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.

IN PICTURES: 5 "New" Rules For Safe Investing

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.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  2. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  6. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  7. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  8. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  9. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  10. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  4. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  5. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  6. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>

You May Also Like

Trading Center