0000858470
2008-01-01
2008-12-31
0000858470
2008-09-30
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2007-12-31
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2009-09-30
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2008-12-31
0000858470
2008-06-30
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2009-10-20
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2009-09-30
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2008-07-01
2008-09-30
0000858470
2008-01-01
2008-09-30
0000858470
2009-01-01
2009-09-30
iso4217:USD
xbrli:shares
xbrli:shares
iso4217:USD
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<div align="center" style="font-size: 10pt; margin-top: 0pt"><b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. FINANCIAL STATEMENT PRESENTATION</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During interim periods, Cabot Oil & Gas Corporation (the Company) follows the same accounting
policies used in its 2008 Annual Report to Stockholders and its Annual Report on Form 10-K for the
year ended December 31, 2008 (Form 10-K) filed with the Securities and Exchange Commission (SEC).
The interim financial statements should be read in conjunction with the notes to the financial
statements and information presented in the Form 10-K. In management’s opinion, the accompanying
interim condensed consolidated financial statements contain all material adjustments, consisting
only of normal recurring adjustments, necessary for a fair statement. The results for any interim
period are not necessarily indicative of the expected results for the entire year. Subsequent
events have been evaluated through October 29, 2009, which is also the date that the financial
statements were issued.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Certain prior year amounts have been reclassified to reflect changes in presenting the geographic
areas for which the Company conducts its operations. These areas consist of the North (comprised
of the East and Rocky Mountain areas), South (comprised of the Gulf Coast and Anadarko areas) and
Canada. In previous periods, the Company presented the geographic areas as East, Gulf Coast, West
and Canada.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">With respect to the unaudited financial information of the Company as of September 30, 2009 and for
the three and nine month periods ended September 30, 2009 and 2008, PricewaterhouseCoopers LLP
reported that they have applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report dated October 29, 2009 appearing herein
states that they did not audit and they do not express an opinion on that unaudited financial
information. Accordingly, the degree of reliance on their report on such information should be
restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers
LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for
their report on the unaudited financial information because that report is not a “report” or a
“part” of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the
meaning of Sections 7 and 11 of the Act.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Recently Adopted Accounting Standards</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In July 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Codification (ASC) 105, “Generally Accepted Accounting Principles,” establishing the accounting
standards codification and the hierarchy of generally accepted accounting principles (GAAP) as the
sole source of authoritative non-governmental U.S. GAAP. The Codification was not intended to
change U.S. GAAP; however, references to various accounting pronouncements and literature will now
differ from what was previously being used in practice. Authoritative literature is now referenced
by topic rather than by type of standard. As of July 1, 2009, the FASB no longer issues
Statements, Interpretations, Staff Positions or EITF Abstracts. The FASB now communicates new
accounting standards by issuing an Accounting Standards Update (ASU). All guidance in the
Codification has an equal level of authority. ASC 105 is effective for financial statements that
cover interim and annual periods ending after September 15, 2009, and supersedes all accounting
standards in U.S. GAAP, aside from those issued by the SEC. There was no impact on the Company’s
financial position, results of operations or cash flows as a result of the Codification.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In February 2008, the FASB issued an amendment to ASC 820, “Fair Value Measurements and
Disclosures,” which granted a one year deferral (to fiscal years beginning after November 15, 2008,
and interim periods within those fiscal years) for certain non-financial assets and liabilities
measured on a nonrecurring basis to comply with ASC 820. Effective January 1, 2009, the Company
applied these amendments of ASC 820 discussed above and there was no material impact on the
Company’s financial statements. For further information, please refer to Note 7 of the Notes to
the Condensed Consolidated Financial Statements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Effective January 1, 2009, the Company adopted amendments that the FASB made to ASC 260, “Earnings
Per Share,” regarding determining whether instruments granted in share-based payment transactions
are participating securities. The adoption of these amendments did not have a material impact on
the Company’s financial statements. For further information, please refer to Note 5 of the Notes
to the Condensed Consolidated Financial Statements.
