inconsistency in the Plan, in any Award, or in any
Award agreement in the manner and to the extent it deems necessary or desirable
to carry the Plan into effect, and the Committee shall be the sole and final
judge of that necessity or desirability. The determinations of the Committee on
the matters referred to in this Section 3(a) shall be final and conclusive.

(b) Manner of Exercise of Committee Authority. At any time that a
member of the Committee is not a Qualified Member, any action of the Committee
relating to an Award granted or to be granted to a Participant who is then
subject to section 16 of the Exchange Act in respect of the Company, or relating
to an Award intended by the Committee to qualify as "performance-based
compensation" within the meaning of section 162(m) of the Code and regulations
thereunder, may be taken either (i) by a subcommittee, designated by the
Committee, composed solely of two or more Qualified Members, or (ii) by the
Committee but with each such member who is not a Qualified Member abstaining or
recusing himself or herself from such action; provided, however, that, upon such
abstention or recusal, the Committee remains composed solely of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such non-Qualified Member(s), shall
be the action of the Committee for purposes of this Plan. Any action of the
Committee shall be final, conclusive and binding on all persons, including the
Company, its Subsidiaries, stockholders, Participants, Beneficiaries, and
transferees under Section 10(a) hereof or other persons claiming rights from or
through a Participant. The express grant of any specific power to the Committee,
and the taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee. The Committee may delegate to
officers or managers of the Company or any Subsidiary, or committees thereof,
the authority, subject to such terms as the Committee shall determine, to
perform such functions, including administrative functions, as the Committee may
determine, to the extent that such delegation will not result in the loss of an
exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to
section 16 of the Exchange Act in respect of the Company and will not cause
Awards intended to qualify as "performance-based compensation" under section
162(m) of the Code to fail to so qualify. The Committee may appoint agents to
assist it in administering this Plan.

(c) Limitation of Liability. The Committee and each member thereof
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any officer or employee of the Company or
a Subsidiary, the Company's legal counsel, independent auditors, consultants or
any other agents assisting in the administration of this Plan. Members of the
Committee and any officer or employee of the Company or a Subsidiary acting at
the direction or on behalf of the Committee shall not be personally liable for
any action or determination taken or made in good faith with respect to this
Plan, and shall, to the fullest extent permitted by law, be indemnified and held
harmless by the Company with respect to any such action or determination.

4. Stock Subject to Plan.

(a) Overall Number of Shares Available for Delivery. Subject to
adjustment in a manner consistent with any adjustment made pursuant to Section
9, the total number of shares of Stock reserved and available for delivery in
connection with Awards under this Plan shall not exceed 4,600,000 shares and the
total number of shares of Stock received and available for delivery in
connection with ISOs under this Plan shall not exceed 4,600,000 shares. No Award
may be granted under the Plan on or after the 10 year anniversary of the
Effective Date.

(b) Application of Limitation to Grants of Awards. No Award may be
granted if the number of shares of Stock to be delivered in connection with such
Award exceeds the number of shares of Stock remaining available under this Plan
minus the number of shares of Stock issuable in settlement of or relating to
then-outstanding Awards. The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments if the number of
shares of Stock actually delivered differs from the number of shares previously
counted in connection with an Award.

(c) Availability of Shares Not Issued under Awards. Shares of Stock
subject to an Award under this Plan that expire or are canceled, forfeited,
settled in cash or otherwise terminated without an issuance of shares to the
Participant, including (i) the number of shares withheld in payment of any

-5-

exercise or purchase price of an Award or taxes relating to Awards, and (ii) the
number of shares surrendered in payment of any exercise or purchase price of an
Award or taxes relating to any Award, will again be available for Awards under
this Plan, except that if any such shares could not again be available for
Awards to a particular Participant under any applicable law or regulation, such
shares shall be available exclusively for Awards to Participants who are not
subject to such limitation.

(d) Stock Offered. The shares to be delivered under the Plan shall be
made available from (i) authorized but unissued shares of Stock, (ii) Stock held
in the treasury of the Company, or (iii) previously issued shares of Stock
reacquired by the Company, including shares purchased on the open market.

5. Eligibility; Per Person Award Limitations. Awards may be granted under
this Plan only to Persons who are Eligible Persons at the time of grant thereof
or in connection with the severance or retirement of Eligible Individuals. In
each fiscal year or 12-month period, as applicable, during any part of which
this Plan is in effect, a Covered Employee may not be granted (a) Awards (other
than Awards designated to be paid only in cash) relating to more than 250,000
shares of Stock, subject to adjustment in a manner consistent with any
adjustment made pursuant to Section 9 and (b) Awards designated to be paid only
in cash having a value determined on the date of grant in excess of $4,000,000.

6. Specific Terms of Awards.

(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
10(c)), such additional terms and conditions, not inconsistent with the
provisions of this Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the
Participant and terms permitting a Participant to make elections relating to his
or her Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under this Plan; provided, however, that the Committee shall
not have any discretion to accelerate, waive or modify any term or condition of
an Award that is intended to qualify as "performance-based compensation" for
purposes of section 162(m) of the Code if such discretion would cause the Award
to not so qualify.

