Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Comstock Resources Earnings Conference Call. My name is Jeremy, and I'll be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today, Mr. Jay Allison, President and CEO. Please proceed, sir.

Jeremy, thank you, and thank you for all those that are attending the conference call. We changed up the format a little bit. Traditionally, we'd put our results out at the end of the day and then we would distribute [ph] with analysts whatever and then we would have the conference call the next morning. I think this format might serve us better. We are flying to a conference tomorrow and we'll have 24 meetings on Tuesday, Wednesday so that's why we changed this format. I would like to welcome everyone to the Comstock Resources Fourth Quarter and Year End 2011 Financial and Operating Results Conference Call. You can view a slide presentation during or after this call by going to our website at www.comstockresources.com and clicking Presentations. There, you will find a presentation entitled Fourth Quarter 2011 Results. I am Jay Allison, President of Comstock. And with me this morning is Roland Burns, our Chief Financial Officer; and Mark Williams, our VP of Operations. During this call, we will review our 2011 fourth quarter financial and operating results, report on the results of our 2011 drilling program and discuss our plans and outlook for 2012. Please refer to Slide 2 in our presentations and note that our discussion today will include forward-looking statements within the meaning of securities laws. While we believe the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct. The 2011 highlights. Please refer to Page 3 of the presentation where we summarize the highlights of 2011. In 2011, we had a very strong production growth, with production increasing 31% over 2010. The successful Haynesville shale program drove much of the production gains while the Eagle Ford shale program is allowing us to increase our…

Thanks, Jay. On Slide 4, we show our oil and gas production on a daily basis the last 4 years and we also separate it by operating region. Production from the Haynesville shale program on the chart is shown in blue and now we're showing the contribution from our Eagle Ford program in yellow. In the fourth quarter of this year, our production averaged 277 million cubic feet of natural gas equivalent per day, 48% increase over the fourth quarter of last year but about 3% lower than production in the third quarter of this year. Oil production of 3,800 barrels per day in the fourth quarter was up 78% from the third quarter. And oil now makes up 8% of our total production, as compared to only 4% in the previous 3 quarters. Eagle Ford averaged 20 million per day in the fourth quarter, as compared to about only 9 million a day in the third quarter of this year. On December 31, we estimate that oil made up 16% of total production, which we put in the press release, when taking into account the Permian properties that we closed on, on December 29. Our Haynesville production in the quarter decreased 184 million per day, as compared to the 200 million a day we had in the prior quarter because we had very little completion activity in the fourth quarter. Next quarter, we expect our Haynesville production to increase as we're completing the 14 wells that we carried over from last year. Production from our Cotton Valley wells decreased slightly in the quarter to 37 million per day. In the South Texan--, the South Texas region, when you exclude the Eagle Ford, also decreased slightly to 29 million per day, and our other regions remained unchanged at 7 million…

Thank you, Roland. On Slide 19, we have an updated map of our holdings in the Haynesville shale play in North Louisiana and in East Texas. You can see our acreage highlighted in blue. We have increased our acreage to 96,000 gross acres and 82,000 net acres that we believe are prospective for Haynesville shale development. With better natural gas prices and expected well spacing of 80 acres and an expected per-well recovery of 6 Bcfe per well, our acreage could have 4.6 Tcfe of resource potential. On Slide 7 -- on Slide 20, we also outlined our Bossier shale acreage and the base for the same acreage that's prospective for Haynesville is also prospective for the Bossier shale development, which could add another 2.7 Tcfe of potential, as shown on this slide. On Slide 20 (sic) [Slide 21], we recap our activity in our East Texas-North Louisiana region for 2011. Our activity in this region was primarily focused on developing our Haynesville and Bossier shale properties. We drilled 64 wells, 28.3 net, in this region in the 6 different fields, and all but 2 were Haynesville or Bossier shale wells. And all of these wells were successful. We completed 84, or 42.3 net, of our Haynesville and Bossier shale wells in 2011. The wells drilled and completed in 2011 were put on production at an average per-well initial production rate of 10.7 million cubic feet equivalent per day under our restricted choke program. Since we have initiated our Haynesville shale program in 2008, we have now drilled a total of 180 wells and 105.6 net wells. On Slide 22, we provide an update of our backlog both uncompleted Haynesville and Bossier shale wells. We've been talking about this all year since late 2010 when we had the shortage of…

