Over the past three years PXP has achieved an average reserve replacement rate of 654% with average all-source finding and development costs of $7.23 per BOE, while reserve additions through discoveries, extensions and revisions replaced 120% of production at an average cost of $7.07 per BOE.
"We are encouraged by the 2004 drilling results which have continued to deliver cost effective reserve growth and attractive returns for our shareholders," said James C. Flores, PXP's Chairman, President and Chief Executive Officer. "We began our multi-year drilling programs in the Inglewood field testing the deeper Sentous and Moynier zones and in the Rocky Point structure offshore California. We increased drilling activity in several of our fields in the San Joaquin Valley and expect to nearly triple that activity in 2005. We believe the 2004 results as well as the historical performance demonstrate PXP's ability to economically expand its asset base."
Year-end 2004 estimated proved reserves of 419.3 million BOE were composed of 351.4 million barrels of oil and liquids and 407.4 Bcf of natural gas. Approximately 68% of the reserves were classified as proved developed reserves compared to 58% in 2003. PXP's reserve-to-production ratio is 16.3 years for total proved reserves and 11.1 years for proved developed reserves.
At year-end 2004, the pre-tax net present value of proved reserves, calculated according to SEC guidelines and discounted at 10%, was $3.3 billion. This compares with the Company's reported 280.9 million BOE of reserves with a pre-tax net present value discounted at 10% of $2.0 billion at December 31, 2003.
PXP's third party engineers, Netherland, Sewell and Associates, Inc. reviewed 100% of PXP's properties, including those acquired from Nuevo Energy Company, for their preparation of PXP's proved reserves report.
2004 Earnings Release
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