Pioneer Natural Resources Co. has closed the transaction with Sinochem Petroleum USA to sell 40% of Pioneer’s interest in approximately 207,000 net acres leased by the company in the Wolfcamp Shale play for US $1.7 billion.

At closing, Sinochem paid $631 million in cash to Pioneer, of which $522 million was the upfront portion of the transaction price and $109 million was Sinochem’s 40% share of net expenditures in the joint interest area from the Dec. 1, 2012, effective date of the transaction to the closing date. Sinochem will pay the remaining $1.2 billion of the transaction price by carrying 75% of Pioneer’s share of future drilling and facilities costs until the drilling carry is fully utilized.

Production from the joint interest area is approaching 10,000 boe/d, and Sinochem will commence receiving its share effective immediately.

Sinochem is acquiring 82,800 net acres of Pioneer’s leasehold. Pioneer retains 60% of its interest in the Wolfcamp and deeper horizons, with Sinochem receiving 40% of Pioneer’s interest. Pioneer will continue as operator and will conduct all leasing, drilling, operations, and marketing activities in the joint interest area. The joint interest area covers defined portions of Upton, Reagan, Irion, Crockett, and Tom Green counties in Texas. Pioneer retains its current working interests in all horizons shallower than the Wolfcamp horizon.