(b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:

(i) Exercise Price. Each Option agreement shall state the exercise
price per share of Stock (the "Exercise Price"); provided, however, that the
Exercise Price per share of Stock subject to an ISO shall not be less than the
greater of (A) the par value per share of the Stock or (B) 100% of the Fair
Market Value per share of the Stock as of the date of grant of the Option (or in
the case of an individual who owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Corporation or its
parent or any Subsidiary 110% of the Fair Market Value per share of the Stock on
the date of grant). The exercise price per share of Stock subject to an Option
other than an Incentive Stock Option shall not be less than the greater of (1)
the par value per share of the Stock and (2) 100% of the Fair Market Value per
share of the stock as of the date of grant of the Option.

(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of performance
goals and/or future service requirements), the methods by which such exercise
price may be paid or deemed to be paid, the form of such payment, including
without limitation cash, Stock, other Awards or awards granted under other plans
of the Company or any Subsidiary, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered to Participants, including, but not limited to, the delivery of
Restricted Stock subject to Section 6(d). In the case of an exercise whereby the
Exercise Price is paid with Stock, such Stock shall be valued as of the date of
exercise.

-6-

(iii) ISOs. The terms of any ISO granted under this Plan shall
comply in all respects with the provisions of section 422 of the Code. Anything
in this Plan to the contrary notwithstanding, no term of this Plan relating to
ISOs (including any SAR in tandem therewith) shall be interpreted, amended or
altered, nor shall any discretion or authority granted under this Plan be
exercised, so as to disqualify either this Plan or any ISO under section 422 of
the Code, unless the Participant has first requested the change that will result
in such disqualification. ISOs shall not be granted more than ten years after
the earlier of the adoption of this Plan or the approval of this Plan by the
Company's stockholders. Notwithstanding the foregoing, the Fair Market Value of
shares of Stock subject to an ISO and the aggregate Fair Market Value of shares
of stock of any parent or Subsidiary corporation (within the meaning of sections
424(e) and (f) of the Code) subject to any other incentive stock option (within
the meaning of section 422 of the Code)) of the Company or a parent or
Subsidiary corporation (within the meaning of sections 424(e) and (f) of the
Code) that first becomes purchasable by a Participant in any calendar year may
not (with respect to that Participant) exceed $100,000, or such other amount as
may be prescribed under section 422 of the Code or applicable regulations or
rulings from time to time. As used in the previous sentence, Fair Market Value
shall be determined as of the date the incentive stock options is granted.
Failure to comply with this provision shall not impair the enforceability or
exercisability of any Option, but shall cause the excess amount of shares to be
reclassified in accordance with the Code.

(c) Stock Appreciation Rights. The Committee is authorized to grant
SARs to Participants on the following terms and conditions:

(i) Right to Payment. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess of (A)
the Fair Market Value of one share of Stock on the date of exercise over (B) the
grant price of the SAR as determined by the Committee.

(ii) Rights Related to Options. A Stock Appreciation Right granted
pursuant to an Option shall entitle a Participant, upon exercise, to surrender
that Option or any portion thereof, to the extent unexercised, and to receive
payment of an amount computed pursuant to Subsection 6(c)(ii)(B). That Option
shall then cease to be exercisable to the extent surrendered. Stock Appreciation
Rights granted in connection with an Option shall be subject to the terms of the
Award agreement governing the Option, which shall comply with the following
provisions in addition to those applicable to Options:

(A) A Stock Appreciation Right granted in connection with an
Option shall be exercisable only at such time or times and only to the
extent that the related Option is exercisable and shall not be
transferable except to the extent that the related Option is
transferable.

(B) Upon the exercise of a Stock Appreciation Right related to
an Option, a Participant shall be entitled to receive payment from the
Company of an amount determined by multiplying:

(1) the difference obtained by subtracting the exercise
price of a share of Stock specified in the related Option from the
Fair Market Value of a share of Stock on the date of exercise of
the Stock Appreciation Right, by

(2) the number of shares as to which that Stock
Appreciation Right has been exercised.

(iii) Right Without Option. A Stock Appreciation Right granted
independent of an Option shall be exercisable as determined by the Committee and
set forth in the Award agreement governing the Stock Appreciation Right, which
Award agreement shall comply with the following provisions:

(A) Each Award agreement shall state the total number of
shares of Stock to which the Stock Appreciation Right relates.

-7-

(B) Each Award agreement shall state the time or periods in
which the right to exercise the Stock Appreciation Right or a portion
thereof shall vest and the number of shares of Stock for which the
right to exercise the Stock Appreciation Right shall vest at each such
time or period.

(C) Each Award agreement shall state the date at which the
Stock Appreciation Rights shall expire if not previously exercised.

(D) Each Stock Appreciation Right shall entitle a participant,
upon exercise thereof, to receive payment of an amount determined by
multiplying:

(1) the difference obtained by subtracting the Fair Market
Value of a share of Stock on the date of grant of the Stock
Appreciation Right from the Fair Market Value of a share of Stock
on the date of exercise of that Stock Appreciation Right, by

(2) the number of shares as to which the Stock
Appreciation Right has been exercised.

(iv) Terms. Except as otherwise provided herein, the Committee
shall determine at the date of grant or thereafter, the time or times at which
and the circumstances under which an SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Stock will be
delivered or deemed to be delivered to Participants, whether or not an SAR shall
be in tandem or in combination with any other Award, and any other terms and
conditions of any SAR. SARs may be either freestanding or in tandem with other
Awards.

