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Chesapeake Energy CHK - Permian Basin Unconventional Liquids Plays (West Texas and southern New Mexico): Chesapeake
has built a strong position of approximately 670,000 net acres of leasehold in four Permian Basin unconventional liquids plays:
the Avalon Shale, Bone Spring, Wolfcamp and Spraberry in West Texas and in southern New Mexico. The company has drilled
and completed 100 gross wells to date in these four plays. Chesapeake anticipates operating an average of approximately
five rigs in its Permian Basin unconventional liquids plays in 2010 to drill approximately 60 net wells. In 2011 and
2012, the company plans to increase its operated rig count as it continues its transition away from natural gas drilling to
more liquids-rich drilling.
Pioneer Resources is well positioned in the Permian Basin. When it comes to solid foundation assets, Pioneer's West Texas Spraberry field,
with its long-lived oil and gas reserves, stable production and low maintenance capital cost, consistently delivers steady
production growth. Covering nine West Texas counties, the Spraberry field produces sweet crude and gas from formations between
6,700 and 10,000 feet deep. Spraberry is the 5th largest oil field - the only large oil field in the country that is growing
- and the 15th largest gas field in the U.S. Pioneer is the largest acreage holder, driller and producer in the field, with interests in more than 5,600 active
wells. We have set the standard for best practices in drilling, completions and operations in the area. We also benefit from
processing our own gas through the Midkiff/Benedum gas processing system in which we hold a 27% interest. This resource play
covers more than 11,000 square miles, with ever-expanding field boundaries, and we continually pursue opportunities to increase
our working interest and acreage position through bolt-on acquisitions. Pioneer is also actively progressing initiatives to
capture additional resource potential, including ongoing 40-acre field development, ongoing 20-acre downspacing,
horizontal drilling potential deeper zones, evaluating potential from shale/silt intervals and implementing enhanced oil recovery
through a 7,000-acre waterflood project.
Companies Drilling in the Permian
Basin Oil Field - Texas & New Mexico - Permian Basin Stocks
Exxon Mobil (XOM) - Exxon Mobil (XOM) has been busy buying up mineral rights in the Permian Basin - In
the Permian, where we hold approximately 800,000 net acres of leasehold, we are also evaluating unconventional potential that
occurs across roughly half of this acreage.
Occidental Petroleum OXY - Oxy is the largest oil producer in the Permian Basin of Texas and New Mexico, and the leading operator
among more than 1,500 operators in the area. Oxy’s oil production accounts for 20 percent of the Basin’s total
production. Oxy’s Permian acreage spans 3.6 million gross acres (2.2 million net acres) and includes a deep inventory
of more than 2,000 drilling locations. Sixty percent of Oxy’s Permian Basin oil production
utilizes CO2 (carbon dioxide) floods, a tertiary enhanced oil recovery (EOR) technique that facilitates production
of hard-to-reach oil through the injection of CO2. The balance of Oxy’s Permian production utilizes secondary
water flooding techniques (30 percent) and primary means of production (10 percent). The company maintains a significant inventory
of CO2 flood opportunities. Of the estimated 11.9 billion barrels net of oil initially
in place in Oxy-operated CO2 flood projects, 4.1 billion barrels have been produced, with 7.8 billion barrels net
remaining. Of the 7.8 billion barrels of net remaining oil, Oxy expects to produce a total of between 1 and 3 billion net
barrels of enhanced recovery reserves at attractive margins from the CO2 floods it operates in the Permian. A limited supply of carbon dioxide has impacted Oxy’s Permian area oil production and constrained new projects.
Addressing the challenge of producing the next billion barrels from Oxy’s current estimated Permian Basin property reserves,
Oxy plans to accelerate development of its current Permian projects through short-term CO2 purchase opportunities;
CO2 produced by Oxy, obtained by drilling more wells; and additional CO2 supplies from methane/CO2
fields. Oxy has identified more than 6.2 trillion cubic feet (TCF) of CO2 available
for its program. In addition, construction is under way at the Century Plant in Pecos County, Texas, to process high-CO2
gas. The plant is expected to begin initial operation in late 2010 and will further increase Oxy’s CO2 supply
while providing methane for the marketplace. Oxy’s total Permian Basin production is expected
to grow from 180,000 BOEPD in 2010 to between 220,000 and 230,000 BOEPD in 2014, entirely from currently owned properties.
