reimbursements for overhead from other working interest owners, which reduces our general and administrative expenses. 

Successful Acquisitions. We have had significant growth over the years as a result of our acquisition activity. In recent years we have focused primarily on acquiring undrilled acreage rather than producing properties. We apply strict economic and reserve risk criteria in evaluating acquisitions. Over the last twenty years, we have added 1.1 Tcfe of proved oil and natural gas reserves from 38 acquisitions of producing oil and gas properties at an average cost of $1.17 per Mcfe. Our application of strict economic and reserve risk criteria have enabled us to successfully evaluate and integrate acquisitions. 

## Business Strategy 

Pursue Exploration Opportunities. Each year, we conduct exploration activities to grow our reserve base and to replace our production. In recent years we have been focused on oil development, and we limited our drilling on natural gas properties due to weak natural gas prices. 

In 2013 our Eagleville field in South Texas was the primary focus of our drilling activity. From 2010 through 2013, we spent approximately $169.5 million leasing acreage in McMullen, Atascosa, Frio, La Salle, Karnes and Wilson Counties in South Texas, which we believe to be prospective for oil in the Eagle Ford shale formation. In 2012 we entered into a joint venture arrangement to allow us to accelerate the development of this field. Our joint venture partner participates for a one-third interest in the wells that we drill in exchange for paying $25,000 per net acre that is earned by their participation. Through December 31, 2013, we have drilled 128 wells (94.3 net to us) in our Eagleville field including 75 wells (51.6 net to us) drilled in 2013. Our joint venture partner participated in 96 of these wells and contributed $61.3 million through December 31, 2013 for acreage and an additional $5.0 million to reimburse us for a portion of common production facilities. In 2013, we added 6.1 MMBOE to our proved reserves from our drilling activity in Eagleville. We have budgeted to spend $344.0 million in 2014, net of reimbursements from our joint venture partner, to drill 59 wells (40.2 net to us) and to complete 18 wells (13.3 net to us) that were drilled in 2013. 

In May 2013 we completed the divestiture of our West Texas properties that were acquired in 2011. We received proceeds of $823.1 million from the sale and recognized a gain of $230.0 million ($148.6 million after income taxes). We divested of the properties due to the substantial drilling required to maintain the leases, the opportunity to earn a substantial profit from our investment and the low returns we were realizing from our 2012 drilling activity. The divestiture allowed us to repay $722.0 million of our long-term debt and to accelerate the development of our Eagleville field. 

We spent $67.4 million in 2013 to lease 33,624 acres (21,034 net to us) in or near Burleson County, Texas which are prospective for oil in the Eagle Ford shale formation, and we spent $53.3 million to acquire 53,470 acres (51,017 net to us) in Louisiana and Mississippi, which are prospective for oil in the Tuscaloosa Marine shale. We have budgeted $77.0 million in 2014 for drilling 12 wells (7.4 net to us) on the new acreage. 

We have a significant acreage position of 84,875 acres (72,232 net to us) in East Texas and North Louisiana with Haynesville or Bossier shale natural gas potential, but in 2013 we elected to defer most of our drilling operations until natural gas prices improve. We drilled two Haynesville and Bossier shale horizontal wells (2.0 net to us) in 2013, which added 37 Bcfe to our proved reserves. 

Exploit Existing Reserves. We seek to maximize the value of our oil and gas properties by increasing production and recoverable reserves through development drilling and workover, recompletion and exploitation activities. We utilize advanced industry technology, including 3-D seismic data, horizontal drilling, enhanced logging tools, and formation stimulation techniques. 

