Production in the fourth quarter 2012 was 8.2 MMBoe (5.0 MMBbls of crude oil and 19.6 Bcf of natural gas), a 26% increase over the comparable prior-year period. Sequentially, Concho’s total fourth quarter 2012 production increased 5.3% over the previous quarter and crude oil production during the fourth quarter increased 7.2% over the previous quarter.
The Delaware Basin core area, where the Company has an active horizontal drilling program targeting the Avalon shale, Bone Spring sands and Wolfcamp shale, was the most significant contributor of total production growth in 2012. The Company expects to allocate over 50% of its total 2013 drilling and completion budget to the Delaware Basin.
As a result of the Company’s strong production growth in the fourth quarter of 2012, Concho has revised its 2013 annual production guidance range as follows:
|2013 Production (MMBoe)||32.9 - 34.3||33.4 - 34.8|
2012 Year-end Estimated Proved Reserves and Costs IncurredConcho’s year-end estimated proved reserves increased to 447.2 MMBoe. Year-end proved reserves were determined utilizing an average 2012 WTI posted oil price of $91.21 per barrel and an average 2012 Henry Hub spot market natural gas price of $2.76 per MMBtu. Substantially all of the Company’s proved reserves are located in the Permian Basin, which remains one of the most active and prolific oil basin in the continental U.S. The PV-10 of proved reserves at December 31, 2012 was $8.3 billion. Please refer to the attached table for a reconciliation of PV-10 to the standardized measure of discounted future net cash flows. Crude oil represented over 61% of year-end estimated proved reserves, consistent with year-end 2011, despite a significant natural gas-weighted acquisition and an oil-weighted divestiture during 2012. In addition, 61% of Concho’s year-end estimated proved reserves were proved developed, consistent with year-end 2011 and reflective of the Company’s ability to consistently convert unproved resources into proved reserves.