May 2011 Update - Of the 16 rigs that we have currently running in the Permian,
right now 6 of those are drilling Wolfberry wells, which as you know is that interval between the Spraberry and the Wolfcamp.
So we've got nearly 50% of our Permian development
program designated to drill Wolfberry wells.
Anadarko Petroleum (APC) - Anadarko Petroleum (APC) drills in the Permian Basin and has some nice
acreage in the Avalon Shale - Average sales volumes for the quarter were 15,600 BOE/d, which represents an increase
of 13% compared to the same period of 2010. The quarter’s sales volumes of liquids increased by more than 180% over
the same period in 2010, and more than 30% sequentially. Anadarko
exited the quarter with four operated rigs and five non-operated rigs drilling in the Bone Spring horizontal play and one
operated rig and one non-operated rig drilling in the Avalon Shale. A total of 15 wells were spud during the quarter and 19
wells were completed.
Devon Energy DVN - In the Permian Basin, Devon Energy (DVN) drills for Oil & Gas. In the Permian Basin, Devon increased
oil and natural gas liquids production 17 percent compared to the third quarter of 2010. Liquids production accounted for
75 percent of the 50,000 oil-equivalent barrels per day produced in the Permian Basin during the third quarter. At
the Bone Spring play in the Permian Basin, the company added 11 new wells to production in the third quarter of 2011. Initial
daily production from the 11 wells averaged 540 Boe per day per well.
ConocoPhillips (COP) - ConocoPhillips (COP) give a Permian Basin Update - In the Permian, in the Bakken, we are running a total of 12 --
10 rigs and expect to increase this by as much as 50% during 2012. The fourth quarter production at the Permian and Bakken
averaged 50,000 BOE per day and 18,000 BOE per day, respectively. The Permian activities are focused around the Avalon, the
Wolfberry and the Wolfcamp, and we're using both horizontal and vertical drilling techniques there.
PetroHawk Energy (HK) - Petrohawk Energy (HK) Expands to the Permian Basin - Petrohawk is currently operating four rigs in
the Permian region, all concentrated in the Delaware Basin where the majority of the Company's
leasehold is located. An initial vertical well in Culberson County, Texas tested approximately
1.0 Mmcf/d of 1250 BTU gas from the Wolfcamp formation. Total depth was reached on the Company's first horizontal Bone Springs
well in Reeves County, Texas. A completion date for this well has been set for early August.
A commingled Wolfcamp and Bone Springs vertical completion in Reeves County is planned with
a completion date expected in mid-August. The Company is also currently drilling the lateral portion of its first horizontal
Wolfcamp well in Culberson County with a planned completion date of mid-August. In addition,
the Company is undertaking necessary infrastructure construction in order to market all products with minimum delays as wells
come online. Petrohawk Energy Corporation is an independent energy company engaged in the acquisition, production, exploration
and development of oil and natural gas with properties concentrated in North Louisiana, in
the Haynesville Shale; South Texas, in the Eagle Ford Shale; and West Texas, in the Delaware and Midland Basins.
EOG Resources EOG - EOG Resources (EOG) is focusing on the Wolfcamp Shale portion of the Permian Basin - In the Permian Basin Wolfcamp in Texas, EOG has been
operating a two-rig program and plans to ramp up drilling activity early in 2012. Recent efforts have focused on completion
techniques that increase reserves per well and improve cost efficiencies. In Irion and Crockett Counties, the University 40 #1306H, 40 #1308H and 40 #1504H were completed to sales with
initial maximum production rates of 1,426, 1,293 and 1,338 Bopd with 0.9, 1.0 and 1.2 MMcfd of rich natural gas, respectively.
EOG has 94 percent, 88 percent and 89 percent working interest in these wells, respectively. In Irion
County, EOG has 88 percent working interest in the Mayer #5002H, which was turned to sales at 686 Bopd with 1.3 MMcfd
of rich natural gas. Drilling results from the Mid-Continent Marmaton and Permian Basin Leonard also continued to be
positive.
Energen (EGN) - Energen is active in all part of the Permian Basin - Energen remains pleased with the progress the
company is making in developing the vertical Wolfberry play in the Midland sub-basin of the Permian Basin and is seeing good
results from its more recent 3rd Bone Spring wells that have been drilled on the east side of the Pecos River.