All right, thanks, Mark. On Slide 33, we outlined what we expect to spend in 2012 on our drilling program. So as Mark said, with the continued weakness in natural gas prices, which worsened in January compared to where that we thought they were in December, we did recently reevaluate our drilling plans for 2012 to further deemphasize natural gas drilling and to reduce the overall drilling expenditures that we're going to incur in 2012. So we're now down to 2 rigs drilling for natural gas in North Louisiana, as compared to the 7 operated rigs we were running in 2010. Last year, we moved 2 of these rigs to our oil-focused Eagle Ford shales drilling program and we also released 3 rigs. We plan to move the remaining 2 natural gas-directed rigs to our Permian properties in February and then also in early March of this year. Our revised drilling plans now calls for us to spend approximately $458 million in 2012, which will draw 84 wells or 60.6 net wells, as well as complete an additional 29 wells or 19.1 net wells that we drilled in 2011. We'll spend $158.3 million to drill the 43 wells or 38.8 net wells that Mark talked about on our Delaware Basin properties in West Texas and then we'll also complete the 4 wells, so the 2.5 net wells that were drilled before we completed the acquisition. We'll spend $165.2 million in our South Texas region to drill 24 wells or 21.7 net wells in our Eagle Ford shale horizontal program in 2012 and $27.7 million to complete the 4 wells or 3.2 net wells that we drilled in 2011 in South Texas. In the East Texas-North Louisiana operating region, we'll spend the remaining $45.4 million to drill 17 wells, but this is only 5.1 net wells, and all of these will be Haynesville or Bossier shale wells. Only 3 of these wells are operated wells that Comstock is drilling, but the remaining of the net wells being just estimated wells that we think will be drilled by our -- other operators where we have a small interest in the units. Our largest expenditure in this region will be the $61.4 million that we're spending here mostly in the first quarter to drill the wells that we drilled, to complete the wells that we drilled in 2011. So under the revised 2012 drilling plan that we've put forward here with in our press release we did a week or so ago, 92% of the net wells that we're going to drill in 2012 will be oil wells, and then 77% of our budget will be spent on oil projects. So now I'm going to turn it back over to Jay to kind of summarize our results.

So if you look at the 2012 outlook -- and again, Mark, thanks for going over again the transformational event that we've had in the acquisition of the Permian and also the Eagle Ford. But then, yes, if you look at catalysts for transformational events, I think, toward the end of last year, we demonstrated that we have those. If you'd kind of take a capsule of 2011 in a paragraph, before you get to 2012, 2011 is history for the most part. In 2011, we had very strong production growth: 31% over 2010; very strong oil production growth, which made up 16% of oil production at year-end 2011 versus only 4% in the first half of 2011; we had strong growth in our financial results. As Roland told you, we increased production, we lowered our operating costs. Revenues were up 24%, EBITDAX up 35%, operating cash flows up 35%. We had 25% production growth of proved reserves and our total cost structure continued to be among the lowest of the E&P sector. So now that, that is, for the most part, history, what about 2012, where are we? And if you look at Slide 34, despite the dismal outlook, which we're aware of for natural gas prices or the very warm winter we're having, we're more excited than we've ever been about the prospects for Comstock this year of 2012. We expect the strong growth in our oil production will be more than offset -- will more than offset the lower natural gas prices to allow us to have higher revenues and cash flow and be a much more profitable company in 2012. We expect oil to comprise 14% to 16% of 2012's production and over 20% of production at the end of the year. Oil now makes up…

[Operator Instructions] Our first question comes from the line of Brian Corales with Howard Weil.

The, one quick question, the drilling budget, do you all have a budget for what's not drilling. I mean, any leasehold estimates or, for 2012?

Yes, this is Roland, Brian. No, we really don't expect to spend any significant amount for leases in 2012. We've really, we did a lot of that in 2011, really have a lot of stuff on our plates, so we have no leases expiring in 2012 so it's a...

Okay, so that's the total budget, the $458 million?

Right.

Brian, I think, if you look at the Haynesville Bossier, we have, say, 140,000, net acres, which 82,000 of that is Haynesville and 58,000 is Bossier and it's overlapping. And we've got the 7.3 Tcfe of upside there as far as reserve potential. We'll drill 3 net wells this year that we operate, and that's it. Come March, we won't have any wells drilling for gas and all that will be held for 2012. And maybe we have to drill a couple of wells in 2013 for that 140,000 net acres. So in order to hold acreage, it's a very nominal program this year and next year so it kind of inventory there. We've put all that on the shelf, so now what do you do? Well, you have to have a couple rigs drilling for oil in the Eagle Ford, which you've got 2 rigs now and if we could ramp up to 3 or 4, that would be good. But in our budget, we have 2 rigs and that answers your question, that will hold that acreage. And I think, in the Permian, we've got 2 rigs now, we'll add a third and then a fourth. And I think, as the years go by, we'll ramp that up to maybe a 6-rig, 7-rig program, but in order to hold acreage, the rigs that we've told you we would use to drill wells on those 3 basins this year completely satisfies all of our 2012 obligations.

And the 10-well pad that, in the Haynesville, when do you all-- is that online, or is it about to come online? When is that, when should that come online?

Brian, this is Mark. We have, all the wells have been frac-ed. 1 of them is flowing back, cleaning up. The other 9, we're in the process of drilling out the frac plugs. So we expect those to start coming online over the next 1.5 weeks, 2 weeks, to start cleaning them up.

Okay. And then one final question. Looking at the Eagle Ford, I mean, it looks like that central McMullen acreages you have has been very, very impressive with the rates. What are you all seeing kind of from Northern McMullen or even as you get north of McMullen versus the central portion? I mean, what are you all seeing, is there a cost difference? Is the rock not as good? What is the difference between that acreage?

