The increase in year-end 2012 estimated proved reserves is primarily a result of our horizontal development project in the Wolfcamp oil shale resource play. Year-end 2012 estimated proved reserves included 60.1 MMBoe attributable to the Wolfcamp shale play, compared to 24.2 MMBoe at year-end 2011, representing a 149% increase.

The increase in proved reserves was partially offset by the reclassification of 8.9 MMBoe of proved undeveloped reserves to probable undeveloped. These reserves are attributable to vertical Canyon locations in southeast Project Pangea. Due to our horizontal Wolfcamp development project, including pad drilling, postponement of these deeper locations beyond five years from initial booking is necessary to integrate their development with the shallower Wolfcamp and Wolffork zones. As a result of lower natural gas and NGL prices during 2012, we also recorded 2.4 MMBoe of price revisions.

The following table summarizes the changes in our estimated proved reserves during 2012.


    Natural Gas (MMcf)     Total

Balance – December 31, 2011 18,051 29,123 178,807 76,975
Extensions and discoveries 21,993 8,639 49,372 38,861
Production (969 ) (904 ) (6,089 ) (2,888 )
Revisions (1,823 ) (7,758 ) (47,330 ) (17,469 )
Balance – December 31, 2012 37,252   29,100   174,760   95,479  
Proved developed reserves at

December 31, 2012
8,816   11,761   73,178   32,774  

Our preliminary, unaudited estimate of the standardized after-tax measure of discounted future net cash flows (“Standardized Measure”) for our proved reserves at December 31, 2012, was $494.2 million. Estimated PV-10, or pre-tax present value of our proved reserves discounted at 10%, was $830.9 million. The independent engineering firm DeGolyer and MacNaughton prepared our estimates of year-end 2012 proved reserves and PV-10. PV-10 is a non-GAAP measure. See “Supplemental Non-GAAP Measures” below for our definition of PV-10 and a reconciliation to the Standardized Measure (GAAP). Estimates of proved reserves and PV-10 were prepared using $94.71 per Bbl of oil, $37.88 per Bbl of NGLs and $2.74 per MMBtu of natural gas.

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