The Avalon potential remains unclear, and Energen likely will redirect planned Avalon capital to the deeper Wolfcamp shale
formation in 2012; the Wolfcamp is thought to have a higher mix of oil to gas, and its production will hold the shallower
Avalon shale. Wolfberry: Energen Resources (Energen’s exploration and production subsidiary)
drilled 153 net Wolfberry wells in 2011 and completed another 22 wells that were spudded in 2010. Of these 175 wells, 122
are producing and 53 are waiting on completion. Initial stabilized rates (consistent flow rates
after clean-up of stimulation fluid) from the 39 wells brought on line during the fourth quarter averaged 65 barrels of oil
per day and 150 Mcf per day of wet gas. Energen’s risked model initial stabilized rate is 55 barrels of oil per day
and 110 Mcf per day of wet gas. Energen Resources has approximately 32,000 net undeveloped acres
in the Wolfberry play and some 800 potential drilling locations based on 40-acre spacing. The company’s estimated cost
to drill and complete a well in the Wolfberry trend in 2012 is $2.3 million. 3rd Bone
Spring: Energen Resources has drilled and completed 18 net 3rd Bone Spring wells in 2011 and completed two additional
wells spudded in 2010; another five wells are drilling, waiting on completion, or testing. The
seven wells brought on line during the 4th quarter of 2011 had an initial stabilized rate of approximately 485 barrels of
oil per day and 1,085 Mcf per day of wet gas. The initial stabilized rate of all 20 net wells brought on line in 2011 averaged
approximately 400 barrels of oil per day and 1,035 Mcf per day of wet gas. The initial stabilized rate in Energen’s
risked, weighted average, 3rd Bone Spring model is 260 barrels of oil per day and 735 Mcf per day of wet gas. While the Company is pleased with the average initial stabilized rate of its 2011 3rd Bone Spring wells,
the majority of 12 wells drilled on the west side of the Pecos River have underperformed relative to wells drilled on the
east side. In general, the western wells have encountered higher amounts of water, and efforts to optimize production from
nine wells that have experienced steeper-than-expected declines have been hampered by limited infrastructure. With water disposal
wells drilled late in 2011, Energen has recently been able to install pumps on three of the west-side Bone Spring wells and
continues to work to improve production. Energen Resources has approximately 68,000 net undeveloped
acres that are prospective for the 3rd Bone Spring sands and approximately 210 potential drilling locations based
on 320-acre spacing. The company’s estimated cost to drill and complete a well in the 3rd Bone Spring trend
in 2012 is $7.5 million. Avalon: Energen Resources’ Avalon shale test well in Loving County
had an initial stabilized rate of 200 barrels of oil per day and 750 Mcf per day of wet gas. The well has not been able to
sustain its oil rate and currently is producing about 75 barrels of oil per day and 750 Mcf of wet gas. The well’s completion
design utilized smaller fracs in an effort to reduce produced water and maximize hydrocarbon production; instead, hydrocarbon
production may actually have been hampered by the use of smaller fracs. Energen Resources has
approximately 110,000 net undeveloped acres that are prospective for Avalon shale and approximately 340 potential drilling
locations based on 320-acre spacing.
Pioneer Nautral Resources PXD - Pioneer Natural Resources (PXD) Permian Basin - In the Spraberry oil field in West
Texas, Pioneer has increased its drilling program to an average of 38 rigs in the third quarter, including 15 Company-owned
rigs. The Company has continued to expand its integrated services to control drilling costs and support the execution of its
accelerated drilling program. Five Company-owned fracture stimulation fleets are currently operating in the Spraberry field.
To support its growing operations, the Company also owns other oil field service equipment, including pulling units, fracture
stimulation tanks, water transport trucks, hot oilers, blowout preventers, construction equipment and fishing tools. In addition,
the Company has contracted for tubular and pumping unit requirements through 2012, forecasted fracture stimulation sand supply
requirements through 2015 and forecasted well cementing services through 2016. Vertical integration in the Spraberry field
is saving Pioneer up to $500 thousand per well compared to utilizing third-party services at market rates. Pioneer expects
its vertical integration equipment will provide approximately one third of its rig requirements and two thirds of its fracture
stimulation requirements by the end of 2011. As a result, the blended Pioneer and third-party well cost is expected to average
$1.5 million to $1.6 million per well for 2011. Pioneer's internal rate of return on its 2011 Spraberry drilling program is
expected to be approximately 40% before tax based on flat commodity prices of $90 per barrel for oil and $5 per thousand cubic
feet (MCF) for gas, estimated future production costs and an estimated ultimate recovery (EUR) of 140 thousand barrels oil
equivalent (MBOE) for a vertical well completed through the Lower Wolfcamp. During 2010, Pioneer successfully added
incremental production and proved reserves from vertical completions in the Lower Wolfcamp and organic rich shale/silt intervals.