(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:

(i) Grant and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Committee may impose, which restrictions may lapse separately or
in combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant
or thereafter. During the restricted period applicable to the Restricted Stock,
the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.

(ii) Certificates for Stock. Restricted Stock granted under this
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, and that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.

(iii) Dividends and Splits. As a condition to the grant of an Award
of Restricted Stock, the Committee may require or permit a Participant to elect
that any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the purchase
of additional Awards under this Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split or Stock dividend,
and other property distributed as a dividend, shall be subject to restrictions
and a risk of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed.

(e) Restricted Stock Units. The Committee is authorized to grant
Restricted Stock Units to Participants, which are rights to receive Stock at the
end of a specified deferral period, subject to the following terms and
conditions:

-8-

(i) Award and Restrictions. Settlement of an Award of Restricted
Stock Units shall occur upon expiration of the deferral period specified for
such Restricted Stock Unit by the Committee (or, if permitted by the Committee,
as elected by the Participant). In addition, Restricted Stock Units shall be
subject to such restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including based on
achievement of performance goals and/or future service requirements), separately
or in combination, in installments or otherwise, as the Committee may determine.
Restricted Stock Units shall be satisfied by the delivery of cash or Stock in
the amount equal to the Fair Market Value of the specified number of shares of
Stock covered by the Restricted Stock Units, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.

(ii) Dividend Equivalents. Unless otherwise determined by the
Committee at date of grant, Dividend Equivalents on the specified number of
shares of Stock covered by an Award of Restricted Stock Units shall be either
(A) paid with respect to such Restricted Stock Units on the dividend payment
date in cash or in shares of unrestricted Stock having a Fair Market Value equal
to the amount of such dividends, or (B) deferred with respect to such Restricted
Stock Units and the amount or value thereof automatically deemed reinvested in
additional Restricted Stock Units, other Awards or other investment vehicles, as
the Committee shall determine or permit the Participant to elect.

(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of obligations to pay cash or deliver other property under this Plan or under
other plans or compensatory arrangements, provided that, in the case of
Participants subject to section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Stock or other Awards are exempt from liability
under section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall
be subject to such other terms as shall be determined by the Committee. In the
case of any grant of Stock to an officer of the Company or a Subsidiary in lieu
of salary or other cash compensation, the number of shares granted in place of
such compensation shall be reasonable, as determined by the Committee.

(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.

(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of this Plan, including without limitation
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
Subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
this Plan, may also be granted pursuant to this Section 6(h).

7. Certain Provisions Applicable to Awards.

(a) Termination of Employment. Except as provided herein, the treatment
of an Award upon a termination of employment or any other service relationship
by and between a Participant and any Company or Subsidiary shall be specified in
the agreement controlling such Award.

-9-

(b) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under this Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
Subsidiary, or any business entity to be acquired by the Company or a
Subsidiary, or any other right of a Participant to receive payment from the
Company or any Subsidiary. Such additional, tandem and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award, the Committee shall require the surrender of such
other Award in consideration for the grant of the new Award. In addition, Awards
may be granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any Subsidiary, in which the value
of Stock subject to the Award is equivalent in value to the cash compensation
(for example, Restricted Stock Units or Restricted Stock), or in which the
exercise price, grant price or purchase price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of the underlying
Stock minus the value of the cash compensation surrendered (for example, Options
granted with an exercise price "discounted" by the amount of the cash
compensation surrendered).

(c) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided that in no event shall the term of
any Option or SAR exceed a period of ten years (or such shorter term as may be
required in respect of an ISO under section 422 of the Code).

(d) Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of this Plan and any applicable Award agreement, payments to be made by
the Company or a Subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including without limitation cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. Except as otherwise provided herein, the settlement of any
Award may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more
specified events (in addition to a Change in Control). Installment or deferred
payments may be required by the Committee (subject to Section 10(c) of this
Plan, including the consent provisions thereof in the case of any deferral of an
outstanding Award not provided for in the original Award agreement) or permitted
at the election of the Participant on terms and conditions established by the
Committee. Payments may include, without limitation, provisions for the payment
or crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock. Any deferral shall only
be allowed as is provided in a separate deferred compensation plan adopted by
the Company. This Plan shall not constitute an "employee benefit plan" for
purposes of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended.

(e) Exemptions from Section 16(b) Liability. It is the intent of the
Company that the grant of any Awards to or other transaction by a Participant
who is subject to section 16 of the Exchange Act shall be exempt from such
section pursuant to an applicable exemption (except for transactions
acknowledged in writing to be non-exempt by such Participant). Accordingly, if
any provision of this Plan or any Award agreement does not comply with the
requirements of Rule 16b-3 as then applicable to any such transaction, such
provision shall be construed or deemed amended to the extent necessary to
conform to the applicable requirements of Rule 16b-3 so that such Participant
shall avoid liability under section 16(b) of the Exchange Act.

(f) Non-Competition Agreement. Each Participant to whom an Award is
granted under this Plan may be required to agree in writing as a condition to
the granting of such Award not to engage in conduct in competition with the
Company or any of its Subsidiaries for a period after the termination of such
Participant's employment with the Company and its Subsidiaries as determined by
the Committee.

8. Performance and Annual Incentive Awards.

(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may

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exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Sections 8(b)
and 8(c) hereof in the case of a Performance Award or Annual Incentive Award
intended to qualify under section 162(m) of the Code.