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">In March 2008, the FASB amended the disclosure requirements prescribed in ASC 815, “Derivatives and
Hedging.” The Company adopted these amendments as of January 1, 2009. The principal impact was to
require the expansion of its disclosure regarding its derivative instruments. For further
information, please refer to “Derivative Instruments and Hedging Activity” in Note 7 of the Notes
to the Condensed Consolidated Financial Statements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2009, the FASB amended guidance in ASC 820 regarding determining fair value when the
volume and level of activity for an asset or liability has significantly decreased and identifying
transactions that are not orderly. If an entity determines that either the volume or level of
activity for an asset or liability has significantly decreased from normal conditions, or that
price quotations or observable inputs are not associated with orderly transactions, increased
analysis and management judgment will be required to estimate fair value. The objective in fair
value measurement remains unchanged from what is prescribed in ASC 820 and should be reflective of
the current exit price. Disclosures in interim and annual periods must include inputs and
valuation techniques used to measure fair value, along with any changes in valuation techniques and
related inputs during the period. In addition, disclosures for debt and equity securities must be
provided on a more disaggregated basis. These amendments became effective for interim and annual
reporting periods ending after June 15, 2009 and did not have a material impact on the Company’s
financial position, results of operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2009, the FASB amended ASC 825, “Financial Instruments,” to require disclosures about fair
value of financial instruments for publicly traded companies for both interim and annual periods.
Historically, these disclosures were only required annually. The interim disclosures are intended
to provide financial statement users with more timely and transparent information about the effects
of current market conditions on an entity’s financial instruments that are not otherwise reported
at fair value. These amendments became effective for interim reporting periods ending after June
15, 2009, and the Company has provided interim disclosures regarding the fair value of debt
instruments in Note 4 of the Notes to the Condensed Consolidated Financial Statements. Comparative
disclosures are only required for periods ending after the initial adoption. There was no material
impact on the Company’s financial position, results of operations or cash flows as a result of the
adoption.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2009, the FASB amended the other-than-temporary impairment guidance for debt securities in
ASC 320, “Investments-Debt and Equity Securities,” to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements. There were no amendments made to the recognition and
measurement guidance for equity securities, but a new method of recognizing and reporting for debt
securities was established. Disclosure requirements for impaired debt and equity securities have
been expanded significantly and are now required quarterly, as well as annually. These amendments
became effective for interim and annual reporting periods ending after June 15, 2009 and did not
have a material impact on the Company’s financial position, results of operations or cash flows.
Comparative disclosures are only required for periods ending after the initial adoption.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2009, the FASB amended ASC 855, “Subsequent Events,” to require entities to disclose the
date through which they have evaluated subsequent events and whether the date corresponds with the
release of their financial statements. In addition, a new concept of financial statements being
“available to be issued” was introduced. These amendments became effective for interim and annual
periods ending after June 15, 2009 and did not have any impact on the Company’s financial position,
results of operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In August 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-05, “Fair Value
Measurement and Disclosures: Measuring Liabilities at Fair Value,” which provides clarification on
measuring liabilities at fair value when a quoted price in an active market is not available. ASU
No. 2009-05 specifies that in cases where a quoted price in an active market is not available, a
valuation technique should be applied that uses either the quote of the liability when traded as an
asset, the quoted prices for similar liabilities or similar liabilities when traded as assets, or
another valuation technique consistent with existing fair value measurement guidance. Valuation
methods discussed include using an income approach, such as a present value technique, or a market
approach based on the amount at the measurement date that the reporting entity would pay to
transfer the identical liability or would receive to enter into the identical liability. Entities
are not required to include a separate input or adjustment to other inputs relating to the
existence of a restriction that prevents the transfer of the liability. ASU No. 2009-05 is
codified in ASC 820-10 and is effective for the first reporting period (including interim periods)
beginning after issuance. There was no impact on the Company’s financial position, results of
operations or cash flows as a result of the adoption of ASU No. 2009-05.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Recently Issued Accounting Pronouncements</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2009, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 166,
“Accounting for Transfers of Financial Assets.” SFAS No. 166 has not yet been codified, but
revises ASC 860, “Transfers and Servicing,” and will require entities to provide more information
about sales of securitized financial assets and similar transactions, particularly if the seller
retains some risk to the assets. SFAS No. 166 will be effective at the beginning of the first
fiscal year beginning after November 15, 2009. As the Company does not anticipate having any of
these types of transactions in the near future, SFAS No. 166 is not expected to have any impact on
its financial position, results of operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2008, the SEC issued Release No. 33-8995, “Modernization of Oil and Gas Reporting,”
which amends the oil and gas disclosures for oil and gas producers contained in Regulations S-K and
S-X, as well as adding a section to Regulation S-K (Subpart 1200) to codify the revised disclosure
requirements in Securities Act Industry Guide 2, which is being phased out. The goal of Release
No. 33-8995 is to provide investors with a more meaningful and comprehensive understanding of oil
and gas reserves. Energy companies affected by Release No. 33-8995 will be required to price
proved oil and gas reserves using the unweighted arithmetic average of the price on the first day
of each month within the 12-month period prior to the end of the reporting period, unless prices
are defined by contractual arrangements, excluding escalations based on future conditions. SEC
Release No. 33-8995 is effective beginning January 1, 2010. The Company is currently evaluating
what impact Release No. 33-8995 may have on its financial position, results of operations or cash
flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2008, the FASB issued an amendment to ASC 715-20, “Compensation – Retirement Benefits –
