The Company had gross revenue from oil and gas production from twenty-two wells during the year of $2,153,519, as compared with $1,313,123 from six wells in 2011.
Lease operating expenses for the year were $319,980 as compared to $194,175 in 2011. The increase in operating expenses is due to the increase in number of wells from six to twenty-two.
The Company had exploration expense of $309,656 during the year ended 2012. The exploration expenses result from the related investments in drilling two dry holes on the Sarco Creek 3-D project during the first quarter of 2013. During the prior year period the Company incurred $1,004,229 in exploration expense resulting from the drilling of four dry exploration wells on four different prospects.
Production and Reserves - Year-End 2012
The Company's December 31, 2012 reserves were evaluated in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities by Cawley, Gillespie and Associates, Inc., ("Cawley") Petroleum Consultants of Fort Worth, Texas. The report prepared by Cawley is dated April 24, 2013 and effective December 31, 2012.
Proved reserves at December 31, 2012 more than doubled to 486.4 MBOE, over year-end 2011 proven reserves of 234.2 MBOE. The year-end 2012 proved reserves consists of 129.3 MBBL of oil and 2,142.3 MMCF of natural gas, as compared with 50.8 MBBL of oil and 1,100.4 MMCF of natural gas in 2011. In addition, Cawley estimates probable reserves, net to the Company, of 135.1 MBOE, consisting of 57.6 MBBL oil and 465.1 MMCF natural gas, as compared with no comparable reserves in 2011.
The net present value of Doxa's proved reserves, before tax and using a 10% discount rate ("PV-10"), increased 54% to $10.959 million, as compared with $7.107 million at the end of fiscal year 2011.
The Company more than doubled its net production of oil and gas in 2012 to 58.4 MBOE, as compared with 22.7 MBOE for the twelve months ending December 31, 2011. During 2012 the Company produced 13,230 BBLs of oil and 271,217 MCF of natural gas, versus 8,151 BBLs of oil and 87,335 MCF of natural gas for the same period in 2011.
Notable Project Updates
Mississippian Lime Play - The Company continues to actively participate in exploratory and development drilling within the Mississippian Lime Play of northern Oklahoma. Doxa owns undivided interests in 17,347 gross acres of leasehold (being 3,469 net), primarily situated in Alfalfa, Grant and Kay Counties, Oklahoma. As of December 31, 2012 the Company had participated in sixteen gross wells, or 0.48 net, with several additional wells in various stages of drilling and completion. The Company invested approximately $2 million in drilling and completing the sixteen producing wells, which at year end were generating approximately $90,000 in net revenue per month after deduction for royalty and taxes.
Sarco Creek 3-D Project - As previously reported, Doxa owns 30% interest in a proprietary 3-D seismic survey covering more than 35 square miles in Goliad and Bee Counties, Texas. During 2012 the Company participated in two out of four planned initial exploratory wells, which were both unsuccessful. Management expects to commence an additional well in the second quarter 2013, and subject to favorable results a fourth well in the second half of the year. The primary objective in the planned drilling is the Frio formation above 5,000'.
Eagle Ford Shale Play - On February 2, 2012 the Company agreed to sell 10.52% out of its 20% interest in the proposed Peeler Ranch No. 2-H well to third parties in an arm's length transaction. Proceeds from the transaction total $847,497, which funds have been used to fund ongoing operations. Doxa retained 9.48% working interest in the Peeler Ranch No. 2-H well, which was successfully completed. Also during 2012, Company management announced its intent to divest of its remaining undeveloped holdings in the Eagle Ford Shale Play in order to intensify its efforts and resources on the continuing development of its interest in the Mississippian Lime Play. In this regard, on July 19, 2012 and August 6, 2012, respectively, the Company closed on the sale of its remaining 13% under the Pfluger undeveloped leasehold and 20% under the Peeler Ranch undeveloped leasehold, both of which are located in Atascosa County, Texas. Collectively, the divestiture included Doxa's interest under 2,565 gross acres (465 net acres) and resulted in sales proceeds net to the Company of $644,293.
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