(b) Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as "performance-based compensation" for purposes of section
162(m) of the Code, the grant, exercise and/or settlement of such Performance
Award may be contingent upon achievement of preestablished performance goals and
other terms set forth in this Section 8(b).

(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria or individual
performance criteria and a targeted level or levels of performance with respect
to each of such criteria, as specified by the Committee consistent with this
Section 8(b). Performance goals shall be objective and shall otherwise meet the
requirements of section 162(m) of the Code and regulations thereunder (including
Treasury Regulation ss.1.162-27 and successor regulations thereto), including
the requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being "substantially
uncertain." The Committee may determine that such Performance Awards shall be
granted, exercised, and/or settled upon achievement of any one performance goal
or that two or more of the performance goals must be achieved as a condition to
grant, exercise and/or settlement of such Performance Awards. Performance goals
may differ for Performance Awards granted to any one Participant or to different
Participants.

(ii) Business and Individual Performance Criteria

(A) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
Subsidiaries or business or geographical units of the Company (except with
respect to the total stockholder return and earnings per share criteria), shall
be used by the Committee in establishing performance goals for such Performance
Awards: (1) earnings per share; (2) increase in revenues; (3) increase in cash
flow; (4) increase in cash flow return; (5) return on net assets; (6) return on
assets, return on investment; (7) return on capital; (8) return on equity; (9)
economic value added; (10) operating margin; (11) contribution margin; (12) net
income; (13) pretax earnings; (14) pretax earnings before interest,
depreciation, amortization, exploration and abandonment costs; (15) pretax
operating earnings after interest expense and before incentives, service fees,
and extraordinary or special items; or operating income; (16) total stockholder
return; (17) debt reduction; (18) production growth; (19) general and
administrative expenses; (20) reserve replacement; (21) finding and development
costs; (22) net asset value; (23) operating costs, and (24) any of the above
goals determined on an absolute or relative basis or as compared to the
performance of a published or special index deemed applicable by the Committee
including, but not limited to, the Standard & Poor's 500 Stock Index or a group
of comparable companies. One or more of the foregoing business criteria shall
also be exclusively used in establishing performance goals for Annual Incentive
Awards granted to a Covered Employee under Section 8(c) hereof.

(B) Individual Performance Criteria. The grant, exercise
and/or settlement of Performance Awards may also be contingent upon individual
performance goals established by the Committee. If required for compliance with
section 162(m) of the Code, such criteria shall be approved by the stockholders
of the Company.

(iii) Performance Period; Timing for Establishing Performance
Goals. Achievement of performance goals in respect of such Performance Awards
shall be measured over a performance period of up to ten years, as specified by
the Committee. Performance goals shall be established not later than 90 days
after the beginning of any performance period applicable to such Performance
Awards, or at such other date as may be required or permitted for
"performance-based compensation" under section 162(m) of the Code.

(iv) Performance Award Pool. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for purposes of
measuring performance of the Company in connection with Performance Awards. The

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amount of such Performance Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the criteria set forth in
Section 8(b)(ii) hereof during the given performance period, as specified by the
Committee in accordance with Section 8(b)(iii) hereof. The Committee may specify
the amount of the Performance Award pool as a percentage of any of such
criteria, a percentage thereof in excess of a threshold amount, or as another
amount which need not bear a strictly mathematical relationship to such
criteria.

(v) Settlement of Performance Awards; Other Terms. After the end of
each performance period, the Committee shall determine the amount, if any, of
(A) the Performance Award pool, and the maximum amount of potential Performance
Award payable to each Participant in the Performance Award pool, or (B) the
amount of potential Performance Award otherwise payable to each Participant.
Settlement of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to increase any
such amount payable to a Covered Employee in respect of a Performance Award
subject to this Section 8(b). The Committee shall specify the circumstances in
which such Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a performance
period or settlement of Performance Awards.

(c) Annual Incentive Awards Granted to Designated Covered Employees. If
the Committee determines that an Annual Incentive Award to be granted to an
Eligible Person who is designated by the Committee as likely to be a Covered
Employee should qualify as "performance-based compensation" for purposes of
section 162(m) of the Code, the grant, exercise and/or settlement of such Annual
Incentive Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(c).

(i) Annual Incentive Award Pool. The Committee may establish an
Annual Incentive Award pool, which shall be an unfunded pool, for purposes of
measuring performance of the Company in connection with Annual Incentive Awards.
The amount of such Annual Incentive Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the business
criteria set forth in Section 8(b)(ii) hereof during the given performance
period, as specified by the Committee in accordance with Section 8(b)(iii)
hereof. The Committee may specify the amount of the Annual Incentive Award pool
as a percentage of any of such business criteria, a percentage thereof in excess
of a threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.

(ii) Potential Annual Incentive Awards. Not later than the end of
the 90th day of each applicable year, or at such other date as may be required
or permitted in the case of Awards intended to be "performance-based
compensation" under section 162(m) of the Code, the Committee shall determine
the Eligible Persons who will potentially receive Annual Incentive Awards, and
the amounts potentially payable thereunder, for that fiscal year, either out of
an Annual Incentive Award pool established by such date under Section 8(c)(i)
hereof or as individual Annual Incentive Awards. In the case of individual
Annual Incentive Awards intended to qualify under section 162(m) of the Code,
the amount potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria set
forth in Section 8(b)(ii) hereof in the given performance year, as specified by
the Committee; in situations not governed by section 162(m) of the Code, such
amount shall be based on such criteria as shall be established by the Committee.
In all cases, the maximum Annual Incentive Award of any Participant shall be
subject to the limitation set forth in Section 5 hereof.

