Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today reported estimated full year 2011 production and year end proved reserves. Production and reserves highlights for the year ended December 31, 2011 include:
- Production of 23.6 million barrels of oil equivalents (“MMBoe”), a 51% increase over 2010
- Year end proved reserves of 386.5 MMBoe, a 19% increase over year end 2010
- Reserve replacement ratio 1 of 402%
1The Company uses the reserve replacement ratio as an indicator of the Company's ability to replenish annual production volumes and grow its reserves, thereby providing some information on the sources of future production. It should be noted that the reserve replacement ratio is a statistical indicator that has limitations. The ratio is limited because it typically varies widely based on the extent and timing of discoveries and property acquisitions. Its predictive and comparative value is also limited for the same reasons. In addition, since the ratio does not imbed the cost or timing of future production of new reserves, it cannot be used as a measure of value creation. The reserve replacement ratio of 402% was calculated by dividing net proved reserve additions of 95.0 MMBoe (the sum of extensions, discoveries, revisions and purchases) by production of 23.6 MMBoe.
2011 Year End Estimated Proved Reserves, Production and Costs Incurred
(The following information is unaudited and preliminary. Final results will be provided in our Annual Report on Form 10-K for the year ended December 31, 2011.)Concho's total proved oil and natural gas reserves at December 31, 2011 were 386.5 MMBoe, a 19% increase over year end 2010 proved reserves, and consisted of 238.3 million barrels (“MMBbls”) of oil and 889.3 billion cubic feet (“Bcf”) of natural gas utilizing an average 2011 WTI posted oil price of $92.71 per barrel and an average 2011 Henry Hub spot market natural gas price of $4.12 per MMBtu. At December 31, 2011, 61% of the Company’s proved reserves were proved developed compared to 57% at year end 2010. The following estimates of our proved oil and natural gas reserves at December 31, 2011 are based on reports prepared by Cawley, Gillespie & Associates, Inc. and Netherland, Sewell & Associates, Inc., independent petroleum engineers.
|Summary of Changes in Proved Reserves||MMBoe|
|Proved reserves at December 31, 2010||323.5|
|Purchase of minerals-in-place||12.6|
|Sales of minerals-in-place||(8.4)|
|Extensions and discoveries||86.5|
|Revisions of previous estimates 1||(4.1)|
|Proved reserves at December 31, 2011||386.5|