The changes in proved reserves from 2011 proved reserves include revisions of approximately 1.3 Tcfe based on lower SEC prices, changes in well performance, operating cost, future development plans, and other factors, as well as a reclassification of some of our undeveloped locations from proved reserves as they were not developed within five years of first recognition. The company has been directing a large portion of its capital budget to the Horn River Basin and new ventures in the U.S., and therefore, fewer Barnett Shale PUDs are expected to be drilled within the SEC's prescribed five-year timeframe.
Reserves by product are 76% natural gas, 23% NGL, and 1% crude oil and condensate. Geographically, 82% of reserves were located in the U.S., primarily in the Barnett Shale, and 18% in Canada.
Reserve Price Sensitivity
Quicksilver's reserves are directly correlated to the market price for natural gas, natural gas liquids, and oil, which are traded daily on commodity exchanges and are subject to market price fluctuation. Due to SEC rules, the company reports year-end reserves using an average of the first day of the month spot prices for the preceding twelve months, as disclosed above. As commodity prices rise above the year-end SEC average price – as natural gas prices currently have – Quicksilver's proved reserves may increase. Conversely, proved reserves may decrease further should prices fall below the year-end SEC average price.Quicksilver's reserves are most sensitive to a change in the NYMEX gas price because natural gas is approximately 76% of the company's year-end 2012 reserves. The company estimates that a $0.50 per MMbtu increase in the benchmark natural gas price and $5 per barrel increase in the benchmark oil price would increase proved reserves by 21% to 1.8 Tcfe, and a $0.50 per MMbtu decrease in the benchmark natural gas price and $5 per barrel decrease in the benchmark oil price would decrease proved reserves by 13% to 1.3 Tcfe. These sensitivities are based solely on current reserves and may not provide an accurate view of the company's proved reserves in a previous year or by extrapolating higher or lower pricing increments than what has been provided.
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