Lease operating expenses increased in third quarter 2012 compared to third quarter 2011 primarily due to higher compressor rental and repair, well repair and maintenance, pumpers and supervision as well as water hauling and insurance. Severance and production taxes increased due to our increase in oil, NGL and gas sales. General and administrative expenses increased primarily due to higher salaries, benefits and share-based compensation resulting from increased staffing. Depletion, depreciation and amortization expense increased primarily due to higher production and oil and gas property carrying costs, relative to estimated proved developed reserves. Higher oil and gas property carrying costs primarily reflect our development of our oil-focused, Wolfcamp shale play.
During third quarter 2012, the Company drilled 12 wells and completed 10 wells, including five of eight wells that were waiting on completion at June 30, 2012. At September 30, 2012, we had eight wells waiting on completion. We currently have two horizontal rigs and one vertical rig working. Results for recent horizontal Wolfcamp wells are provided below:
- The University 45 C 806H well (8,032 feet lateral) targeted the Wolfcamp B bench, and was completed with 30 stages. The 806H flowed at an initial 24-hour rate of 922 Boe/d, made up of 93% oil.
- The University 45 D 905H well (8,961 feet lateral) targeted the Wolfcamp A bench, and was completed with 34 stages. The 905H well flowed at an initial 24-hour rate of 689 Boe/d, made up of 90% oil.
- The Cinco Terry J 1003H (7,834 feet lateral) targeted the Wolfcamp B bench, and was completed with 30 stages. The 1003H flowed at an initial 24-hour rate of 575 Boe/d, made up of 70% oil.
- The Pangea West 6507H well (7,795 feet lateral) targeted the Wolfcamp B bench, and was completed with 29 stages. The 6507H flowed at an initial 24-hour rate of 450 Boe/d, made up of 91% oil.
We also recently completed the University 45 G 2217H (8,053 feet lateral) and University 45 G 2216H (8,049 feet lateral). Each well targeted the Wolfcamp B bench and was completed with 30 stages. The 2217H is flowing 627 Boe/d, made up of 84% oil, with approximately 8% fluid recovery and production climbing daily. The 2216H is in the very early stages of flowing back fracture stimulation fluids, and we expect to see peak oil production within the next two weeks.
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