Ourcoststodrilland completethesewellsare downconsiderablywhich isallowingustodrill33% morenetwellsin2013 withonlyan8%higher spending level. 

In our South Texas region we have 32.8 million barrels of oil equivalent in reserves which is 28% of our total reserves. 56% of our reserves in this region are oil. We have 35,000 acres (28,000 net) in South Texas that are in the oil window of the Eagle Ford shale play. This region accounted for 73% of our oil production in 2012 at 4,600 barrels of oil per day and 11% of our natural gas production at 24 MMcf per day. Natural gas production in this region fell by 23% in 2012 but oil production increased 140% as a result of our Eagle Ford shale drilling program. We spent $203 million in 2012 to drill 30 (20.5 net) horizontal Eagle Ford shale wells. These wells had an average per well initial production rate of 675 barrels of oil equivalent per day. We plan to spend $219 million in 2013 to drill 42 (27.3 net) Eagle Ford shale horizontal wells. Our costs to drill and complete these wells are down considerably which is allowing us to drill 33% more net wells in 2013 with only an 8% higher spending level. 

In our West Texas region we have 26.8 million barrels of oil equivalent in reserves which is 23% of our total reserves. 76% of our reserves in this region are oil. We have 89,000 acres (54,000 net) in the Permian Basin in West Texas. We believe that these properties are prospective for oil development primarily in the Avalon, Bone Spring and Wolfcamp shales. This region accounted for 22% of our oil production at 1,400 barrels of oil per day and less than 1% of our natural gas production at 2 MMcf per day. We spent $184 million in 2012 to drill 48 (30.5 net) wells. These wells had an average per well initial production rate of 322 barrels of oil equivalent per day. We plan to spend $169 million in 2013 to drill 33 (27.2 net) wells including eight horizontal wells targeting the Wolfcamp shale. 

## E a s t T e x a s / N o r t h L o u i s i a n a R e g i o n 

At the end of 2012, we had 342 Bcfe of our proved reserves (48%) in our East Texas/North Louisiana region. The properties in this region are essentially all natural gas. In response to the very low natural gas prices we discontinued drilling in this region and moved all of our operating drilling rigs to our oil regions during the first quarter of 2012. As a result our production from this region, which averaged 196 MMcfe per day in 2012, declined by 8% from 2011. Most of our proved undeveloped reserves in this region had to be written off by the end of 2012 due to the low average natural gas price in 2012. In 2012, we spent $101 million in this region to drill seven wells (3.2 net) and to complete 16 wells (10.4 net) that were drilled in 2011. We currently have 94,000 gross acres and 80,000 net acres that we believe are prospective for Haynesville or Bossier shale development. We believe that our acreage has over 6 Tcfe of combined reserve potential for these two plays. We expect to have minimal activity in this region in 2013 unless natural gas prices improve. 

## S o u t h T e x a s R e g i o n 

## West Texas Region 

## Oil Proved Reserves 

Million Barrels 

2011 

32.1 

2010 

4.2 

## Natural Gas Proved Reserves 

2011 

1,119 

2010 

1,026 

2012 

39.2 

Bcf 

2012 

477 

