Executing our drilling program and further expanding in the Eagle Ford Shale
We anticipate operating up to eight rigs for the second half of our 2014 drilling program and into 2015. We are continuing efforts to lower our completion costs and improve results through the increased use of multi-well pads and more effective fracturing techniques and stimulation referred to as “zipper fracs.” As of July 2014, we own approximately 102,000 net acres in the Eagle Ford Shale, and we plan to further increase our acreage position in proximity to our existing holdings. As of July 2014, our lease position provides us with in excess of 1,600 drilling locations, or the equivalent of an approximate 12-year inventory of drilling sites.
Improving our liquidity and financial position
We are pursuing a goal of continuing to strengthen our balance sheet over the next three years. In furtherance of this goal, in January 2014, we sold our South Texas natural gas gathering assets for approximately $94 million and, in July 2014, we sold our Mississippi assets for approximately $73 million and the rights to gather and transport oil in a portion of our South Texas area for $150 million. The Mississippi assets consisted of proved reserves of approximately 26 MMBOE at year-end 2013 and production of approximately 2,100 BOEPD in 2Q14. These proceeds will fund our projected capital program outspend for 2014 and 2015. Through these actions, we lowered our debt-to-EBITDAX ratio, a non-GAAP measure defined in our revolving credit agreement, to about 2.5x as of June 30, 2014. Our goal is to maintain a level of financial liquidity (cash on hand plus availability under the revolving credit agreement) of a minimum of $150 million, and in the longer term, maintain a debt-to-EBITDAX ratio of less than 2.5 times.
Managing 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. We have hedged approximately 70 percent of our estimated crude oil production for the second half of 2014 at a weighted-average floor price of $92.80 per barrel. In addition, we have hedged approximately 25 percent of our estimated natural gas production for the second half of 2014 at a weighted-average floor price of $4.20 per MMBtu.
Retain long-term optionality of our core natural gas assets
We maintain substantial natural gas properties in the Haynesville Shale and Cotton Valley in East Texas, which are largely held-by-production. At this time, we plan to retain these assets, which provide us with the option to increase development in these regions.
Generating new exploration opportunities
We are actively seeking new exploration opportunities with a goal of early entry into emerging plays at modest lease acquisition cost. Potential opportunities that we are considering include resource and unconventional play types with a horizontal drilling application.