Brian, generally, as you go from north to south over here, you get a little improvement in the rock quality, but it's really a pressure difference. The wells to the south, the Swenson, the Hill, the Gloria Wheeler wells, they have more reservoir pressure, a little more energy so you get a higher IP. What we have seen on our production declines, though, is even the wells kind of in the middle, the Cutter Creek, the Carlson, the Donnell, they don't IP as high but they EUR almost as high as the wells to the south so you get about the same amount of oil out, you just don't get it out quite as fast. And so that's really the difference in the, as you go from north to south.

And if you had to take in over under on that, the 400,000 EUR, what would you kind of excavate?

For us, I think, on a weighted average, we're -- it's over. We feel that's a good, conservative weighted-average type curve. But everything so far, we look at on our wells, it's been meeting or exceeding our type curves.

I think, to the south, Brian, you're going to get to the plus 400,000. To the north and you might get a little less than that, but I don't know that you'd get that much less mainly because of what Mark has said to you, given our higher IP to the south, that your decline rates are a little steeper to the south than it is to the north.

Our next question comes from Ron Mills with Johnson Rice. Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division: Question on the Permian. The 2 rigs are currently drilling the Wolfbone, I assume. Is the plan to take the other 2 rigs to and just drill Wolfbone as well? And at what point do you think you'll start to or when do you think you'll drill your horizontal Wolfcamp?

Ron, this is Mark. We have, the other 2 rigs that we're moving from the Haynesville, 1 of them is in the process of rigging up in West Texas. The other 1 will move in about the 1st of March. And they are all scheduled to drill vertical Wolfbones, this well, except right now we have one horizontal well scheduled in the second quarter. And then we're going to look at those results and we're doing a lot of science: microseismic coring, additional logging, some modeling. And so as we gain this information, we'll build our horizontal program kind of out of our vertical program, but we just aren't quite ready to, science-wise, to do that yet. Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division: And when you look at the offset operator activity and with the prior drilling programs in your 2012 plans, it looks like almost all your acreage is going to be de-risked from a Wolfbone standpoint. Have any of the offset operators started testing the horizontal Wolfcamp, offsetting you in Reeves?

Not in our immediate area. There's activity just across the river in Ward County. It's mostly third Bone Spring, but that's right at the top of the Wolfcamp and we think that's really a Wolfcamp frac-ing. Also, to the northwest of us, kind of along around our farthest northwest acreage, Petrohawk is very active and they've, but they've just started. We don't have any results from that yet. I think they're testing various intervals in the section. Several of the other independent operators around us are talking about doing this, but nobody has drilled one yet. They're really vertical players and they're just, they're going to step out into it here shortly, but they haven't done it yet. Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division: Okay. And can you refresh our memory in terms of, what agreements you have in place from a completion standpoint, both for the Eagle Ford and the Permian and the status of those contracts? Just given all the talk on pressure pumping prices coming down, what kind of outlook do you have on that cost side?

On the Eagle Ford, we used our Haynesville crew and we made a deal to rotate that crew back and forth to cover the Eagle Ford and the Haynesville. And so that contract is, for this year, it actually runs out in June, at the end of June with Schlumberger. It adjusts quarterly to market conditions. In West Texas, we don't have a contract signed yet. We're working on building our schedule. We've talked to various service providers. I'm very encouraged: There's more interest in capacity than I, we even thought there might be out there, seem like we've got a good number of providers that are very interested in the work at this point. Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division: And in terms of overall savings, in terms of a well cost in the Eagle Ford, what do you expect the potential savings on the drill cost to be?

As far as just going forward? Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division: Going forward, right, given the pricing pressure.

We think we'd get 10% to 20% on our frac cost going forward as more people move their crews down there and that supply outruns the demand. And then the, one of the largest savings for us is going to be when we really go to pad drilling, to full development. We've seen savings in the $0.5 million to $1 million per well in range in our Haynesville and we expect those same types of savings to occur in the Eagle Ford. Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division: And what are you expecting your typical, what is your typical Eagle Ford well costing right now?

They're around $8.5 million now. So in development mode, I think we're looking at a, in the $7.5 million range. Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division: Okay. And then, Roland, you mentioned the pricing differentials or the oil realizations for your Eagle Ford productions, are you selling all of that on spot? It sounds like you're getting Gulf Coast pricing. Do you have marketing arrangements in place? And prospectively, how much -- do you think it can come back to where you've been averaging 100%, 101% of WTI, or do you think it'll be somewhere between that and 107% that you had there in the fourth quarter?

Well, I think that the pricing in the Eagle Ford is going to be, in the future, is going to be more tied to Gulf Coast, Louisiana Gulf Coast-type pricing because that's where the oil is all going and that's where the new marketing arrangements will be. Now the relationship of those price, index prices to WTI is all based on how, what happens to those indexes. They've tightened up a lot from the huge disconnect they had in especially early fourth quarter. So if that trend continues and they don't separate back apart, then we wouldn't -- we would expect our Eagle Ford oil production to still be at a lower premium to WTI but maybe not as large as the $6-per-barrel type premium we were getting in the fourth quarter.

