Core Oil & Gas Plays
PVA is an independent oil and gas company engaged primarily in the development, exploration and production of oil and natural gas in various domestic onshore regions including Texas, Appalachia, the Mid-Continent and Mississippi.
The year 2010 was transformational for us. We transitioned to a “pure play” E&P (exploration and production) company, and we began, and are continuing, to refocus our operations to drill in economically attractive natural gas, oil and NGL-rich areas. To this end, we disposed of our Gulf Coast assets and exited this area, invested over $150 million to increase our leaseholds in potentially higher return prospects in the Mid-Continent and the Marcellus Shale and established a position in the oil rich Eagle Ford Shale. We have also suspended drilling on our acreage located in east Texas and Mississippi, which is primarily lower return, dry gas and held by production, with the option to resume drilling there when natural gas prices justify renewed investment.
As of December 31, 2010, we had proved natural gas and oil reserves of approximately 942 Bcfe, of which 79% were natural gas and 53% were proved developed. Our operations include both conventional and unconventional developmental drilling opportunities, as well as some exploratory prospects. We believe our emerging presence in several key plays, as discussed below, positions us for meaningful growth over the next several years.
We have grown our reserves and production primarily through development and exploratory drilling, complemented to a lesser extent by making strategic acquisitions. During 2010, we replaced approximately 260% of our 2010 production by adding net proved reserves of approximately 122 Bcfe from extensions, discoveries, additions and purchases of reserves, net of other revisions. In 2010, our capital expenditures were $451.2 million, of which $243.4 million, or 54%, was related to development drilling and $140.5 million, or 31%, was related to leasehold acquisitions. The remaining $67.3 million, or 15%, was related to exploration drilling, pipelines, gathering and facilities.