(iii) Payout of Annual Incentive Awards. After the end of each
applicable year, the Committee shall determine the amount, if any, of (A) the
Annual Incentive Award pool, and the maximum amount of potential Annual
Incentive Award payable to each Participant in the Annual Incentive Award pool,
or (B) the amount of potential Annual Incentive Award otherwise payable to each
Participant. The Committee may, in its discretion, determine that the amount
payable to any Participant as a final Annual Incentive Award shall be increased
or reduced from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever, but may not

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exercise discretion to increase any such amount in the case of an Annual
Incentive Award intended to qualify under section 162(m) of the Code. The
Committee shall specify the circumstances in which an Annual Incentive Award
shall be paid or forfeited in the event of termination of employment by the
Participant prior to the end of the applicable year or settlement of such Annual
Incentive Award.

(d) Written Determinations. All determinations by the Committee as to
the establishment of performance goals, the amount of any Performance Award pool
or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(c), shall be made in writing in the case of any Award intended to qualify
under section 162(m) of the Code. The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards.

(e) Status of Section 8(b) and Section 8(c) Awards under Section 162(m)
of the Code. It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Sections 8(b) and 8(c) hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of section 162(m) of the Code and regulations thereunder (including Treasury
Regulation ss.1.162-27 and successor regulations thereto) shall, if so
designated by the Committee, constitute "performance-based compensation" within
the meaning of section 162(m) of the Code and regulations thereunder.
Accordingly, the terms of Sections 8(b), (c), (d) and (e), including the
definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with section 162(m) of the Code and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive
Award, who is likely to be a Covered Employee with respect to that fiscal year.
If any provision of this Plan as in effect on the date of adoption or any
agreements relating to Performance Awards or Annual Incentive Awards that are
designated as intended to comply with section 162(m) of the Code does not comply
or is inconsistent with the requirements of section 162(m) of the Code or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

9. Recapitalization or Reorganization; Change in Control.

(a) Existence of Plans and Awards. The existence of this Plan and the
Awards granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities ahead of or affecting Stock or the rights thereof,
the dissolution or liquidation of the Company or any sale, lease, exchange or
other disposition of all or any part of its assets or business or any other
corporate act or proceeding.

(b) Subdivision or Consolidation of Shares. The terms of an Award and
the number of shares of Stock authorized pursuant to Section 4 for issuance
under the Plan shall be subject to adjustment from time to time, in accordance
with the following provisions:

(i) If at any time, or from time to time, the Company shall
subdivide as a whole (by reclassification, by a Stock split, by the issuance of
a distribution on Stock payable in Stock, or otherwise) the number of shares of
Stock then outstanding into a greater number of shares of Stock, then (A) the
maximum number of shares of Stock available for the Plan as provided in Section
4 shall be increased proportionately, and the kind of shares or other securities
available for the Plan shall be appropriately adjusted, (B) the number of shares
of Stock (or other kind of shares or securities) that may be acquired under any
Award shall be increased proportionately, and (C) the price (including the
exercise price) for each share of Stock (or other kind of shares or securities)
subject to then outstanding Awards shall be reduced proportionately, without
changing the aggregate purchase price or value as to which outstanding Awards
remain exercisable or subject to restrictions.

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(ii) If at any time, or from time to time, the Company shall
consolidate as a whole (by reclassification, reverse Stock split, or otherwise)
the number of shares of Stock then outstanding into a lesser number of shares of
Stock, (A) the maximum number of shares of Stock available for the Plan as
provided in Section 4 shall be decreased proportionately, and the kind of shares
or other securities available for the Plan shall be appropriately adjusted, (B)
the number of shares of Stock (or other kind of shares or securities) that may
be acquired under any Award shall be decreased proportionately, and (C) the
price (including the exercise price) for each share of Stock (or other kind of
shares or securities) subject to then outstanding Awards shall be increased
proportionately, without changing the aggregate purchase price or value as to
which outstanding Awards remain exercisable or subject to restrictions.

(iii) Whenever the number of shares of Stock subject to outstanding
Awards and the price for each share of Stock subject to outstanding Awards are
required to be adjusted as provided in this Section 9(b), the Committee shall
promptly prepare a notice setting forth, in reasonable detail, the event
requiring adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the change in price and the number of shares of
Stock, other securities, cash, or property purchasable subject to each Award
after giving effect to the adjustments. The Committee shall promptly give each
Participant such a notice.

(iv) Adjustments under Subsections 9(b)(i) and (ii) shall be made
by the Committee, and its determination as to what adjustments shall be made and
the extent thereof shall be final, binding, and conclusive. No fractional
interest shall be issued under the Plan on account of any such adjustments.

(i) If the Company recapitalizes, reclassifies its capital stock,
or otherwise changes its capital structure (a "recapitalization"), the number
and class of shares of Stock covered by an Option or an SAR theretofore granted
shall be adjusted so that such Option or SAR shall thereafter cover the number
and class of shares of stock and securities to which the holder would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to
the recapitalization, the holder had been the holder of record of the number of
shares of Stock then covered by such Option or SAR and the share limitations
provided in Sections 4 and 5 shall be adjusted in a manner consistent with the
recapitalization.