The Company is also continuing to drill deeper intervals below the Wolfcamp in certain areas of the field. This deeper drilling
includes the Strawn, the Atoka and the Mississippian intervals. The Company anticipates a potential increase of up to 110
MBOE in the EUR of a Lower Wolfcamp well in areas of the field where the Strawn and Atoka intervals are both present. Pioneer
has completed 113 vertical wells in the Strawn interval since the drilling program began in 2010. Initial peak production
rates from this interval, when tested alone, have averaged 70 BOEPD. For wells that have been on production for at least ten
months, production has increased by more than 25% compared to offset wells that have been drilled only to the Lower Wolfcamp.
This data suggests a potential incremental EUR per well of 20 MBOE to 40 MBOE from the Strawn interval. The incremental cost
per well for this deeper drilling and one additional fracture stimulation stage is approximately $60 thousand. Pioneer believes
the Strawn interval is prospective in 40% of its Spraberry acreage and expects to complete and commingle this interval with
all zones in 25% of the vertical wells drilled in the fourth quarter of 2011 and during 2012. The Company completed
its third vertical Atoka well in the third quarter of 2011. The initial peak production rate from this interval alone averaged
127 BOEPD. The Company plans to test the Atoka interval for approximately six months and will then commingle this production
with production from all zones. The incremental cost to drill an Atoka well ranges from approximately $300 thousand to $350
thousand as a result of deeper drilling, larger casing and two additional fracture stimulation stages. Pioneer believes the
Atoka interval is prospective in 25% to 50% of its Spraberry acreage. Incremental EURs per well from this interval are estimated
to range from 50 MBOE to 70 MBOE based on offset well data. The Company plans to test two to three additional single-zone
Atoka wells in the fourth quarter and is forecasting that 15% to 20% of its 2012 vertical drilling program in the Spraberry
will include wells drilled to the Atoka interval, with production commingled from all zones. Pioneer completed its second
vertical test of the Mississippian interval in the third quarter, with an initial peak production rate of 92 BOEPD. The incremental
cost per well for this deeper drilling, larger casing and two additional fracture stimulation stages is approximately $300
thousand to $350 thousand. Offset well data indicates a potential incremental EUR per well of 15 MBOE to 30 MBOE. Pioneer
believes the Mississippian interval is prospective in 10% to 20% of its Spraberry acreage. The Company expects to complete
one to two additional single-zone wells in the fourth quarter and is forecasting that 10% of its 2012 vertical drilling program
in the Spraberry will include wells drilled to the Mississippian interval, with production commingled from all zones. The
Company continues to test vertical downspacing in the Spraberry field from 40 acres to 20 acres. Eleven 20-acre vertical wells
have been drilled during 2011, with six put on production. These 20-acre wells are producing from the Lower Wolfcamp, Strawn
and shale/silt intervals. As was the case with 20-acre wells drilled during 2010, results continue to indicate that production
from these wells is significantly outperforming the previous 110 MBOE type curve for a traditional Spraberry/Dean well. The
Company expects to drill three to five additional 20-acre downspaced wells in 2011 and is targeting 30 to 50 20-acre wells
in its 2012 vertical drilling program. Water injection was initiated in the third quarter of 2010 on the Company's 7,000-acre
waterflood project in the Upper Spraberry interval. Results continue to be encouraging, as the production decline from 110
producing wells in the surveillance area has flattened and an increase in production is now being observed. Cumulative production
from the area flooded in the Upper Spraberry has increased by greater than 10% compared to forecasted base production decline,
with further increases expected as additional wells respond to the water injection. Based on these early results, reserve
adds related to the waterflood are likely during 2011. The Company has one dedicated rig drilling horizontal wells in
the Wolfcamp Shale in the Spraberry field area. The Company successfully completed its first horizontal well in Upton County,
Texas with a 30-stage fracture stimulation in a 5,800-foot lateral section. The XBC Giddings Estate 2041H continues to flow
naturally with a peak seven-day average rate of 732 BOEPD (591 barrels oil per day, 86 barrels natural gas liquids (NGLs)
per day and 332 MCF per day), and a peak 24-hour rate of 854 BOEPD (686 barrels oil per day, 102 barrels NGLs per day and
395 MCF per day), even with flow line restrictions. Pioneer's micro-seismic analysis of the completion showed that the entire
800 foot thick target zone was successfully fracture stimulated. The well is producing to sales. The results of the
XBC Giddings 2041H well are encouraging, as this well is 30 miles to 60 miles northwest of the area where most of the recent
successful industry drilling of horizontal Wolfcamp Shale wells has been occurring. Based on this successful drilling activity
and Pioneer's extensive geologic interpretation of the Wolfcamp Shale, the Company believes it has significant horizontal
Wolfcamp Shale potential within its acreage and is currently focusing its efforts on more than 200,000 acres in the southern
part of the field. Pioneer has not been drilling vertical Spraberry wells in this area because the returns are marginal and
the southern acreage is not prospective for the deeper Strawn, Atoka and Mississippian intervals. Pioneer is currently
drilling its second horizontal Wolfcamp Shale well in Upton County with a planned 6,000-foot lateral section and 30-stage
fracture stimulation. Two additional horizontal Wolfcamp Shale wells are planned in southern Reagan County by early 2012.