Defined Benefit Plans – General,” which requires enhanced disclosures regarding Company benefit
plans. Disclosure regarding plan assets should include discussion about how investment allocation
decisions are made, the major categories of plan assets, the inputs and valuation techniques used
to measure plan assets and significant concentrations of risk within plan assets. These amendments
to ASC 715-20 are effective for fiscal years ending after December 15, 2009, and earlier
application is permitted. Prior year periods presented for comparative purposes are not required
to comply. The Company does not believe that these amendments to ASC 715-20 will have a material
impact on its financial position, results of operations or cash flows.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. PROPERTIES AND EQUIPMENT, NET</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Properties and equipment, net are comprised of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unproved Oil and Gas Properties
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>301,992</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">315,782</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Proved Oil and Gas Properties
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>4,010,954</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,813,014</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Gathering and Pipeline Systems
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>277,120</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">274,192</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Land, Building and Other Equipment
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>72,372</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">68,606</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>4,662,438</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,471,594</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated Depreciation, Depletion and
Amortization
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(1,478,133</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,335,766</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>3,184,305</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,135,828</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At September 30, 2009, the Company did not have any projects that had exploratory well costs that
were capitalized for a period of greater than one year after drilling.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2009, the Company sold its Canadian properties to a private Canadian company. Total
consideration received from the sale was $84.4 million, consisting of $64.3 million in cash and
$20.1 million in common stock of the Canadian company (included on the Condensed Consolidated
Balance Sheet as Investment in Equity Securities at September 30, 2009). The common stock
investment is being accounted for using the cost method. The total net book value of the Canadian
properties sold was $95.0 million. At December 31, 2008, the Company recorded 40.4 Bcfe of proved
reserves (two percent of total proved reserves) related to these properties.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company recognized a $3.9 million aggregate loss on sale of assets in the first nine months of
2009. During 2009, the Company recorded a $10.5 million (net of taxes of $6.1 million) loss on
sale of assets, primarily due to the sale of the Canadian properties described above. In addition,
the Company recognized a $12.7 million gain on sale of assets during the first nine months of 2009
primarily related to the first quarter 2009 sale of Thornwood properties in the East. Cash
proceeds of $11.4 million were received from the sale of the Thornwood properties.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>3. ADDITIONAL BALANCE SHEET INFORMATION</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Certain balance sheet amounts are comprised of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">ACCOUNTS RECEIVABLE, NET
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Trade Accounts
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>44,987</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">94,164</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Joint Interest Accounts
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>9,522</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16,454</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other Accounts
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>1,813</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,987</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>56,322</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">112,605</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Allowance for Doubtful Accounts
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(3,709</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,518</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>52,613</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">109,087</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">INVENTORIES
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas in Storage
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>20,022</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">27,478</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Tubular Goods and Well Equipment
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>16,298</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16,439</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Pipeline Imbalances
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>449</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,760</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>36,769</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">45,677</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">OTHER CURRENT ASSETS
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Drilling Advances
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>2,773</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,869</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Prepaid Balances
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>7,292</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,631</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>10,065</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,500</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">OTHER ASSETS
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Rabbi Trust Deferred Compensation Plan
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>10,644</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,651</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Deferred Charges for Credit Agreements
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>12,694</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,847</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other Accounts
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>1,419</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,245</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>24,757</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">14,743</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">ACCOUNTS PAYABLE
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Trade Accounts
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>15,078</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">44,088</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas Purchases
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>4,427</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,346</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Royalty and Other Owners
