Strategy
Exploration
Our exploration strategy focuses on organic growth through the drill bit. We continue to focus our efforts on discovering and developing reserves close to our current operating areas, especially those amenable to 3-D seismic imaging. Through better analysis, we are able to lower our dry hole rate and increase the likelihood of success. Our goal is to build a multi-year inventory of drillable projects, helping to ensure a steady stream of activity and growth.
Termo Drilling Activity
By Type & Outcome 2011
Operated & Non-Operated Wells
| Exploratory Crude Oil | 15% |
| Exploratory Natural Gas | 8% |
| Development Crude Oil | 38% |
| Development Natural Gas | 38% |
Acquisition
We frequently review prospects for possible investment near our core operating areas, both working interests and property, that have multiple wells, offer step-out or in-fill development opportunities, and would benefit from operational enhancements. We actively pursue interest ownership consolidation, acquiring additional interests in existing properties as they become available from other non-operating working interest owners.
Termo Capital Expenditure (2012)
Total ($19,241M)
- Acquisition (Including Leasing): $200M
- Exploratory Drilling: $8,915M
- Development Drilling: $7,090M
- Optimization (Workover, Recomplete): $2,733M
- Other: $303M
State-by-State Breakdown
California ($12,055M)
- Acquisition: $90M
- Exploratory Drilling: $3,909M
- Development Drilling: $6,650M
- Optimization: $1,103M
- Other: $303M
Colorado ($2,000M)
- Exploratory Drilling: $2,000M
- Acquisition: $0M
- Development Drilling: $0M
- Optimization: $0M
- Other: $0M
Louisiana ($4,129M)
- Acquisition: $110M
- Exploratory Drilling: $2,504M
- Optimization: $1,515M
- Development Drilling: $0M
- Other: $0M
Montana & North Dakota ($240M)
- Development Drilling: $240M
- Acquisition: $0M
- Exploratory Drilling: $0M
- Optimization: $0M
- Other: $0M
Oklahoma & Texas ($702M)
- Exploratory Drilling: $502M
- Development Drilling: $200M
- Acquisition: $0M
- Optimization: $0M
- Other: $0M
Wyoming ($115M)
- Optimization: $115M
- Acquisition: $0M
- Exploratory Drilling: $0M
- Development Drilling: $0M
- Other: $0M
Optimization
We increase reserves production by developing and improving existing wells. Through internal geologic, technical, and economic reviews, and by implementing advanced downhole technology, we are able to improve production capabilities of existing properties at a reasonable cost. We regularly review our older properties to see if newer methods will improve production. We center our efforts on recompletions, stimulations, and operational efficiencies as well as working candidate idle and shut-in wells.
Through our strategic exploration and acquisition models in California, Wyoming, and Louisiana, we have a history of steady growth and a promising future ahead.
Termo’s Cost Breakdown
Percentage Per BOE of Operated Production in 2010
Average per barrel price of $72.50 and per MCF of $4.40. Values are averaged for nation‑wide production.
| Royalties | 18% |
| Taxes, Excluding Corporate | 10% |
| Marketing, Gathering, Transport | 2% |
| Operations, Repairs, Service Rigs, Etc. | 16% |
| Land and Lease Obligations | 1% |
| Administration, Overhead, Labor | 9% |
| Regulatory Compliance | 4% |
| Abandonment Reserve | 2% |
| Total | 62% |
| Profit | 38% |
In other words, 62% of a Barrel of Oil Equivalent Production goes to the above factors, leaving 38% for profit.
Partners
We Work With People We Trust
We credit our success for the last 80 years to strong relationships, and many of those are with our partners. Our core values center around integrity, respect, transparency, and good communication, and we've learned to look for those aspects of character in our partners. We also consider experience, responsibility, and good reputation to be essential. We thoughtfully consider each potential partnership because our relationships go far beyond the balance sheet. We work to offer our partners mutually beneficial opportunities and ultimately build trust and shared loyalty. The result is a family of long-lasting partnerships in which both sides are highly regarded.