This area represents our most significant concentration of assets and year end 2011 estimated proved reserves of 210.3 million barrels of oil equivalent (“MMBoe”) in this area accounted for 54% of our total net proved reserves.

Our activities in the New Mexico Shelf are primarily focused in the vertical Yeso play where we have been an active driller since 2006. The Yeso assets generally produce from the Blinebry and the Paddock formations, with producing depths ranging from approximately 4,000 feet to 7,500 feet. Concho drilled our thousandth well in the Yeso this year. The pace of drilling and our existing infrastructure allow us to think of this area as a manufacturing type operation. We drilled over 400 wells in 2011 alone.

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During 2011, we drilled several horizontal Yeso wells both into the Blinebry and the Paddock and we plan to drill more horizontal wells in 2012. Additionally, we continue to stretch the boundaries of what we traditionally think of as the Yeso trend, both to the North and to the West.

In addition to drilling in the Yeso play, we also had a rig running in the Lower Abo play for most of 2011. This play, which sits directly north of our Yeso acreage, is where Concho began drilling horizontal wells in 2008.

The Lower Abo is a horizontal oil play just north and northeast of the Yeso assets in Lea, Eddy and Chaves Counties, New Mexico. The Lower Abo play is found at vertical depths ranging from 6,500 feet to 10,000 feet and is being developed utilizing horizontal drilling techniques and advanced fracture and stimulation technology.

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This area represents our newest and fastest growing core area. At December 31, 2011, proved reserves attributable to the Company’s Delaware Basin assets totaled approximately 49.7 MMBoe, accounting for 13% of our total proved reserves.

At December 31, 2011, on its Delaware Basin assets, the Company had identified 1,870 drilling locations, with proved undeveloped reserves attributable to 162 of such locations. Of these drilling locations, 1,417 target the horizontal Bone Spring play, which includes the Avalon shale, the Bone Spring sands and the Wolfcamp shale.

The Northern portion of the acreage is currently being drilled horizontally. Concho currently targets several zones: primarily the Avalon Shale, the Bone Spring sands and the Wolfcamp shale.

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We have increased our activity in this area from approximately one-quarter of our budget in 2011 to approximately one-third of our budget in 2012. In 2012, we are taking the excess cash flow created by the New Mexico Shelf and the Texas Permian and redeploying those dollars into the Delaware Basin in order to delineate the play.

In addition to our horizontal program in the Northern Delaware, we are drilling vertical wells in the Southern part of the basin, often referred to as the Wolfbone. In the Southern Delaware, we will drill a horizontal well during 2012 to better understand the horizontal potential of the Southern Delaware Basin.

During 2011, we added approximately significant acres in both the Northern and the Southern parts of the Delaware through a series of acquisitions and leasing efforts. We have now amassed and acreage position in the Delaware Basin of 270,000 net acres.

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At December 31, 2011, our estimated proved reserves of 126.5 million barrels of oil equivalent (“MMBoe”) in this area accounted for 33% of our total proved reserves.

Currently, the primary objective in the Texas Permian area is the Wolfberry in the Midland Basin. “Wolfberry” is the term applied to the combined Spraberry and Wolfcamp target interval which is typically encountered at depths of 7,000 to 10,500 feet. The Wolfberry is comprised of a sequence of basinal, interbedded shales and carbonates. Like the Yeso, we have drilled over a thousand wells in this area and it has similar manufacturing-like characteristics. These wells are fractured over 2,500 gross feet of pay from the top of the Spraberry through the Wolfcamp and down to the Atoka or Bend in many cases.

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Throughout 2011, we acquired additional acreage in the Wolfberry, which increased our average working interest to approximately 54% in the Wolfberry and added over 750 gross opportunities. Through these acquisitions, we were able to replace all of the locations that we drilled in 2011 with newly acquired locations. We drilled approximately 270 Wolfberry wells in 2011 and began to recognize 20 acre potential on our acreage, which more than doubled our inventory in the Wolfberry.

Additionally, we began drilling our first horizontal Cline well in the Texas Permian in the fourth quarter of 2011.

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