Approach Resources Inc., Fort Worth, Texas, (Nasdaq: AREX) says its production increased 65% over 2007 to 8.8 billion cubic feet equivalent in 2008.
Proved reserves as of Dec. 31, 2008, were 211.1 billion cubic feet equivalent, 17% over year-end 2007, comprising 82% natural gas and 18% oil, condensate and natural gas liquids and had a reserve life index of more than 20 years. Approach replaced 483% of production.
Proved reserves in Approach’s Cinco Terry field in West Texas totaled 45.9 billion cubic feet equivalent, representing an increase of 150% from 18.3 billion cubic feet equivalent of proved reserves at year-end 2007.
Proved reserves in the company’s Ozona Northeast field in West Texas totaled 144.4 billion cubic feet equivalent, compared to year-end 2007 proved reserves of 140.7 billion cubic feet equivalent. Reserves in its North Bald Prairie field in East Texas totaled 20.8 billion cubic feet equivalent, compared to year-end 2007 proved reserves of 21.4 billion cubic feet equivalent.
Approach president and chief executive officer J. Ross Craft says, “During 2008, we increased our reserve base primarily through our low-cost and low-risk West Texas development programs. In July 2008, we completed the acquisition of deep rights, additional wellbores and approximately 75 miles of gathering lines and related compression facilities in our Ozona Northeast field. Due to the timing of this strategic acquisition, we redirected a portion of our Ozona Northeast drilling capital to our expanding, multi-pay Cinco Terry project. Throughout 2008, we increased our Cinco Terry acreage position to 45,288 gross (19,466 net) acres, rivaling our Ozona Northeast gross acreage position of 49,169 gross (44,044 net) acres.
“Given the current commodity price environment and economic uncertainties, we plan to focus on reducing overall costs, increasing the efficiencies of our drilling programs and reducing drilling activity where necessary. Preservation of our financial flexibility will allow Approach to be in a good position to take advantage of potential 2009 drilling and acquisition opportunities.”
Total costs for oil and gas properties were $104.1 million in 2008, consisting of $89.2 million for exploration and development drilling and $14.9 million for property acquisitions.
Approach has a $200-million revolving credit facility with a $100-million borrowing base, of which $43.5 million and $47.4 million was drawn at Dec. 31, 2008, and Feb. 28, 2009, respectively.
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