Thank you Ron. Ron, as far as service completion providers, I mean, we are working with our service provider in the Eagle Ford to maybe come down and do some wells if there's not a lot of wells in the Permian. And their relationship carries to a different region, too, as you know.

And our next question comes from Kim Pacanovsky with MLV and Company. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: How many wells do you have 90-day rates on now in the Eagle Ford?

Oh gosh, Kim, probably about 10 or 12, but I don't have 90-day rates in front of me. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Okay. And I'm just curious, if they came in where you had anticipated and if you take the Jupe out of the picture, what your lowest IRR at a $90 price or $100 price is, whatever number you might happen to have, if you have a number like that off the top of your head.

Yes, I don't have what the -- I'm sure that our NWR well would be our lowest IRR, but I don't have that number in front of me. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Okay, could I get that later after the call? Just curious. I'm just curious what the worst well is as we look at the acreage...

Let's talk about the best well, Kim.

We, Kim, we will get that to you. That's a great question. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Okay. And then...

Yes, $100 oil plus the premium makes a lot of them pretty good. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Yes, I'm sure. And then in Gaines County and the exploration program there, can you just detail a timeline of what you're going to do when there? And also, what other operators are near you and how far away and what kind of results they've seen?

Kim, as far as other operators, this is really a little exploration play and any activity in the near vicinity of us. All the activity would be Wolfberry, but it would be 10 to 20 miles to the south. And so it's really an exploration play based on log properties and our knowledge of what we like to see in a shale play. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Okay, and when will you be drilling your first well there?

We haven't finalized anything. We may discuss drilling one this year in place of one of our Reeves County wells, but we don't need to. With all these, all these lease are really fresh and so we don't know that we really need to go over there and drill one. We've got a big [indiscernible]owner and we wanted to, we'd want to talk about a deal with and kind of run the game and making sure we own all the leases that we want to own before we go forward with drilling. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Okay. And what's your tolerance for hedging? I was pleased to see some of these oil hedges coming in. What, how high of a percentage of the oil production do you think that you're going to hedge if you have opportunities for attractive prices?

Kim, this is Roland. Well, I think we'll be hedging between 50% to 75% of our oil volumes, going forward and... Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Wow, this is like the new you.

Well, we, our -- as you look at, if you look at our 2012 business plan, we're most vulnerable to oil prices falling off, right, but we think-- they think it's gas prices, but gas prices are already bad. We're not drilling hardly any gas wells. And they have a more limited impact to the gas prices, to think we'll come back in the long run that the, for oil prices to drop. And we made a large acquisition, an oil acquisition in the Eagle Ford program, and so we definitely want to protect that part and let that part of the company grow. We're seeing, just with current prices out there now, oil will make up 50% of our entire revenues this year and that's a very dramatic change from when it only made up, in 2011, it was only 18% of our revenues. The future for the company in the next 2 years, while gas is out a balance, is oil and we'll aggressively protect it, especially when we can lock in this near-$100-plus area because that's very strong returns for the, all of our programs. Even, maybe even the far-north Eagle Ford wells would be very good at this kind of price. Kim M. Pacanovsky - McNicoll, Lewis & Vlak LLC, Research Division: Okay, all right. Well, that's great. And what is the current Eagle Ford production running today, do you have a number on that? I didn't hear it, unless I missed it.

Kim, gross, it's about 6,000 or -- between 6,000 and 7,000 barrels per day. So about between 5,000 and 6,000...

Take about, yes-- 75% of that to get closer to our net, yes.

Thank you, Kim. I think you'll be pleased with this, how we are at $90 when we get that for the 10 to 12 Eagle Ford wells that have been producing for 90 days. And on the Gaines County, again, over a year ago, we had been acquiring acreage in Gaines County. And then once we were able to acquire the bigger footprint in the Permian, I mean, we disclosed that we had added the Gaines County. And then if you look at our balance sheet, what we're trying not to do is overspend our operating cash flow plus the divestitures that we'll have this year. That's why, when you ask Mark, we may drill a well in Gaines County. Those leases are new, they're 3-plus-year leases so we don't have to drill any wells this year in Gaines. It would be nice if we could drill 1 or 2, that would be vertical wells. And then like Mark said, you can -- there's a little bit of science to that. But there is a big mineral owner, and the big mineral owner would participate in, then maybe we could have a pretty big program there. But our goal is to continue to stay financially sound, as you know. And then as far as the hedging, your comment, we always try to hedge if we have a big acquisition. And a $340-some-odd million acquisition at the Permian, even though it was 1,300-plus barrels of net oil a day, that's a big acquisition. So hopefully, you can see that we demonstrate that, to protect that acquisition and even to make the acreage a little more valuable to the north and Eagle Ford, we go ahead and put these hedges in. And if oil stays up and our oil production continues to grow, which we expect, then we'll continue to add hedges on. So hopefully, that will give the market some comfort in what we're doing.

