Quarterly report pursuant to Section 13 or 15(d)

Property Disclosures and Operating Leases

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Property Disclosures and Operating Leases
6 Months Ended
Jun. 30, 2013
Property Acquisition and Operating Leases [Abstract]  
Property Disclosures and Operating Leases
Property Disclosures and Operating Leases

In April 2012, the Company took delivery of a drilling rig for a term of two years to support its horizontal drilling program in the Permian Basin, and on August 1, 2013, the Company contracted an additional drilling rig for a one year term. Lease cost recorded during the three and six months ended June 30, 2013 was $2,280 and $4,551, respectively. Lease payments will approximate $12,601 in 2013 (with $8,050 remaining at June 30, 2013) and $6,941 in 2014. The agreements include early termination provisions that would reduce the minimum rentals under the agreement, assuming the lessor is unable to re-charter the rig and staffing personnel to another lessee, to $5,055 in 2013 and $4,530 in 2014.

On June 1, 2013, the Company acquired approximately 2,468 gross (2,186 net) acres in Reagan County, Texas, which is located in the southern portion of the Midland Basin and which is prospective for both horizontal and vertical drilling. The acquisition also included seven gross vertical wells and 1,051 barrels of oil equivalent proved reserves. The purchase price of $11,000 was funded using a portion of the proceeds from the preferred stock offering (discussed in Note 9).