Continue to expand oil and NGL reserves and drilling inventory
Following the recent Eagle Ford Shale acquisition, we anticipate spending up to approximately $500 million to $530 million for capital expenditures in 2013, of which approximately 94% will be allocated to our Eagle Ford Shale acreage. Through October 30, 2013, we had amassed approximately 107,000 gross (67,000 net) acres in the Eagle Ford Shale with approximately 1,060 well locations and approximately 890 undeveloped drilling locations. Our proved reserves in the Eagle Ford Shale increased from approximately 26 million barrels of oil equivalent (MMBOE) at December 31, 2012 to approximately 51 MMBOE at June 30, 2013, with total reserves, including probable and possible reserves, of approximately 170 MMBOE.
Grow our cash flows and margins
We expect our operating cash flows and margins will continue to grow, on a pro forma basis taking into consideration recent asset sales, as we increase our oil and NGL production through investment in higher rate-of-return development oil projects.
Maintain our liquidity and financial position
We expect to continue to use our operating cash flows and borrowings under our revolving credit facility to fund our capital requirements in 2013. Based on our capital expenditure plan for the fourth quarter of 2013 and 2014, the contribution to our cash flow and reserve value, we expect to fund our development plan through operating cash flow and undrawn capacity on our revolving credit facility.
Maximize long-term optionality across our portfolio
Our substantial Haynesville Shale and Cotton Valley Sands properties are largely held by production. Retaining these assets provides us the option to deploy capital on these leaseholds in a higher natural gas price environment. Given that these properties are past their initial production declines, we feel they will exhibit a more gradual decline in the future and, based on estimated reserves, have a long reserve to production life. We also continue to evaluate divestment opportunities with respect to our non-core assets with limited near term development. We expect that any divestitures of these non-core assets will provide us with cash to reinvest in higher growth oil- and NGL-focused projects. Further, as production from our Eagle Ford Shale acreage grows, we have the ability to monetize these assets to improve our overall operating cost profile and liquidity.
Manage risk exposure through an active hedging program
We actively manage our exposure to commodity price fluctuations by hedging the commodity price risk for our expected production. The level of our hedging activity and duration of the instruments employed depend upon our cash flows at risk, available hedge prices and our operating strategy. As of late October 2013, we have hedged approximately 79% of our estimated fourth quarter 2013 crude oil production at an average floor/swap price of $94.69 per barrel. In addition, as of late October 2013, we have hedged approximately 69% of our estimated fourth quarter 2013 natural gas production at an average floor/swap price of $3.82 per MMBtu. We will continue to target an overall hedged percentage resembling our current percent of expected production.