These two wells are expected to test longer lateral lengths and additional fracture stimulation stages. Pioneer expects to
expand its horizontal drilling program in 2012. Third quarter production from the Spraberry field averaged 47 MBOEPD,
an increase of 6 MBOEPD from the second quarter. Current production is approximately 51 MBOEPD. Spraberry production is forecasted
to continue to grow to 51 MBOEPD to 53 MBOEPD in the fourth quarter, with full-year 2011 production expected to be towards
the high end of the Company's full-year average guidance of 43 MBOEPD to 46 MBOEPD. Production is forecasted to further increase
to 54 MBOEPD to 59 MBOEPD in 2012, 68 MBOEPD to 74 MBOEPD in 2013 and 77 MBOEPD to 84 MBOEPD in 2014. The forecast for 2012
through 2014 excludes the potential contributions from drilling vertical wells deeper to intervals below the Lower Wolfcamp
and the impacts from the expected expansion of horizontal Wolfcamp Shale drilling.
Apache Corp APA - Apache Corporation (APA) is very active in the Permian Basin - In the Permian, our production increased 3% sequentially, driven by strong drilling results
than prior period adjustments. We operated 24 rigs during the third quarter with 132 new wells spud, and with initial completion
operations started on 171 wells. This increased the level of completion activity has reduced our backlog of wells waiting
on completion at the end of the third quarter to 71, which we will continue to work down over the next 2 quarters. The key
focus areas of our activity during the quarter continued to be the horizontal redevelopment of legacy water flood units and
the multizone zone development of Mariner's Deadwood area. We also continue to progress other plays and projects across the
basin where we have about 3 million acres. One notable example is the horizontal climb play at Deadwood, where we have a very
positive update. After somewhat disappointing first test on the previous
quarter, our second climb horizontal well came in flowing 325 barrels of oil per day, so 320 Mcf of gas per day after our
10-stage slick water frac and has produced 8,800 barrels of oil equivalent to its first 30 days. We anticipate completing
2 additional climb horizontal wells in the fourth quarter
Range Resources RRC - In the Permian Basin, the division drilled and completed one new oil well and deepened another. One of the wells came online
at 509 (381 net) Boe per day, while the other had initial production of 640 (480 net) Boe per day.
Samson Oil & Gas SSN - NEW MEXICO - WESTERN PERMIAN BASIN - State GC Oil and Gas Field - Samson 27% Working Interest
The State
GC oil and gas field is located in Lea County, New Mexico, and includes two producing wells, which produced at an average
gross rate of 50.7 BOPD and 88.2 Mcf/D. This rate is expected to be increased after the Permian Bone Spring Formation interval
in the State GC#2 well is fracture stimulated in the first quarter of the 2011 calendar year.
Linn Energy LINE - LINN Energy LINE Permian Basin Update - Permian Basin Activity Update During the third
quarter 2011, the Company signed purchase agreements for two bolt-on acquisitions in the Permian Basin Wolfberry play for
a combined contract price of $105 million, subject to closing conditions. These acquisitions are expected to close during
the fourth quarter, and add net production of approximately 800 Boe/d and proved reserves of approximately 8.3 MMBoe (78 percent
oil and NGLs). The Company expects these pending acquisitions to complement and bolster its expanding presence in the Permian
Basin. Year-to-date, the Company has closed or signed purchase agreements for a total contract price of approximately $962
million.