(ii) In the event of changes in the outstanding Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Section 9, any
outstanding Awards and any agreements evidencing such Awards shall be subject to
adjustment by the Committee at its discretion as to the number and price of
shares of Stock or other consideration subject to such Awards. In the event of
any such change in the outstanding Stock, the aggregate number of shares
available under this Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.

(d) Additional Issuances. Except as hereinbefore expressly provided,
the issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock subject to Awards theretofore granted
or the purchase price per share, if applicable.

(e) Change in Control. Upon the occurrence of a Change in Control, with
respect only to Awards held by Participants who are employees or directors of
the Company (and their permitted transferees pursuant to Section 10(a)) at the
occurrence of the Change in Control, (i) all outstanding Stock Appreciation
Rights and Options shall immediately become fully vested and exercisable in
full, including that portion of any Stock Appreciation Right or Option that
pursuant to the terms and provisions of the applicable Award Agreement had not
yet become exercisable (the total number of shares of Stock as to which a Stock

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Appreciation Right or Option is exercisable upon the occurrence of a Change in
Control is referred to herein as the "Total Shares"); (ii) the restriction
period of any Restricted Stock Award and Restricted Stock Unit shall immediately
be accelerated and the restrictions shall expire; and (iii) the performance
goals established under the Performance Awards will be deemed to have been met
for all performance periods upon the occurrence of a Change in Control and the
holder will be paid a pro rata portion of all associated targeted performance
goals (based on the number of complete and partial calendar months elapsed as of
the occurrence of the Change in Control) in cash within thirty days following
the Change in Control or in Stock effective as of the Change in Control, for
cash and stock-based Performance Awards respectively. If a Change in Control
involves a Restructure or occurs in connection with a series of related
transactions involving a Restructure and if such Restructure is in the form of a
Non-Surviving Event and as a part of such Restructure shares of stock, other
securities, cash or property shall be issuable or deliverable in exchange for
Stock, then the holder of an Award shall be entitled to purchase or receive (in
lieu of the Total Shares that the holder would otherwise be entitled to purchase
or receive), as appropriate for the form of Award, the number of shares of
stock, other securities, cash or property to which that number of Total Shares
would have been entitled in connection with such Restructure (and, for Options,
at an aggregate exercise price equal to the Exercise Price that would have been
payable if that number of Total Shares had been purchased on the exercise of the
Option immediately before the consummation of the Restructure).

(f) Restructure and No Change in Control. In the event a Restructure
should occur at any time while there is any outstanding Option, SAR, Restricted
Stock Award or Restricted Stock Unit hereunder and that Restructure does not
occur in connection with a Change in Control or in connection with a series of
related transactions involving a Change in Control, then:

(i) no holder of an Option shall automatically be granted
corresponding SARs;

(ii) neither any outstanding SARs nor any outstanding Options shall
immediately become fully vested and exercisable in full merely because of the
occurrence of the Restructure;

(iii) the restriction period of any Restricted Stock Award or
Restricted Stock Unit shall not immediately be accelerated and the restrictions
shall not expire merely because of the occurrence of the Restructure; and

(iv) at the option of the Committee, the Company may (but shall not
be required to) take any one or more of the following actions:

(A) grant each holder of an Option corresponding Stock or cash
SARs;

(B) accelerate in whole or in part the time of the vesting and
exercisability of any one or more of the outstanding SARs and Options
so as to provide that those SARs and Options shall be exercisable
before, upon, or after the consummation of the Restructure;

(C) accelerate in whole or in part the expiration of some or
all of the restrictions on any Restricted Stock Award or Restricted
Stock Unit so that the Stock subject to that Restricted Stock Award or
Restricted Stock Unit shall be owned by the holder without restriction
or risk of forfeiture;

(D) the performance goals established under the Performance
Awards will not be deemed to have been fully met for all performance
periods merely because of the occurrence of the Restructure;

(E) if the Restructure is in the form of a Non-Surviving
Event, cause the surviving entity to assume in whole or in part any one
or more of the outstanding Options, SARs, Restricted Stock Awards and
Restricted Stock Units upon such terms and provisions as the Committee
deems desirable; or

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(F) redeem in whole or in part any one or more of the
outstanding Options, SARs, Restricted Stock Awards and Restricted Stock
Units (whether or not then exercisable) in consideration of a cash
payment, as such payment may be reduced for tax withholding obligations
as contemplated in the section governing the particular form of Award,
in an amount equal to:

(1) for Options and SARs granted in connection with
Options, the excess of a) the Fair Market Value, determined as of
the date immediately preceding the consummation of the
Restructure, of the aggregate number of shares of Stock subject to
the Award and as to which the Award is being redeemed over b) the
Exercise Price for that number of shares of Stock;

(2) for SARs not granted in connection with an Option, the
excess of (a) the Fair Market Value, determined as of the date
immediately preceding the consummation of the Restructure, of the
aggregate number of shares of Stock subject to the Award and as to
which the Award is being redeemed over (b) the Fair Market Value
of the number of shares of Stock on the date of grant;

(3) for Restricted Stock Awards and Restricted Stock
Units, the Fair Market Value, determined as of the date
immediately preceding the consummation of the Restructure, of the
aggregate number of shares of Stock subject to the Award and as to
which the Award is being redeemed; and

(4) for Performance Awards, the amount per Performance
Award as the Committee in its sole discretion may determine (which
may be zero dollars).

