EBITDAX (non-GAAP) for second quarter 2012 was $20.1 million, or $0.60 per diluted share, compared to $21 million, or $0.73 per diluted share, for second quarter 2011. See “Supplemental Non-GAAP Financial and Other Measures” below for our reconciliation of EBITDAX to net income.

Average realized prices for second quarter 2012, before the effect of commodity derivatives, were $83.21 per Bbl of oil, $33.75 per Bbl of NGLs and $2.19 per Mcf of natural gas, compared to $97.89 per Bbl of oil, $51.88 per Bbl of NGLs and $4.16 per Mcf of natural gas for second quarter 2011. Our average realized price, including the effect of commodity derivatives, was $43.12 per Boe for second quarter 2012, down 10% compared to $48.01 per Boe for second quarter 2011.

Lease operating expenses trended higher in second quarter 2012 compared to second quarter 2011 due to higher production volumes and oil-weighted growth. Severance and production taxes decreased due to our increase in oil sales as a percentage of total oil, NGL and gas sales, as oil sales are taxed at a lower rate. General and administrative expenses increased primarily due to higher salaries and benefits resulting from increased staffing, partially offset by a decrease in share-based compensation. Depletion, depreciation and amortization expense increased primarily due to higher production and increased investment in our oil-focused, Wolfcamp Shale play, relative to estimated proved developed reserves.

Operations Update

During second quarter 2012, the Company drilled seven wells and completed 10 wells, including eight of 11 wells that were waiting on completion at March 31, 2012. At June 30, 2012, we had eight wells waiting on completion, of which five have since been completed as producers and one has been completed as a water source well. We also recompleted 14 wells during the second quarter of 2012. We currently have two horizontal rigs and one vertical rig working.

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