On Wednesday, Pioneer Natural Resources (NYSE:PXD) had good news and bad news for its investors. On the good news front, the company announced that China's Sinochem Petroleum USA LLC has agreed to pay $500 million upfront, and contribute an additional $1.2 billion to future drilling and facilities costs, to acquire a 40% interest in Pioneer's approximately 207,000 leased acres in the Wolfcamp Shale play.
Pioneer will retain a majority interest in, and control over, the venture, and will remain the project's operator. Assuming regulators approve, this deal is expected to close sometime in Q2 2013.
Now for the bad news: Attempts to find investors willing to make similar investments in the company's 150,000 acres-worth of Barnett Shale properties have failed to bear fruit. After first attempting to divest its interests in the Barnett back in September, four months of entertaining offers from prospective buyers failed to produce a single bid that Pioneer felt was "representative of the value Pioneer places on these properties."
Accordingly, Pioneer announced today that it is discontinuing its efforts to unload the Barnett properties, and will "retain operatorship of this asset."
The company advises that the properties it would have liked to unload, but which it is now stuck with, are producing approximately 9,000 barrels of oil equivalent per day via one drilling rig. The company is now in the process of reclassifying the assets -- which were labeled "discontinued operations" last quarter -- back into the category of continuing operations. This change will be reflected in the firm's Q4 2012 results.
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