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>31,409</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">42,349</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Capital Costs
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>53,425</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">117,029</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Taxes Other Than Income
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>3,403</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,617</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Drilling Advances
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>1,089</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,289</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Wellhead Gas Imbalances
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>4,096</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,354</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other Accounts
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>3,013</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,913</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>115,940</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">222,985</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">ACCRUED LIABILITIES
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Employee Benefits
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>7,025</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10,807</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Current Liability for Pension Benefits
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>245</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">245</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Current Liability for Postretirement Benefits
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>642</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">642</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Taxes Other Than Income
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>23,893</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16,582</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Interest Payable
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>11,665</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20,684</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other Accounts
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>2,251</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,591</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>45,721</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">50,551</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">OTHER LIABILITIES
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Rabbi Trust Deferred Compensation Plan
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>18,824</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">14,531</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Accrued Plugging and Abandonment Liability
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>29,229</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">27,978</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Derivative Contracts
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>757</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other Accounts
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>5,557</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,717</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>54,367</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">47,226</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 4 - us-gaap:LongTermDebtTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>4. LONG-TERM DEBT</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company’s debt consisted of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Long-Term Debt</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">7.19% Notes
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>20,000</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">20,000</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">7.33% Weighted-Average Fixed Rate Notes
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>170,000</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">170,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">6.51% Weighted-Average Fixed Rate Notes
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>425,000</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">425,000</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">9.78% Notes
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>67,000</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">67,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Credit Facility
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>128,000</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">185,000</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Current Maturities</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">7.19% Notes
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(20,000</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(20,000</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Credit Facility
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>—</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(15,857</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px"><b>Total Current Maturities</b>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(20,000</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(35,857</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Long-Term Debt, excluding Current Maturities</b>
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>790,000</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">831,143</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2009, the Company entered into a new revolving credit facility and terminated its prior
credit facility. The credit facility provides for an available credit line of $500 million and
contains an accordion feature allowing the Company to increase the available credit line to $600
million, if any one or more of the existing banks or new banks agree to provide such increased
commitment amount. The term of the facility expires in April 2012.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In conjunction with entering into the new credit facility, the Company incurred $10.4 million of
debt issuance costs which were capitalized and will be amortized over the term of the credit
facility. Additionally, $1.5 million in unamortized costs associated with the prior credit
facility will be amortized over the term of the new credit facility in accordance with ASC 470-50,
“Debt-Modifications and Extinguishments.”
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The credit facility is unsecured. The available credit line is subject to adjustment from time to
time on the basis of (1) the projected present value (as determined by the banks based on the
Company’s reserve reports and engineering reports) of estimated future net cash flows from certain
proved oil and gas reserves and certain other assets of the Company (the “Borrowing Base”) and (2)
the outstanding principal balance of the Company’s senior notes. Under the credit facility, the
Borrowing Base is initially set at $1.35 billion, to be periodically redetermined as described
above. While the Company does not expect a reduction in the available credit line, in the event
that it is adjusted below the outstanding level of borrowings in connection with scheduled
redetermination or due to a termination of hedge positions, the Company has a period of six months
to reduce its outstanding debt in equal monthly installments to the adjusted credit line available.
