Pioneer Southwest Energy Partners Provides Production and Financial Update for the Second Quarter of 2012

Pioneer Southwest Energy Partners L.P. (NYSE: PSE) today provided updates on the Partnership's expected production and commodity price realizations for the second quarter of 2012. Second Quarter 2012 Production Update Pioneer Southwest's production averaged 7,103 barrels oil equivalent per day (BOEPD) in the second quarter of 2012. The Partnership's production guidance for the quarter was 7,400 BOEPD to 7,900 BOEPD. Production from the Spraberry field in West Texas was negatively impacted by approximately 530 BOEPD due to unplanned third-party natural gas liquids (NGL) fractionation downtime and tight industry NGL fractionation capacity at Mont Belvieu, Texas, as described below. Had these third-party processing issues not occurred during the second quarter and all of Pioneer Southwest's NGL volumes could have been fractionated and sold, the Partnership's production would have been approximately 7,630 BOEPD. The Spraberry field produces oil and associated liquids-rich gas. The gas includes NGLs, which are separated at the Midkiff/Benedum and Sale Ranch gas processing facilities in West Texas. These NGLs are then transported to third-party fractionation facilities at Mont Belvieu. During May, a significant third-party facility was shut down for planned maintenance. When it came back on line in late May, it had operating problems and was not able to achieve its pre-shutdown fractionation capacity. As a result of this problem and tight fractionation capacity across the Mont Belvieu complex, Pioneer Southwest built an NGL inventory of 28 thousand barrels that could not be processed for sale in June, thereby negatively impacting production for the second quarter by approximately 310 BOEPD. Within the next month, the fractionation facility is expected to increase processing rates to its pre-shutdown processing capacity, thereby allowing Pioneer Southwest's NGL inventory and ongoing production to be fractionated and sold over the remainder of 2012. Based on the Partnership's second quarter NGL price realization per barrel, the NGL inventory has a sales value of approximately $840 thousand. The Midkiff/Benedum gas processing plants were also forced to reject ethane into the residue gas stream during the second quarter as a result of tight NGL capacity at Mont Belvieu. The net impact of this shift was a loss in production of approximately 220 BOEPD. Ethane rejection continues and is expected to impact Pioneer Southwest's production over the remainder of 2012 based on the outlook for continuing tight fractionation capacity at Mont Belvieu. Due to low ethane prices, there is not a significant economic impact to rejecting ethane versus producing it. Pioneer Southwest estimates that its revenues are lower as a result of rejecting ethane by approximately $2 thousand per day at current gas and NGL prices. Second Quarter 2012 Commodity Prices In the second quarter of 2012, Pioneer Southwest's oil sales averaged 4,874 barrels per day (BPD), NGL sales averaged 1,164 BPD and gas sales averaged 6 million cubic feet per day. For the second quarter, Pioneer Southwest expects to report an approximate before-tax net gain of $46 million on mark-to-market derivative contracts, of which approximately $48 million is a before-tax noncash net gain and $2 million is a before-tax cash net loss. The Company's derivative mark-to-market results are outlined on the attached schedule. In the second quarter, the NYMEX West Texas Intermediate (WTI) oil price averaged $93.49 per barrel. Pioneer Southwest's second quarter oil average realized price per barrel before derivative transactions was $86.25 per barrel. Including the impact of all derivatives, the second quarter average oil price was $77.53 per barrel. The NGL average realized price per barrel before derivative transactions was $30.28, or approximately 32% of WTI. Including the impact of all derivatives, the average NGL price was $26.02 per barrel. In the second quarter, the NYMEX gas price averaged $2.21 per thousand cubic feet (MCF). Pioneer Southwest's second quarter average realized gas price before derivative transactions was $1.89 per MCF. Including the impact of all derivatives, the average gas price was $5.11 per MCF.