And our next question comes from Dan McSpirit with BMO Capital Markets.

Just referring to Slide 31 in your corporate presentation in today's presentation, which illustrates the locations of wells you will drill this year in Reeves County. I noticed the 2 northernmost wells that may be off a little bit outside of the concentrated area. Any thoughts on what your expectations are for those 2 wells and the amount of surrounding acreage involved in those or approximately to those 2 wells and maybe the timing of those results?

Dan, I'm not really sure when those 2 wells are scheduled. I'll tell you they're sometime this year, but I'm not going to guarantee when. As far as expected results, we haven't seen much change in rock properties, going north, looking at logs and other activity so we really expect them to perform very similarly to the other acreage that we have.

Okay. And then staying in Reeves County, what development spacing will you test this year?

We really don't have any plans this year to test a development spacing. Our drilling program in Reeves is focused on maintaining our lease schedule and so it's really spread, you can look at it, it's really spread out.

Okay, very good. And then just turning to the subject of natural gas, maybe one that all would like to forget, I guess. But if we will look at 12-month strip pricing today, it's closer to $3 per MMBTU versus, say, $4 per MMBTU. What might that mean for reserve bookings going forward as much of your proved reserves are still weighted toward natural gas? And any thoughts on what impact that might have on your redetermination regarding your own bank borrowing base and how that might be offset by reserve bookings associated with oil and your liquids assets?

Well, I think that, Dan, if you're looking at especially SEC reserves, the way that that's calculated, kind of a 12-month historical price, that is, if those low prices stay in effect, I mean, I think that the undeveloped gas reserves will be the most challenged to still be economic. I think that the positives are that we've seen some big reductions in total development costs for those type reserves that may help them stay economic at the price, if the price maybe boost down on the SEC side. The, but a lot of the -- of course, it doesn't really have any impact on the developed producing reserves because the lifting costs are so low on those type properties.

Okay, great. And then 2, quickly, 2 modeling questions here. I noticed that LOE lifting cost continued to trend lower at least on a per-unit basis. What should we expect during the next, say, 12, 18 months as more oil and liquids hit the P&L?

The, we'll see especially production taxes which is where the oil has a much higher production tax rate on a unit of production because a lot of our natural gas qualifies for some exemptions or relief for tight gas in Texas and Louisiana, and the oil does not. So we do expect to see our lifting cost rates, which have dropped below, in this quarter, below $0.80 per Mcfe, trend up a little bit, more so in the second half of 2012 because in the first half we still have some growth in the gas side that will come through. So in the second half of 2012, we would expect to be averaging, for all of them lifting costs, which we would count production taxes, the direct field cost and transportation, will be a little over, potentially a little over $1 or so per Mcfe in the second half of the year. With most of that change coming in the production tax side.

Right, okay, great. And then one last one, turning to the Eagle Ford and the EUR of 400 MBOE. What is the B factor behind that cumulative production estimate?

Dan, I believe it's about 1.2. I didn't run reserves, but I'm pretty sure it's, the B factor is around 1.2, 1.1 and 1.2.

Our next question comes from Jack Aydin with KeyBanc Capital Markets.

Most of my questions are answered.

[Operator Instructions] And our next question comes from Leo Mariani with RBC.

Guys, in the Delaware Basin, obviously, you guys announced the acquisition a couple of months back. Have you guys not had any completed wells during the last couple months?

Leo, we've got 2, but they just, they're still flowing back and they haven't IP-ed yet. We really took it over December 29.

We closed on the 29th.

So we have 2 we frac-ed late in January, but they're just not cleaned up and flowing through.

Leo, it takes about 30 days to drill 1 of these wells, they're vertical. I mean, you would go down to, again, the pay goes anywhere from 10,000 to 11,500 feet. And then you probably have 10 days to move [ph] time. So we're saying it, from well to well, it's about 40, 45 days as to spud to spud. So we closed this on the 29th, took it over. We kept the 2 rigs. In fact, we changed out 1 of the 2 rigs and we'll move up, again, a third rig in and a fourth rig in, in the next couple months and we've completed those 2. That's all we could do in the 35 days or so.

Okay. And in terms of your oil percentage, you guys talked about 14% to 16% oil in 2012. And then you guys kind of also said that your year end '11 percentage was around 16% oil. Could you just kind of walk us through the math there? I guess I thought that maybe you would be a little bit higher on average this year.

I think, Leo -- this is Roland. In the fourth quarter, our gas production was down a little bit and we had a lot of -- of course, we made an acquisition on the 29th and had some new Eagle Ford wells coming on in late December. So I think that that number was the actual number on that date. But then as the gas production grows some in the next 2 quarters, it'll just push that percentage down, based on that. But now in the second half of the year where the gas is no longer growing, that's when the oil percentage of the company probably starts to exceed that number. It's all relative on kind of how you're measuring it.

Yes, the second quarter of this year will probably be our peak production for gas.

Right. And we, it will be peaking. It hasn't peaked yet so that's the...

Okay. And in terms of Eagle Ford, you guys talked about 24 wells this year in your program. How many of those are going to be on pad drilling?