Interest rates under the credit facility are based on Euro-Dollars (LIBOR) or Base Rate (Prime)
indications, plus a margin. These associated margins increase if the total indebtedness under the
credit facility and the Company’s senior notes is greater than 25%, greater than 50%, greater than
75% or greater than 90% of the Borrowing Base, as shown below:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="19" style="border-bottom: 1px solid #000000">Debt Percentage</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><i><25%</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><i><font style="font-family: Symbol">³</font> 25% <50%</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><i><font style="font-family: Symbol">³</font> 50% <75%</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><i><font style="font-family: Symbol">³</font> 75% <90%</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><i><font style="font-family: Symbol">³</font> 90%</i></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Eurodollar Margin
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.000</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.250</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.500</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.750</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">3.000</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Base Rate Margin
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">1.125</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">1.375</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">1.625</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">1.875</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.125</td>
<td nowrap="nowrap">%</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The credit facility provides for a commitment fee on the unused available balance at annual rates
of 0.50%.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The credit facility contains various customary restrictions, which include the following:
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">(a) Maintenance of a minimum annual coverage ratio of operating cash flow to interest expense for
the trailing four quarters of 2.8 to 1.0.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">(b) Maintenance of an asset coverage ratio of the present value of proved reserves plus working
capital to debt of 1.5 to 1.0.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">(c) Maintenance of a current ratio, as defined in the agreement, of 1.0 to 1.0.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">(d) Prohibition on the merger or sale of all, or substantially all, of the Company’s or any
subsidiary’s assets to a third party, except under certain limited conditions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, the credit facility includes a customary condition to the Company’s borrowings under
the facility that there has not occurred a material adverse change with respect to the Company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At September 30, 2009, the Company had $128 million of borrowings outstanding under its revolving
credit facility at a weighted-average interest rate of 3.7%.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company believes it is in compliance in all material respects with its debt covenants.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>5. EARNINGS PER COMMON SHARE</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Effective January 1, 2009, the Company adopted amendments that the FASB made to ASC 260, “Earnings
Per Share,” regarding determining whether instruments granted in share-based payment transactions
are participating securities. Under these amendments, unvested share-based payment awards that
contain nonforfeitable rights to dividends or dividend equivalents, whether they are paid or
unpaid, are considered participating securities and should be included in the computation of
earnings per share pursuant to the two-class method. These amendments became effective for
financial statements issued for fiscal years beginning after December 15, 2008, and interim periods
within those years. In addition, all prior period earnings per share data presented are required
to be retrospectively adjusted. Upon adoption, basic earnings per share (EPS) is required to be
computed using the two-class method prescribed in ASC 260. The two-class method is an earnings
allocation formula that treats a participating security as having rights to earnings that would
otherwise have been available to common shareholders. ASC 260 defines participating securities as
“securities that may participate in dividends with common stocks according to a predetermined
formula.” ASC 260 provides that its provisions under the amendments discussed above need not be
applied to immaterial items. The Company has concluded that there are no material items to
consider for purposes of its shares outstanding and EPS calculations, and the treasury stock method
will continue to be used, as described below.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Basic EPS is computed by dividing net income (the numerator) by the weighted-average number of
common shares outstanding for the period (the denominator). Diluted EPS is similarly calculated
except that the denominator is increased using the treasury stock method to reflect the potential
dilution that could occur if stock options and stock awards outstanding at the end of the
applicable period were exercised for common stock.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following is a calculation of basic and diluted weighted-average shares outstanding for the
three and nine months ended September 30, 2009 and 2008:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Nine Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-Average Shares — Basic
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>103,647,016</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">103,351,147</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>103,603,085</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">99,857,606</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Dilution Effect of Stock Options and
Awards at End of Period
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>1,269,683</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,144,096</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>980,043</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,043,650</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-Average Shares — Diluted
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>104,916,699</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">104,495,243</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>104,583,128</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">100,901,256</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-Average Stock Awards and Shares
Excluded from Diluted Earnings per
Share
due to the Anti-Dilutive Effect
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>213,480</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>233,489</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">149,524</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>6. COMMITMENTS AND CONTINGENCIES</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Contingencies</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is a defendant in various legal proceedings arising in the normal course of its
business. All known liabilities are accrued based on management’s best estimate of the potential
loss. While the outcome and impact of such legal proceedings on the Company cannot be predicted
with certainty, management believes that the resolution of these proceedings through settlement or
adverse judgment will not have a material adverse effect on the Company’s condensed consolidated
financial position or cash flow. Operating results, however, could be significantly impacted in
the reporting periods in which such matters are resolved.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Commitment and Contingency Reserves</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">When deemed necessary, the Company establishes reserves for certain legal proceedings. The
establishment of a reserve involves an estimation process that includes the advice of legal counsel
and subjective judgment of management. While management believes these reserves to be adequate, it
is reasonably possible that the Company could incur approximately $1.0 million of additional loss
with respect to those matters in which reserves have been established. Future changes in the facts
and circumstances could result in the actual liability exceeding the estimated ranges of loss and
amounts accrued.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">While the outcome and impact on the Company cannot be predicted with certainty, management believes
that the resolution of these proceedings through settlement or adverse judgment will not have a
material adverse effect on the condensed consolidated financial position or cash flow of the
Company. Operating results, however, could be significantly impacted in the reporting periods in
which such matters are resolved.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Firm Gas Transportation Agreements</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has incurred, and will incur over the next several years, demand charges on firm gas
transportation agreements. These agreements provide firm transportation capacity rights on
pipeline systems in the North region. The remaining terms on these agreements range from less than
one year to approximately 20 years and require the Company to pay transportation demand charges
regardless of the amount of pipeline capacity utilized by the Company. If the Company does not
utilize the capacity, it can release it to others, thus reducing its potential liability. The
agreements that the Company previously had in place on pipeline systems in Canada were transferred
in April 2009 to the buyer in connection with the sale of our Canadian properties (discussed in
Note 2).
