We continue to evaluate our exposure to the previously announced positive industry discoveries in
Kern County, California. We hold approximately 16,000 net acres in the Kern County area. In 2012, we
will continue to concentrate on development drilling and on recompletion projects and facility
expansions in the San Joaquin Basin. Additionally, we are participating in the acquisition of 3-D seismic
over a significant portion of our acreage and are developing a diatomite expansion project.
Other Onshore California
We hold a 100% working interest (94% net revenue interest) in the Arroyo Grande Field located in
San Luis Obispo County, California. This is a long-lived field that has heavier oil (12 to 16 degree API
gravity) and well depths averaging 1,700 feet and requires continuous steam injection. In 2011, we
spent $63 million on capital projects in this field focused on improved recovery efficiency primarily
through facility enhancements and recompletion projects. Our net average daily sales volumes from
the Arroyo Grande Field were 1.0 MBOE per day in the fourth quarter of 2011.
Construction of a produced water reclamation facility is underway. Upon completion of the facility
in mid-2013, we will begin to dewater the reservoir, allowing for improved efficiency of steam flood and
continued development drilling. Additionally, we have signed a ten-year operations agreement for the
facility which will commence upon commercial operations.
Offshore California
Point Arguello
We hold a 69.3% working interest (58% net revenue interest) in the Point Arguello Unit and the
various partnerships owning the related transportation, processing and marketing infrastructure. Our
net average daily sales volumes in the fourth quarter of 2011 were 2.8 MBOE per day.
Point Pedernales
We hold a 100% working interest (83% net revenue interest) in the Pt. Pedernales Field, which
includes one platform that is utilized to access the Federal OCS Monterey Reservoir by extended
reach directional wells and support facilities which lie within the onshore Lompoc Field. Our combined
net average daily sales volumes from our Pt. Pedernales and Lompoc Fields averaged 5.7 MBOE per
day in the fourth quarter of 2011. In 2011, we spent $25 million on capital projects primarily associated
with equipment improvements, including a significant platform upgrade associated with capacity
expansion to accommodate the drilling of additional wells. During 2012, we plan to drill additional
extended reach Monterey wells in this area and continue our focus on plug back recompletions to
maintain production.
Gulf Coast Region
Eagle Ford Shale
At December 31, 2011, we own interests in oil and gas properties on approximately 89,000 gross
acres (60,000 net acres) with 255 square miles of 3-D seismic data located in the Eagle Ford Shale.
The Eagle Ford Shale is Upper Cretaceous in age, and typical well depths range from 9,500 feet to
11,500 feet. The area is currently being developed with horizontal wells with lateral lengths ranging
from 3,500 feet to 6,000 feet at a measured total depth from 14,500 to 17,500 feet. Based on the 80 to
130 acre well spacing, we anticipate over 500 potential well locations.
Our net average daily sales volumes during the fourth quarter of 2011 were 9.1 MBOE per day, an
increase of greater than 300% from the 2.2 MBOE per day net average during the first quarter of 2011.
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