Net production from Callon's Permian properties increased 135% to 965 barrels of oil equivalent per day (Boe/d) in 2011 from 411 Boe/d in 2010. The company drilled 36 gross (33 net) vertical Wolfberry wells in 2011 and net production from the properties at year-end 2011 was approximately 1,300 Boe/d.
At the Pecan Acres Field, the two initial wells have been drilled and stimulated, and are currently flowing back in preparation for first production. In addition, a third well has been drilled, but not yet completed, and a fourth well is currently being drilled. Callon plans to complete the third and fourth wells in March 2012.
Based upon Callon's ongoing evaluation of its acreage position in the East Bloxom Field, located in Upton County, TX, and recent industry drilling results in northern Upton County and western Reagan County, TX, the company plans to commence a horizontal drilling program at its East Bloxom Field targeting the Wolfcamp B shale during the second quarter of 2012. Callon recently contracted a new-generation drilling rig under a two-year contract to execute the East Bloxom program.
Additionally, Callon has recently expanded its Permian Basin acreage position by 150% to 24,009 net acres from 9,539 net acres at December 31, 2011 with the acquisition of 16,020 gross (14,470 net) acres. The new leasehold is located in the northern portion of the Midland Basin which has had limited drilling activity relative to recent drilling and evaluation efforts in the southern portion of the basin. Callon has an average 90% working interest across the contiguous acreage positions and is the operator. The lease bonus payments were funded from existing cash balances. The company expects to acquire 3-D seismic data in the first half of 2012 and commence drilling to delineate the acreage in the third quarter of 2012. Callon has performed technical analysis of the newly acquired acreage and believes that the acreage is prospective for horizontal drilling of the Cline shale and vertical drilling of multiple intervals. Callon is continuing to pursue additional leasing opportunities in the area.
Callon produced 1.8 MMboe for the year 2011, comprised of 54% crude oil and 46% natural gas and natural gas liquids. The company's production and reserve growth initiatives continue to focus primarily on the Permian Basin, building a multi-year portfolio of oil-weighted drilling locations. In order to advance its growth plans, Callon will be directing a significant amount of its capital budget in 2012 to horizontal drilling and new acreage initiatives in the Permian Basin. The company believes the potential for increased production rates and improved capital efficiency from its horizontal drilling initiatives will enhance the quality of Callon's asset base as this program evolves over time.
Given the near-term production impact of a transition to horizontal drilling in 2012, including reduced vertical activity and the timing of initial production from horizontal completions, and scheduled downtime at the Medusa and Habanero Fields, the company estimates that full-year production for 2012 will approximate 1.7 – 1.9 MMboe. Importantly, Callon anticipates that Permian production will grow approximately 100% in 2012, reflecting the growing contribution of this basin to the company's total production.