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As previously disclosed in the Form 10-K, obligations under firm gas transportation agreements in
effect at December 31, 2008 were $94.7 million. As of September 30, 2009, obligations under firm
gas transportation agreements were $92.2 million. For further information on these future
obligations, please refer to Note 7 of the Notes to the Consolidated Financial Statements in the
Form 10-K.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Drilling Rig Commitments</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In the Form 10-K, the Company disclosed that it had total commitments of $44.3 million on eight
drilling rigs in the South region that are under contracts with initial terms of greater than one
year. The Company entered into a new drilling rig commitment of approximately $8 million in the
first nine months of 2009. The total commitment for nine drilling rigs for the years ending
December 31, 2009 and 2010 was $53.8 million ($47.4 million for 2009 and $6.4 million for 2010).
As of September 30, 2009, outstanding commitments for drilling rigs for the remainder of 2009 and
for 2010 total $12.6 million. For further information on these future obligations, please refer to
Note 7 of the Notes to the Consolidated Financial Statements in the Form 10-K.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - cog:DerivativeInstrumentsAndHedgingActivitiesFairValueMeasuresAndDisclosuresTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7. FINANCIAL INSTRUMENTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Fair Value Measurements</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In February 2008, the FASB issued an amendment to ASC 820, “Fair Value Measurements and
Disclosures,” which granted a one year deferral (to fiscal years beginning after November 15, 2008,
and interim periods within those fiscal
years) for certain non-financial assets and liabilities measured on a nonrecurring basis to
comply with ASC 820. Effective January 1, 2009, the Company applied these amendments of ASC 820
discussed above and there was no material impact on the Company’s financial statements. In the
future, areas that could cause an impact would primarily be limited to asset impairments including
long-lived assets, asset retirement obligations and assets acquired and liabilities assumed in a
business combination, if any.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">ASC 820 established a formal framework for measuring fair values of assets and liabilities in
financial statements that are already required by GAAP to be measured at fair value. As defined
in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date (exit
price). The transaction is based on a hypothetical transaction in the principal or most
advantageous market considered from the perspective of the market participant that holds the asset
or owes the liability.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company utilizes market data or assumptions that market participants who are independent,
knowledgeable and willing and able to transact would use in pricing the asset or liability,
including assumptions about risk and the risks inherent in the inputs to the valuation technique.
These inputs can be readily observable, market corroborated or generally unobservable. The Company
attempts to utilize valuation techniques that maximize the use of observable inputs and minimize
the use of unobservable inputs. The Company is able to classify fair value balances based on the
observability of those inputs. ASC 820 establishes a formal fair value hierarchy based on the
inputs used to measure fair value. The hierarchy gives the highest priority to level 1
measurements and the lowest priority to level 3 measurements, and accordingly, level 1 measurements
should be used whenever possible. For further information regarding the fair value hierarchy and
ASC 820, refer to Note 11 of the Notes to the Consolidated Financial Statements in the Form 10-K.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with ASC 820, the Company has classified its assets and liabilities into these levels
depending upon the data relied on to determine the fair values. The fair values of the Company’s
natural gas and crude oil price collars and swaps are designated as Level 3. The following fair
value hierarchy table presents information about the Company’s assets and liabilities measured at
fair value on a recurring basis as of September 30, 2009:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Quoted Prices in</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Significant</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Active Markets for</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Other</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Significant</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Balance as of</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Identical Assets</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Observable</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Unobservable</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>September 30,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>(Level 1)</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Inputs (Level 2)</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Inputs (Level 3)</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Assets</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Rabbi Trust Deferred Compensation Plan
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">10,644</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>10,644</b></td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Derivative Contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">191,136</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>191,136</b></td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total Assets
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">10,644</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">191,136</td>
<td> </td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>201,780</b></td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Liabilities</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Rabbi Trust Deferred Compensation Plan
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">18,824</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>18,824</b></td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Derivative Contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">757</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>757</b></td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total Liabilities
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">18,824</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">757</td>
<td> </td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>19,581</b></td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company’s investments associated with its Rabbi Trust Deferred Compensation Plan consist of
mutual funds that are publicly traded and for which market prices are readily available. In
addition, the Rabbi Trust Deferred Compensation Liability includes the value of deferred shares of
the Company’s common stock which is publicly traded and for which current market prices are readily
available.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The determination of the fair values above incorporates various factors required under ASC 820.