Whiting Petroleum WLL - Whiting Petroleum (WLL) Permian Basin Update 2011 - Delaware Basin: Big Tex
Play "Wolfbone".The Wolfbone play consists of a 2,000 to 3,000-foot vertical section of Permian age
interbedded carbonate and organic rich siltstone at a depth of 5,700 to 9,500 feet in Pecos, Reeves and Ward counties, Texas.
Targets include the Brushy Canyon, Bone Spring, and Wolfcamp horizons. Currently, Whiting has a lease position consisting
of 121,771 gross (89,852 net) acres. Whiting has moved from vertical wells in the Big Tex area to horizontals in this play.
We have drilled four horizontals with two rigs currently drilling horizontal wells to test several different objectives. Our
first Bone Spring horizontal well, the Bissett 9701H, was drilled with a 3,645-foot lateral and was completed on July 4, 2011
with 18 frac stages. Over the first 30 days, this well averaged 336 BOE per day. We believe this well proved up at least eight
development wells, in which we hold a 100% working interest. We have completed two other horizontal wells; the Chilton 5601H
fraced with 13 stages in the Bone Spring and the Lizzy 402H fraced with 17 stages in the Brushy Canyon. We are now placing
these wells on pump.
Forest Oil (FST) - Forest Oil (FST) Permian Basin Drilling Update - Crockett County, Texas - Wolfcamp Shale Oil Play The Company's New Ventures group has accumulated
58,000 gross (51,000 net) contiguous acres, primarily comprised of two leases, in the Permian Basin prospective for the Wolfcamp
Shale oil play. Although the play is still in the early stages, Forest believes the area is prospective not only for the Wolfcamp
Shale but also for other conventional targets. As this is a new play, Forest intends to perform the necessary "science"
work, including extensive coring of vertical pilot wells and employing micro-seismic technology to identify the most effective
way to complete the horizontal wells. Forest drilled its first vertical and horizontal well pair in the third quarter and
is currently completing the horizontal well while utilizing micro-seismic through the vertical well. Forest has commenced
the second vertical and horizontal well pair in a different area of its acreage position and intends to continue testing this
acreage during the remainder of the year and into 2012 by drilling and completing a total of six wells.
SM Energy SM - In the Permian Basin, The Company operated
one (1) drilling rig in the Permian region during the first quarter of 2011, which focused on Wolfberry tight oil assets in
the region.
Exco Resources XCO - EXCO Resources (XCO) Permian Basin 2011 Update - We drilled and completed 18 gross (17.5 net) wells in our Sugg Ranch
area during the third quarter 2011 with 100% drilling success. We currently are running one operated rig and plan to drill
68 gross (65.4 net) wells in 2011. Our production at Sugg Ranch has increased by 8% in the third quarter of 2011 as compared
to the third quarter of 2010, and economics for this drilling activity typically have rates-of-return in excess of 50%.
SandRidge Energy SD - SandRidge Energy SD Permian Basin - Permian Basin. The company drilled 208 wells in the Permian
Basin during the third quarter of 2011 and 607 wells during the first nine months of 2011 and has identified approximately
7,900 additional drilling locations on its 228,000 net acres there. SandRidge presently operates 14 rigs in the Permian Basin,
all of which are operating on the Central Basin Platform drilling primarily Grayburg/San Andres
vertical wells at depths ranging from 4,500 feet to 7,500 feet. The company plans to drill over 800 wells in the Permian Basin
in 2011.
Cimarex Energy XEC - Cimarex Energy (XEC) Permian Basin Update - Permian Basin - Cimarex drilled and completed 106 gross (79 net) Permian Basin wells during the first nine months
of 2011, completing 95% as producers. At quarter-end, 13 gross (7 net) wells were awaiting completion. Drilling principally
occurred in the Delaware Basin of Texas and southeast New Mexico, mainly targeting Bone Spring, Paddock and Wolf Camp
formations. Third-quarter 2011 Permian production averaged 206 MMcfe/d, an increase of 22% over third-quarter 2010, which
included over 25% growth in oil volumes to 17,578 barrels per day. Year-to-date New Mexico Bone Spring wells drilled and
completed total 42 gross (27 net). The 30-day gross production from Bone Spring wells have averaged 510 barrels equivalent
per day (83% oil). Texas Third Bone Spring drilling totaled 12 gross (9.8 net) wells, which on average had 30-day gross production
rates of 660 barrels equivalent per day (74% oil). During 2011 seven (6.6 net) horizontal Wolfcamp wells have been drilled
and completed, bringing total wells in the play to 14 (13.4 net). First 30-day production from the horizontal Wolfcamp wells
has averaged 6.2 MMcfe/d, comprised of 46% gas, 32% NGL and 22% oil.
