Several exploration and production companies reported high growth in proved reserves at the end of 2010, as these companies aggressively developed properties during the year. Here are four companies active in different oil and gas basins that stand out among its peers in this metric.

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The Leaders
Kodiak Oil and Gas (NYSE:KOG) reported proved reserve growth of 158% over last year, as the company moved quickly to develop its properties exposed to the Bakken and Three Forks formations. The company reported 11.5 million barrels of oil equivalent (BOE) of proved reserves at the end of 2010, compared to just 4.5 million BOE last year. Although this growth was helped by the acquisition of leasehold in 2010, the company is still among the top in this category. Another advantage for Kodiak Oil and Gas is that 87% of its proved reserves were composed of crude oil, a commodity that is viewed favorably by investors relative to natural gas.

Also active in the Bakken and Three Forks formation is Continental Resources (NYSE:CLR), which reported proved reserves of 364.7 million BOE in 2010, up 42% over 2009. Most of the proved reserve additions came from development of the Bakken in 2010, where the company drilled 76.5 net wells in 2010. Like Kodiak Oil and Gas, the company's proved reserves are composed mostly of oil.

Carrizo Oil and Gas (Nasdaq:CRZO) reported proved reserves of 842 Bcfe at the end of 2010, representing 40% growth over last year. While this was solid growth, 79% of these proved reserves were composed of natural gas due to the company's development of the Barnett Shale in Texas.

One positive item from the Carrizo Oil and Gas proved reserve report is that the company booked its first reserves in the Eagle Ford and Niobrara Shale in 2010. These are two liquid areas that the company is developing to transition away from its natural gas base. While these proved reserves are still a small part of the company's total, it demonstrates progress towards its goal.

EXCO Resources (NYSE:XCO) reported 1.5 Tcfe of proved reserves in 2010, 56% above the 959 Bcfe reported at the end of 2009. EXCO Resources is even more oriented to natural gas than Carrizo Oil and Gas, and had 97% of its proved reserves composed of this commodity in 2010.

EXCO Resources has the majority of its proved reserves and production from the Haynesville Shale, and is also increasing development of acreage in the Marcellus Shale.

Artificial Lift?
The entire industry was helped with the growth in proved reserves in 2010 due to the method that the Securities and Exchange Commission (SEC) requires companies to follow. The SEC requires proved reserves to be determined using the average of first of the month prices over the preceding 12 months. Since oil and natural gas prices were weak in 2009, the industry is using substantially higher prices this year to calculate proved reserves.

Exploration and production companies present a confusing number of metrics and data at the end of every year. One measure that investors can look at when analyzing a company is the amount and growth of proved reserves. (For related information, take a look at Understanding Oil Industry Terminology.)

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Tickers in this Article: XCO, CLR, KOG, CRZO

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