The Company shall promptly notify each holder of an outstanding Option, SAR,
Restricted Stock Award or Restricted Stock Unit of any election or action taken
by the Company under this Section 9(f). In the event of any election or action
taken by the Company pursuant to this Section 9(f) that requires the amendment
or cancellation of any Award agreement as may be specified in any notice to the
holder thereof, that holder shall promptly deliver that Award agreement to the
Company in order for that amendment or cancellation to be implemented by the
Company and the Committee. The failure of the holder to deliver any such Award
agreement to the Company as provided in the preceding sentence shall not in any
manner effect the validity or enforceability of any action taken by the Company
and the Committee under this Section 9(f), including, without limitation, any
redemption of an Option, SAR, Restricted Stock Award or Restricted Stock Unit as
of the consummation of a Restructure. Any cash payment to be made by the Company
pursuant to this Section 9(f) in connection with the redemption of any
outstanding Options, SARs, Restricted Stock Awards or Restricted Stock Units
shall be paid to the holder thereof currently with the delivery to the Company
of the Award agreement evidencing that Award; provided, however, that any such
redemption shall be effective upon the consummation of the Restructure
notwithstanding that the payment of the redemption price may occur subsequent to
the consummation. If all or any portion of an outstanding Option, SAR,
Restricted Stock Award or Restricted Stock Unit is to be exercised or
accelerated upon or after the consummation of a Restructure that is in the form
of a Non-Surviving Event and as a part of that Restructure shares of stock,
other securities, cash or property shall be issuable or deliverable in exchange
for Stock, then the holder of such Option, SAR, Restricted Stock Award or
Restricted Stock Unit shall thereafter be entitled to purchase or receive (in
lieu of the number of shares of Stock that the holder would otherwise be
entitled to purchase or receive) the number of shares of stock, other
securities, cash or property to which such number of shares of Stock would have
been entitled in connection with the Restructure (and, for Options, at an
aggregate exercise price equal to the Exercise Price that would have been
payable if that number of Total Shares had been purchased on the exercise of the
Option immediately before the consummation of the Restructure).

10. General Provisions.

(a) Transferability.

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(i) Permitted Transferees. The Committee may, in its discretion,
permit a Participant to transfer all or any portion of an Option or Stock
Appreciation Right, or authorize all or a portion of such Awards to be granted
to an Eligible Person to be on terms which permit transfer by such Participant;
provided that, in either case the transferee or transferees must be any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, in each case with respect to the Participant, any person sharing
the Participant's household (other than a tenant or employee of the Company), a
trust in which these persons have more than fifty percent of the beneficial
interest, a foundation in which these persons (or the Participant) control the
management of assets, and any other entity in which these persons (or the
Participant) own more than fifty percent of the voting interests (collectively,
"Permitted Transferees"); provided further that, (X) there may be no
consideration for any such transfer and (Y) subsequent transfers of Awards
transferred as provided above shall be prohibited except subsequent transfers
back to the original holder of the Award and transfers to other Permitted
Transferees of the original holder. Agreements evidencing Awards with respect to
which such transferability is authorized at the time of grant must be approved
by the Committee, and must expressly provide for transferability in a manner
consistent with this Subsection 10(a)(i).

(ii) Qualified Domestic Relations Orders. An Option, Stock
Appreciation Right, Restricted Stock Unit Award or Restricted Stock Award may be
transferred, to a Permitted Transferee, pursuant to a domestic relations order
entered or approved by a court of competent jurisdiction upon delivery to the
Company of written notice of such transfer and a certified copy of such order.

(iii) Other Transfers. Except as expressly permitted by Subsections
10(a)(i) and 10(a)(ii), Awards shall not be transferable other than by will or
the laws of descent and distribution. Notwithstanding anything to the contrary
in this Section 10, an Incentive Stock Option shall not be transferable other
than by will or the laws of descent and distribution.

(iv) Effect of Transfer. Following the transfer of any Award as
contemplated by Subsections 10(a)(i), 10(a)(ii) and 10(a)(iii), (A) such Award
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that the term "Participant" shall be
deemed to refer to the Permitted Transferee, the recipient under a qualified
domestic relations order, the estate or heirs of a deceased Participant, or
other transferee, as applicable, to the extent appropriate to enable the
Participant to exercise the transferred Award in accordance with the terms of
this Plan and applicable law and (B) the provisions of the Award relating to
exercisability hereof shall continue to be applied with respect to the original
Participant and, following the occurrence of any such events described therein
the Awards shall be exercisable by the Permitted Transferee, the recipient under
a qualified domestic relations order, the estate or heirs of a deceased
Participant, or other transferee, as applicable, only to the extent and for the
periods that would have been applicable in the absence of the transfer.

(v) Procedures and Restrictions. Any Participant desiring to
transfer an Award as permitted under Subsections 10(a)(i), 10(a)(ii) or
10(a)(iii) shall make application therefor in the manner and time specified by
the Committee and shall comply with such other requirements as the Committee may
require to assure compliance with all applicable securities laws. The Committee
shall not give permission for such a transfer if (A) it would give rise to
short-swing liability under section 16(b) of the Exchange Act or (B) it may not
be made in compliance with all applicable federal, state and foreign securities
laws.