Really, not any. If we have a pad, it's only because we're drilling in opposite directions. We have, I think there's 3 of those pads, so there's 6 of the wells of the 24 that we're drilling 2 different units in opposite directions from one location. But we're not doing any what I'd call development where you're drilling multiple wells in the same unit from one pad.

We're using the 2 rigs, Leo, this year just to hold acreage.

Okay. And then, I guess, I mean, you guys talked about $8.5 million current well costs, but then you kind of said you thought you'd average sort of closer to $7.5 million but it doesn't sound like you're doing a lot here on pads, which seems like the bulk of the savings. So I mean, really, is most of the savings you expect this year then just going to be from lower service costs?

Lower service costs and improved efficiency. But really, that's more of an all-in average well from here to the end of the program. When we get them all drilled, it's going to be more like that.

Okay. And in terms of the Wolfcamp, you guys obviously want to drill a horizontal well here in the Delaware Basin. What's got you particularly excited about that? I guess you said that there weren't really any offset wells nearby that you guys are aware of, so what's the, why is that kind of a high priority for you here?

Leo, when we looked at this deal, the first thing we saw were multiple shale intervals that looked very appealing for horizontal development. And they have the rock properties, the porosity, the thickness, the continuity that would be similar to our Haynesville or our Eagle Ford, and we saw more than one. So we say, "Wow, that, this needs to be developed as a horizontal play." It's just hasn't been done yet because the players that were in the area were vertical players and they were being successful drilling the wells vertically. It's also much easier to put your units together, to stay ahead of your lease schedule doing vertical wells than it is horizontal wells so we'll still have a lot of that holding our acreage and testing areas. And you can't develop the whole vertical section with a horizontal lateral so we'll still have the need for a lot of vertical wells also. But as soon as we get the, our comfort factor on which interval we want to target, then we do plan on ramping up the horizontal program.

Okay, and what you think a well cost would be there?

It, construction-wise, it's going to be very similar to the Eagle Ford. It will take a little bit longer to drill, but some of the other costs, like surface locations and other things like that, are going to be less expensive. So I think it's going to be very similar to our Eagle Ford cost.

All right. And I guess, lastly, what's the timing in your asset sale program here?

Leo, this is Roland. We expect to complete most of these asset sales by early second quarter.

Our next question comes from John Freeman with Raymond James. John Freeman - Raymond James & Associates, Inc., Research Division: The only questions I had on, in the Eagle Ford. The, I believe the only area that you all haven't drilled on yet over your acreage is that southeastern portion of Atascosa. Is there any plan to drill that this year?

We have drilled one well, John, and that we haven't completed yet. And we, I think we have 6 more scheduled to drill there in 2012. John Freeman - Raymond James & Associates, Inc., Research Division: Okay, great. And then just the last question I had: In that central McMullen area where you all had really strong results, can you remind me what's the acreage number there?

I think, John, we have about 8,000 acres in that area.

Our next question comes from Michael Hall with Robert W. Baird. Michael A. Hall - Robert W. Baird & Co. Incorporated, Research Division: Just a couple of quick follow-ups. I guess, first in the Eagle Ford, I'm just curious, a little more detail maybe on the restricted rate program and how hard you're choking those back and also just what sort of variance on pressures you're seeing across north to south but particularly as it relates to decline curves. I mean, are you seeing means with different decline curves from north to south, and I guess what are your thoughts on that?

As far as the "choke back" program, we are, we have a very standard program now so we can compare well to well and they flow them on a certain size choke for a certain number of hours or days, and we end up on a 16. That's so we don't, we're not going above a 16/64 inch choke. So I don't have the exact schedule with me, our engineers worked it up and that's how we're doing it. We're very pleased with the result. We still only have one well in artificial lift and we think that's part of the reason that we've been so successful flowing these wells naturally. It's because we don't pull them real hard. And as far as pressures go, on the very north end, the Donnell and the Carlson, they'll flow, they will come down to about 2,000 pounds pretty quickly. And on the south end, in the Hill and Gloria Wheelers, those wells are between 3,500 and 4,000 pounds initially, and then they will just slowly decline from there. At decline curves, I think, we're using 5 different decline curves or type curves, depending on which acreage, but they're not that different. I mean, I could say that the EURs are pretty similar, maybe ranging from 375,000 up to 450,000. It's almost surprising to me even that these lower-IP wells do so well what they do. They, and then typically, they're treading above our type curves. Michael A. Hall - Robert W. Baird & Co. Incorporated, Research Division: And I guess just to follow up a little bit on Leo's question. On the cost front, I mean, it sounds, it seems like it's, also just on those uncompleted wells, you had, what, 3.2 wells net, it's like 28 million-ish. It's quite a bit per well. Is there something going on in those particular wells? I guess, why are the completions running so high on those?

