Approach Resources Inc. (NASDAQ: AREX) today reported results for full year and fourth quarter 2012 and announced estimated 2012 proved reserves. Highlights for 2012, compared to 2011, include:
- Production up 24% to 7.9 MBoe/d, and oil production up 101% to 969 MBbls
- Total proved reserves increased 24% to 95.5 MMBoe, and oil proved reserves increased 106% to 37.3 MMBbls
- PV-10 (non-GAAP) increased 22% to $830.9 million
- Reserve replacement ratio of 1,346% at a competitive drill-bit finding and development (“F&D”) cost of $7.45 per Boe
- Over 2,000 identified horizontal locations targeting the Wolfcamp oil shale in the Midland Basin
- Increases gross resource potential to over 1 billion Boe
PV-10, reserve replacement ratio and drill-bit F&D cost are non-GAAP measures. See “Supplemental Non-GAAP Measures” below for our definition and reconciliation of PV-10 to the Standardized Measure (GAAP) and our definition and calculation of drill-bit F&D cost and reserve replacement ratio.
J. Ross Craft, Approach’s President and Chief Executive Officer, commented, “Growing our proved reserves by 24% in 2012 and doubling our oil reserves highlights the tremendous opportunity we have in the Wolfcamp oil shale resource play. Our reserve replacement of 1,346% was achieved at a competitive drill-bit finding and development cost of $7.45 per Boe. Through our strong horizontal well results and vertical development, we have de-risked approximately 107,000 gross acres in Project Pangea. As a result, we have expanded our count of horizontal Wolfcamp drilling locations 300%, from 500 in 2011 to more than 2,000 currently. Combined, our extensive inventory of horizontal, vertical and recompletion locations represent more than 1 billion Boe of gross, unrisked resource potential, which is more than ten times our current proved reserves and represents multiple decades of drilling inventory. In addition, we have made progress in reaching our target horizontal well cost of $5.5 million. Horizontal well costs during the second half of 2012 averaged approximately $6.4 million per well, and we expect to achieve our target well cost after we complete our infrastructure projects in Block 45 of Project Pangea. We anticipate completing these projects by the end of first quarter 2013. Our inventory of low-risk, high-margin oil reserves is expected to drive the continued success of our company for many years.”
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