Concho Resources CXO - Concho Resources (CXO) drilling update - Permian Basin - Currently, the Company is operating 36 drilling rigs,
all in the Permian Basin; 12 of these rigs are drilling Yeso wells on the New Mexico Shelf, 16 are drilling Wolfberry wells
in the Texas Permian, 6 are drilling Bone Spring wells in the Delaware Basin and 2 rigs are drilling Lower Abo wells on the
New Mexico Shelf. New Mexico Shelf During the third quarter of 2011, the Company drilled 122 wells (105
operated) on its New Mexico Shelf assets, which included both Yeso and Lower Abo wells, with a 100% success rate on the 55
wells that had been completed by September 30, 2011. In addition, during the third quarter of 2011, the Company completed
71 wells that were drilled prior to the third quarter of 2011. Texas Permian During the third quarter
of 2011, the Company drilled 77 wells (74 operated) on its Texas Permian assets with a 100% success rate on the 12 wells that
had been completed by September 30, 2011. In addition, during the third quarter of 2011, the Company completed 77 wells that
were drilled prior to the third quarter of 2011. Delaware Basin During the third quarter of 2011, the
Company drilled 24 wells (15 operated) on its Delaware Basin assets with a 100% success rate on the 2 wells that had been
completed by September 30, 2011. In addition, during the third quarter of 2011, the Company completed 22 wells that were drilled
prior to the third quarter of 2011. The Company's net production in the third quarter of 2011 from the Bone Spring play, which
includes the Avalon shale, the Bone Spring sands and the Wolfcamp shale, averaged approximately 8,900 Boepd, an increase of
59% over the second quarter of 2011.
Brigham Exploration (BEXP) - Brigham Exploration BEXP Permian Basin Wolfberry Oil Update - Wolfberry and Vicksburg, what were the latest results there and what do you have going on? Well, in the
Wolfberry, the last few wells, we've only operated
one well, and it came in as expected just over 100 barrels a day. Our operator, Cobra, has two rigs running.
Mariner Energy ME - In second quarter 2010, Mariner drilled 21 development wells and nine extension wells in the Permian Basin,
all of which were successful. The company also drilled three wells on other onshore properties, all of which were successful.
As of June 30, 2010, Mariner has seven rigs working on its Permian Basin properties and one on other onshore properties.
El Paso EP - During the third quarter 2010, El Paso was the winning bidder for leases covering approximately 123,000 acres in Reagan,
Crockett, Upton, and Irion counties in the September 22, 2010 University of Texas lease sale. The leases, when added to approximately
12,000 net acres of existing leasehold nearby, give the company a large position for its newest horizontal oil program, the
Wolfcamp shale.
Berry Petroleum BRY - Berry Petroleum BRY Permian Basin - In the Permian, we executed
a five rig program and drilled 20 wells during the quarter. Production in the Permian increased by 35% over the second quarter
of 2011 to average 5,200 BOE/D. We have been actively leasing in the Permian to increase our long-term inventory, and through
the end of the third quarter, we accumulated about 11,000 additional net acres at approximately $900 per acre. With these
acquisitions, our total net acreage in the Permian is now approximately 38,000 acres. During the second half of 2011 we have
drilled and completed a majority of our Permian wells below the Wolfcamp in the deeper zones including the Strawn, Atoka and
Mississippian. While the deeper drilling comes at an additional cost, well results to date have demonstrated increased expected
EURs that justify this additional investment with development costs of between $10 and $15 per BOE. Additionally, we have
continued to experience capital cost pressures, primarily related to pressure pumping services in the Permian."
Abraxas Petroleum (AXAS) - Abraxas Petroleum (AXAS) Permian Basin Drilling Update - West Texas - In Nolan County, Texas,
a multi-well oil development program is scheduled to begin in May 2011 on the Spires Ranch. Each of these horizontal wells
will target the Strawn formation at an approximate total measured depth of 9,900 feet, including a 2,600 foot lateral. Abraxas
owns a 100% working interest in each of these wells.
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