Supplemental Information on Oil and Natural Gas Properties (unaudited) |
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Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information on Oil and Natural Gas Properties (unaudited) |
Supplemental Information on Oil and Natural Gas Operations (Unaudited)
The following table discloses certain financial data relating to the Company’s oil and natural gas activities, all of which are located in the United States.
Subsequent to December 31, 2017, and through February 23, 2018, the Company drilled eight gross (6.0 net) horizontal wells and completed five gross (3.0 net) horizontal wells and had three gross (3.0 net) horizontal wells awaiting completion.
Depletion per unit-of-production, on a BOE basis, amounted to $13.82, $12.81 and $19.74 for the years ended December 31, 2017, 2016, and 2015, respectively. Lease operating expenses per unit-of-production, on a BOE basis, amounted to $5.96, $6.88, and $7.71 for the years ended December 31, 2017, 2016, and 2015, respectively.
Estimated Reserves
The Company’s proved oil and natural gas reserves at December 31, 2017, 2016 and 2015 have been estimated by DeGolyer and MacNaughton, the Company’s current independent petroleum engineers. The reserves were prepared in accordance with guidelines established by the SEC. Accordingly, the following reserve estimates are based upon existing economic and operating conditions.
There are numerous uncertainties inherent in establishing quantities of proved reserves. The following reserve data represents estimates only, and should not be deemed exact. In addition, the standardized measure of discounted future net cash flows should not be construed as the current market value of the Company’s oil and natural gas properties or the cost that would be incurred to obtain equivalent reserves.
The following tables disclose changes in the estimated net quantities of oil and natural gas reserves, all of which are located onshore within the continental United States:
Total Proved Reserves: The Company ended 2017 with estimated net proved reserves of 136,974 MBOE, representing a 50% increase over 2016 year-end estimated net proved reserves of 91,580 MBOE. The Company added 57,881 MBOE primarily from the Company’s acquisition and development efforts in the Permian Basin, where it drilled a total of 49 gross (38.2 net) wells. This increase was primarily offset by 2017 production and revisions. The decrease from revisions was primarily due to the removal of 13 proved undeveloped locations as a result of a change in the Company’s development and drilling plans within its operating areas and the removal of certain proved developed vertical well locations..
The Company ended 2016 with estimated net proved reserves of 91,580 MBOE, representing a 69% increase over 2015 year-end estimated net proved reserves of 54,271 MBOE. The Company added 48,477 MBOE primarily from the Company’s acquisition and development efforts in the Permian Basin, where it drilled a total of 29 gross (20.9 net) wells. This increase was primarily offset by 11,168 MBOE related to divestitures, 2016 production and revisions primarily due to pricing.
The Company ended 2015 with estimated net proved reserves of 54,271 MBOE, representing a 65% increase over 2014 year-end estimated net proved reserves of 32,824 MBOE. The increase was primarily due the Company’s development of its properties in the Permian Basin, where it drilled a total of 36 gross (27.1 net) wells, and acquisitions made during 2015. This increase was primarily offset by 2015 production and revisions.
Extrapolation of performance history and material balance estimates were utilized by the Company’s independent petroleum and geological firm to project future recoverable reserves for the producing properties where sufficient history existed to suggest performance trends and where these methods were applicable to the subject reservoirs. The projections for the remaining producing properties were necessarily based on volumetric calculations and/or analogy to nearby producing completions. Reserves assigned to nonproducing zones and undeveloped locations were projected on the basis of volumetric calculations and analogy to nearby production, and to a small extent, horizontal PDP and PUD categories.
Proved Undeveloped Reserves: The Company annually reviews its proved undeveloped reserves (“PUDs”) to ensure an appropriate plan for development exists. Generally, reserves for the Company’s properties are booked as PUDs only if the Company has plans to convert the PUDs into proved developed reserves within five years of the date they are first booked as PUDs.
The Company’s PUDs increased 40% to 67,656 MBOE from 48,348 MBOE at December 31, 2017 and 2016, respectively. The Company added 3,267 MBOE to its PUDs, primarily from acquisitions in the Permian Basin, and added 30,198 MBOE from the continued horizontal development of its Permian Basin properties. The increase in the Permian Basin PUDs was partially offset by 5,876 MBOE of revisions primarily due to the removal of 13 PUD locations as a result of a change in the Company’s development and drilling plans within its operating areas and downward revisions to its current PUD locations. In addition, the increase in Permian Basin PUDs was offset by the reclassification of 8,281 MBOE, or 17%, included in the year-end 2016 PUDs, to PDPs as a result of our horizontal development of Permian Basin properties at a total cost of approximately $57,019, net.
The Company’s PUDs increased 88% to 48,348 MBOE from 25,654 MBOE at December 31, 2016 and 2015, respectively. The Company added 17,482 MBOE to its PUDs, primarily from acquisitions in the Permian Basin, net of divestitures, and added 12,035 MBOE from the continued horizontal development of its Permian Basin properties, net of revisions. The increase in Permian Basin PUDs was partially offset by the reclassification of 6,823 MBOE, or 27%, included in the year-end 2015 PUDs, to PDPs as a result of our horizontal development of Permian Basin properties at a total cost of approximately $43,415, net.
The Company’s PUDs increased 75% to 25,654 MBOE from 14,623 MBOE at December 31, 2015 and 2014, respectively. The Company added 13,774 MBOE to its PUDs, net of revisions, primarily from the continued horizontal development of its Permian Basin properties and from acquisitions in the Permian Basin. The increase in Permian Basin PUDs was partially offset by the reclassification of 2,742 MBOE, or 19%, included in the year-end 2014 PUDs, to PDPs as a result of our horizontal development of Permian Basin properties at a total cost of approximately $55,933, net.
Standardized Measure
The following tables present the standardized measure of future net cash flows related to estimated proved oil and natural gas reserves together with changes therein, including a reduction for estimated plugging and abandonment costs that are also reflected as a liability on the balance sheet at December 31, 2017. You should not assume that the future net cash flows or the discounted future net cash flows, referred to in the tables below, represent the fair value of our estimated oil and natural gas reserves. Prices are based on the preceding 12-months’ average price based on closing prices on the first day of each month. The following table summarizes the average 12-month oil and natural gas prices net of differentials for the respective periods:
Future production and development costs are based on current costs with no escalations. Estimated future cash flows net of future income taxes have been discounted to their present values based on a 10% annual discount rate.
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