I think what happened is there's never a great cutoff between years, between the budgets. And with all the rigs going to [ph] stop on December 31 and it's all ongoing, so, and capturing when a well is actually counted is, there's -- that accounts for those differences. So I'm looking at them on a per-well number. It's not really that meaningful so... Michael A. Hall - Robert W. Baird & Co. Incorporated, Research Division: How many do you expect to have completed and tied in, in 2012, I guess, in the Eagle Ford that's tied into sales?

We had, what do we have? 19 on our list so far. And then we're going to drill 24 and we should have all but maybe 3 of those completed and tied in. So that's about 40, about 40 producing by year end especially now that we're not -- before, we were using the same completion crew in the Haynesville and the Eagle Ford program. And I think that cost kind of a, some wells to stack up in both programs kind of waiting for the opportune time to move back and forth. With the Haynesville program wrapping up, I think we'll see the Eagle Ford wells completed more closely after they're drilled in going forward. So like Mark said, we'll complete most of the wells drilled in 2012 in '12 plus any carryover from '11.

The Schlumberger swing crew, they've been out of the Eagle Ford, they've been over the Haynesville Bossier completing the 9 or 10 wells there. They'll swing back over this month, then they'll start completing these Eagle Ford wells. And I think your numbers are, will be a little bit better. Michael A. Hall - Robert W. Baird & Co. Incorporated, Research Division: That makes sense. And then I guess the only last thing I had is, I'm just kind of curious, as you look at your portfolio as a whole now, you've got clearly some good options on the oil front. It might be a ways off and not on everyone's radar, but I guess, what price would get you to start swinging capital back towards gas? I mean, we know kind of where the Haynesville maybe becomes economic, but I'm assuming there's some price above and beyond that to actually bring capital away from your oil projects at this point. Any thoughts on that or...

I think, first, we, we're committed to maintaining a conservative financial profile. I mean, we need to see where we are in our balance sheet. Our debt-to-cap needs to be reduced and we need to monetize some of the Stone shares and we need to divest to some non-core properties. And then we need, I think, in 2012, we need to really understand the value of the Permian that we bought, including a horizontal well or so. And I think our value from the 2 oil plays will materially increase in 2012. So then, let's just say you have a $85, $90, a $100 oil, I mean, Boone Pickens said $300 per barrel, who knows, it's just insanity out here, but let's just say you have a $80, $90, $100 oil price, if we've got programs going in the Eagle Ford that are successful and we've got programs going in the Delaware Basin that are successful, we've got over 900 vertical locations, plus you might be drilling these wells on 20s and 10s and who knows? I mean, the single most active basin in North America is the Permian Basin. This could -- it doesn't get the most visibility, but it definitely is the most active. So I think, if those basins are working, which they should and they have, in order for us to start a -- even though I think we're one of the lowest, if not the lowest producer of dry gas, and it's the deal dry gas in North America, which is Haynesville, because of the acreage that we captured, I think you'd have to look at a $5-plus gas price for us to even materially start looking at adding rigs and drilling in that area. And it's all going to be based upon where oil…

And our next question comes from John Selser with Iberia Capital Partners.

Gentlemen, can you all talk a little about IP rates? It just sort of seems like, through the industry and through the publicly traded companies, it's just, you see, you get a lot of differences in the timing and how long oil is tested and chokes and different things. Can you just talk kind of about the method and what you all have all chosen to do and how your rates might compare to others that might do it a different way?

Sure. I, well, I'm not going to venture to say how other people are doing it, John, but I'll -- we flow the wells on that restricted choke until we get a stable, stabilized flow rate that's really steady, and then that's what we call our IP rate. It typically is very close to the 30-day rate because these wells just continue to clean up for such a loan period of time and they, when you're flowing along that restricted choke, they kind of just work their way up and level off for a little while before they start coming down. And so it's pretty close to a 30-day rate, but we try to get our IPs filed sooner than that because it's, otherwise, you're struggling with getting your production clearances to sell your oil and everything. So the sooner we can get our completions filed, the easier it is on everybody. So that's kind of how we do it.

Okay. And then in your, in the Delaware Basin, the rigs you have running there, I guess those were the Eagle rigs and those were probably drilling vertical wells. I know they attempted a horizontal there. The rigs that you're moving in, those, I assume, are going to be bigger rigs and more capable of successfully getting a horizontal well drilled versus some of the smaller rigs?

Yes, that's correct. One of the -- Eagle had 2 rigs running, 1 of them was a little smaller and we have replaced it with another rig just for performance issues. What, the other rig that they had in the quiller [ph] rig is a pretty big rig but it's a mechanical rig and it doesn't normally have a top driver so it's not as efficient for horizontal drilling as the rigs were moving. It's about the same size as the 2 rigs we're moving out there, but it's just not set up the same way. The 2 rigs we're moving are both electric rigs with top drives and they've had them on there since the beginning. And that's all they've been doing for us for several years, to drill horizontal wells. So we'll use them to drill vertical wells and they'll do a good job at that, but it'll be nice to have them out there when we, when we get ready to test a vertical concept.

Thank you, John. Again, we're going to have 2 conventional mechanical rigs in the Delaware Basin. And then like Mark said, we'll have 2 that are capable of drilling horizontal wells.