(vi) Registration. To the extent the issuance to any Permitted
Transferee of any shares of Stock issuable pursuant to Awards transferred as
permitted in this Section 10(a) is not registered pursuant to the effective
registration statement of the Company generally covering the shares to be issued
pursuant to this Plan to initial holders of Awards, the Company shall not have
any obligation to register the issuance of any such shares of Stock to any such
transferee.

(b) Taxes. The Company and any Subsidiary is authorized to withhold
from any Award granted, or any payment relating to an Award under this Plan,
including from a distribution of Stock, amounts of withholding and other taxes
due or potentially payable in connection with any transaction involving an
Award, and to take such other action as the Committee may deem advisable to

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enable the Company and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Stock or other property
and to make cash payments in respect thereof in satisfaction of a Participant's
tax obligations, either on a mandatory or elective basis in the discretion of
the Committee.

(c) Changes to this Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate this Plan or the Committee's authority to
grant Awards under this Plan without the consent of stockholders or
Participants, except that any amendment or alteration to this Plan, including
any increase in any share limitation, shall be subject to the approval of the
Company's stockholders not later than the annual meeting next following such
Board action if such stockholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to this
Plan to stockholders for approval; provided that, without the consent of an
affected Participant, no such Board action may materially and adversely affect
the rights of such Participant under any previously granted and outstanding
Award. The Committee may waive any conditions or rights under, or amend, alter,
suspend, discontinue or terminate any Award theretofore granted and any Award
agreement relating thereto, except as otherwise provided in this Plan; provided
that, without the consent of an affected Participant, no such Committee action
may materially and adversely affect the rights of such Participant under such
Award.

(d) Limitation on Rights Conferred under Plan. Neither this Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or in
the employ or service of the Company or a Subsidiary, (ii) interfering in any
way with the right of the Company or a Subsidiary to terminate any Eligible
Person's or Participant's employment or service at any time, (iii) giving an
Eligible Person or Participant any claim to be granted any Award under this Plan
or to be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a stockholder of the Company
unless and until the Participant is duly issued or transferred shares of Stock
in accordance with the terms of an Award.

(e) Unfunded Status of Awards. This Plan is intended to constitute an
"unfunded" plan for certain incentive awards.

(f) Nonexclusivity of this Plan. Neither the adoption of this Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable, including incentive arrangements and awards which do not qualify
under section 162(m) of the Code. Nothing contained in this Plan shall be
construed to prevent the Company or any Subsidiary from taking any corporate
action which is deemed by the Company or such Subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
this Plan or any Award made under this Plan. No employee, beneficiary or other
person shall have any claim against the Company or any Subsidiary as a result of
any such action.

(g) Severability. If any provision of this Plan 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 the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included herein. If any of the terms or provisions of this Plan or
any Award agreement conflict with the requirements of Rule 16b-3 (as those terms
or provisions are applied to Eligible Persons who are subject to section 16(b)
of the Exchange Act) or section 422 of the Code (with respect to Incentive Stock
Options), then those conflicting terms or provisions shall be deemed inoperative
to the extent they so conflict with the requirements of Rule 16b-3 (unless the
Board or the Committee, as appropriate, has expressly determined that the Plan
or such Award should not comply with Rule 16b-3) or section 422 of the Code.
With respect to Incentive Stock Options, if this Plan does not contain any
provision required to be included herein under section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force and
effect as if that provision had been set out at length herein; provided,
further, that, to the extent any Option that is intended to qualify as an
Incentive Stock Option cannot so qualify, that Option (to that extent) shall be
deemed an Option not subject to section 422 of the Code for all purposes of the
Plan.

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(h) Governing Law. All questions arising with respect to the provisions
of the Plan and Awards shall be determined by application of the laws of the
State of Delaware, without giving effect to any conflict of law provisions
thereof, 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 federal and state laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or
delivery of such Stock.

(i) Conditions to Delivery of Stock. Nothing herein or in any Award
granted hereunder or any Award agreement shall require the Company to issue any
shares with respect to any Award if that issuance would, in the opinion of
counsel for the Company, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities
association, as then in effect. At the time of any exercise of an Option or
Stock Appreciation Right, or at the time of any grant of a Restricted Stock
Award or Restricted Stock Unit, the Company may, as a condition precedent to the
exercise of such Option or Stock Appreciation Right or settlement of any
Restricted Stock Award or Restricted Stock Unit, require from the Participant
(or in the event of his death, his legal representatives, heirs, legatees, or
distributees) such written representations, if any, concerning the holder's
intentions with regard to the retention or disposition of the shares of Stock
being acquired pursuant to the Award and such written covenants and agreements,
if any, as to the manner of disposal of such shares as, in the opinion of
counsel to the Company, may be necessary to ensure that any disposition by that
holder (or in the event of the holder's death, his legal representatives, heirs,
legatees, or distributees) will not involve a violation of the Securities Act or
any similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities exchange
or securities association, as then in effect. No Option or Stock Appreciation
Right shall be exercisable and no settlement of any Restricted Stock Award or
Restricted Stock Unit shall occur with respect to a Participant unless and until
the holder thereof shall have paid cash or property to, or performed services
for, the Company or any of its Subsidiaries that the Committee believes is equal
to or greater in value than the par value of the Stock subject to such Award.

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