Cimarex Energy, Co. (NYSE, XEC) is a Denver-based independent oil and gas exploration and production company with principal operations in the Mid-Continent and Permian Basin areas of the U.S. Our business approach is centered on increasing shareholder value through consistent profitable growth in proved reserves and production through our drilling program and optimizing production rates. Year-end 2011 proved reserves totaled 2.05 trillion cubic feet equivalent (59% natural gas and 82% developed).
Our approach is focused on drill-bit driven growth in production and reserves utilizing risked rate of return economics to evaluate projects. We rely heavily on our organization of geoscientists to generate our drilling prospects. We have decentralized exploration teams who are experts in their regions. A cornerstone to our approach is detailed evaluation of each drilling decision based on its risk-adjusted discounted cash flow rate of return on investment. Our analysis includes estimates and assessments of potential reserve size, geologic and mechanical risks, expected costs and future production profiles.
We also believe it is important to maintain a strong financial position and conservative capital structure in order to maintain drilling activity through all price cycles. We believe that this approach will create shareholder value through growth in per-share earnings, cash flow, reserves and production.