Our next question comes from Mike Kelly with Global Hunter Securities.

You mentioned the flexibility in your CapEx program for this year and I was just hoping to ask you a what-if question. And that pertains to, if we see gas prices persist here in the $250 range, what do you think you'll do in terms of that drilling CapEx from where it is right now?

Well, we'll continue to of course monitor the overall cash flow we'll generate this year. And we have more flexibility to-- we can reduce our capital budget if we see lower gas prices or something that would change that kind of cash flow expectation so...

Mike, every rig that we're using right now currently, we'll roll off the contract this year. So I think that gives us the flexibility if we need to reduce it by another rig or so. I mean, hopefully that doesn't happen, but we do have tremendous flexibility.

When do you think you have to make that call? Say we had $2.50 gas through the summer, when do you think you'll decide to potentially let 1 rig or 2 go?

So we'll look at, every month, we'd look at that. There's not a time and-- yes, so we continue to look at our program forward, so it's an ongoing question. So this is where we think it looks like right now.

Well, you even noticed that we reduced our budget that we put out in December. We reduced it again in January because we needed to because gas, the gas market is terrible right now, so we've pulled it in. And quite frankly, if we had known the gas market would be where it is today, we would have probably deferred completing the pad locations that we'd already contracted to, to complete in the Haynesville, but there was already a commitment that we have. We don't have any other commitments like that. That's quite a bit of capital that we don't expose ourselves to in the future either. So I mean, there's a lot of things that are kind of clean-up items on the gas side of the balance sheet that won't reoccur now.

Got it, okay. And I was hoping, if you will, can you identify the assets you have for sale and what the current production is coming from them?

Yes, we did that on our last call. But basically, we won't always be real specific about talking about the assets, but they're generally conventional assets, the ones we said were wet. And I think the major property in that group will, is the [indiscernible] field. Overall, they have about 10 million a day of production associated with them; both oil, gas and NGLs. So we've already kind of included that in our production guidance, like we said in our last call.

Our next question comes from Jeff Robertson with Barclays Capital.

My questions have been answered.

Thank you, Jeff.

And our next question comes from Kelly Krenger with Bank of America Merrill Lynch.

Most of mine have been answered, but just, Roland, a quick one on the balance sheet. You noted that the borrowing base was, it's $700 million: $610 million on producing reserves and, I think you said, $90 million available for a year. Then you said that you were of the belief that that would grow as you, when your next redetermination is done based on the oil reserves and that sort of thing. Is that growth on, I guess, the entire amount of it or the $610 million, or how should we look at that?

Well, that's hard to say, but when we look at our proved producing reserves at year end that we've wrapped up here and used in, on new price tags, which have lower expectations for gas, we have some nice growth, still, in our proved producing reserves. So how that all kind of filters down, we have a lot of confidence-- we don't see it shrinking at all and we think it ought to grow, so. And then that's just -- the first redetermination, which is completed in May. And then the one that's going to be in the fall later on, it will October, November-ish, that's where we would expect the really a lot of significant growth given the drilling we're doing especially on the oil, all in well projects so...

Right, okay. And then I think you mentioned that you wanted to spend within cash flow plus asset sales, does that include the Stone shares, or is that, are those considered kind of separate? When you -- do you consider those an asset sale or are those separate?

They're considered a part of our asset sales and so we kind of show off a bit. Those assets, plus what we consider kind of our wet conventional properties that we had on the divesture list, that's what we picked because they're, we picked those even before gas fell to these lower levels because we felt like they would be something we would realize very large gains with by selling. And we didn't go and look at our conventional gas assets that we may want to divest of in the future because we figured we could not realize big gains from selling those. So I think that, given the strength in oil prices, that all those asset sales look like they're very doable, still.

And the, I think you've said this already here on the last follow-up question, but the asset sale is out of your guidance and it, as well as the kind of the percent of production that's oil and liquids, that the asset sale has already been factored into the guidance on that as well.

Right. And I think there may be a part of which maybe dilutes a little bit of-- as you go ahead and you're saying, what's our total guidance for oil, and you say, well, you're already there. Well, part of it is we factored all these things in but we've also been pretty conservative in our expectations for the new oil properties and even in the Eagle Ford because they don't have the long-time history that the Haynesville gas projects do. So when we're looking ahead, we're being very conservative, and hopefully, our oil production outperforms our guidance here. The gas production became so predictable that we are very good at predicting that. So over time, I think that these, our 2 unconventional oil projects will start to become just as predictable.

Ladies and gentlemen, at this time, we ran out of time for questions. I'd like to hand it back over to Jay.

Jeremy, and probably the last 23 years that I've been the CEO of this company, I've never had a year-end call of 1 hour 43 minutes. I mean, all of you that are still there, I mean, it's unbelievable. Thank you for your time. Hopefully, we've informed you as to what we're doing, and we've been very clear about it. We'll be on the road the next 2 days, telling the story to 24 different accounts, and hopefully, that'll show up in the value of the company with you all. Thanks for your time, and God bless.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.