Permian Basin Consolidation and Strategic Acreage Acquisition
CONCHO
Cautionary Statement Regarding Oil and Gas Quantities
The SEC requires oil and gas companies, in their filings with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically producible-from a given date forward, from known reservoirs,
and under existing economic conditions (using the trailing 12-month average first-day-of-the-month prices), operating methods, and government regulations-
prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether
deterministic or probabilistic methods are used for the estimation. The SEC also permits the disclosure of separate estimates of probable or possible reserves that
meet SEC definitions for such reserves; however, we currently do not disclose probable or possible reserves in our SEC filings.
In this presentation, proved reserves attributable to the Company at December 31, 2011 are estimated utilizing SEC reserve recognition standards and pricing
assumptions based on the trailing 12-month average first-day-of-the-month prices of $92.71 per Bbl of oil and $4.12 per MMBtu of natural gas. The Company's
estimate of its total proved reserves at December 31, 2011 is based on reports provided by Cawley, Gillespie & Associates, Inc. and Netherland, Sewell & Associates,
Inc., independent petroleum engineers.
Proved reserves estimated for the Three Rivers acquisition are internal estimates based on a price of $98.20 per Bbl of oil and $4.24 per MMBtu of natural gas
held flat over the life of the reserves, and are not determined in accordance with SEC rules. Accordingly, proved reserves actually booked for the Three Rivers
acquisition in the Company's SEC filings may be lower than the internal estimates included in this presentation.
We may use the terms "unproved reserves," "EUR" per well and "upside potential" to describe estimates of potentially recoverable hydrocarbons that the SEC
rules prohibit from being included in filings with the SEC. These are the Company's internal estimates of hydrocarbon quantities that may be potentially
discovered through exploratory drilling or recovered with additional drilling or recovery techniques. These quantities may not constitute "reserves" within the
meaning of the Society of Petroleum Engineer's Petroleum Resource Management System or SEC rules and do not include any proved reserves. EUR estimates
and drilling locations have not been risked by Company management. Actual locations drilled and quantities that may be ultimately recovered from the
Company's interests could differ substantially. There is no commitment by the Company to drill all of the drilling locations which have been attributed to these
quantities. Factors affecting ultimate recovery include the scope of our ongoing drilling program, which will be directly affected by the availability of capital,
drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals
and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of unproved reserves, per well EUR
and upside potential may change significantly as development of the Company's oil and gas assets provide additional data.
Our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from
existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
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