These factors include not only the credit standing of the counterparties involved in transactions
with the Company resulting in receivables on the Company’s Condensed Consolidated Balance Sheet,
but also the impact of the Company’s nonperformance risk on its liabilities.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth a reconciliation of changes for the three and nine month periods
ended September 30, 2009 and 2008 in the fair value of financial assets and liabilities classified
as Level 3 in the fair value hierarchy:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Nine Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><i>(In thousands)</i></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at beginning of period
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>297,388 </b></td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top"> <b>(1)</b></sup></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(282,771</td>
<td nowrap="nowrap">)<sup style="font-size: 85%; vertical-align: text-top"> (2)</sup></td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>355,202 </b></td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top"> <b>(3)</b></sup></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">7,272</td>
<td nowrap="nowrap"> <sup style="font-size: 85%; vertical-align: text-top"> (4)</sup></td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Gains or (Losses) (Realized or Unrealized):
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Included in Earnings <sup style="font-size: 85%; vertical-align: text-top">(5) </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>106,795</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(8,799</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right"><b>303,632</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(38,147</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Included in Other Comprehensive Income
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(105,776</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right">472,268</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(164,405</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right">185,133</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Purchases, Issuances and Settlements
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(108,028</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right">10,058</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(304,050</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right">36,498</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Transfers In and/or Out of Level 3
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>—</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>—</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance at end of period</b>
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>190,379</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">190,756</td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>190,379</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">190,756</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>Balance was entirely comprised of derivative assets.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td>
<td> </td>
<td>Balance was entirely comprised of derivative liabilities.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(3)</sup></td>
<td> </td>
<td>Balance was entirely comprised of derivative assets.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(4)</sup></td>
<td> </td>
<td>Balance was comprised of derivative assets of $12.7 million and derivative
liabilities of $5.4 million.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(5)</sup></td>
<td> </td>
<td>A loss of $1.2 million and $0.4 million for the three and nine months ended
September 30, 2009, respectively, was
unrealized and included in Natural Gas Production Revenues in the Statement of Operations. A gain
of $1.3 million and a loss
of $1.6 million for the three and nine months ended September 30, 2008, respectively, was
unrealized and included in Natural
Gas Production Revenues in the Statement of Operations.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The derivative contracts were measured based on quotes from the Company’s counterparties. Such
quotes have been derived using a Black-Scholes model that considers various inputs including
current market and contractual prices for the underlying instruments, quoted forward prices for
natural gas and crude oil, volatility factors and interest rates, such as a LIBOR curve for a
similar length of time as the derivative contract term. These estimates are compared to multiple
quotes obtained from counterparties for reasonableness. The Company measured the
nonperformance risk of its counterparties by reviewing credit default swap spreads for the various
financial institutions in which it has derivative transactions. The resulting reduction to the net
receivable derivative contract position was $0.5 million. In times where the Company has net
derivative contract liabilities, the nonperformance risk of the Company is evaluated using a market
credit spread provided by the Company’s bank.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fair Market Value of Financial Instruments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The estimated fair value of financial instruments is the amount at which the instrument could be
exchanged currently between willing parties. The carrying amounts reported in the Condensed
Consolidated Balance Sheet for cash and cash equivalents, accounts receivable and accounts payable
approximate fair value. The fair value of long-term debt is the estimated cost to acquire the debt,
including a credit spread for the difference between the issue rate and the period end market rate.
The credit spread is the Company’s default or repayment risk. The credit spread (premium or
discount) is determined by comparing the Company’s fixed-rate notes to new issuances (secured and
unsecured) and secondary trades of similar size and credit statistics for both public and private
debt. The fair value of all of the notes, excluding the credit facility, are based on interest
rates currently available to the Company. The credit facility approximates fair value because this
instrument bears interest at rates based on current market rates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company uses available market data and valuation methodologies to estimate the fair value of
debt. This disclosure is presented in accordance with ASC 825-10-50, “Financial
Instruments-Overall-Disclosures,” as well as ASC 820, “Fair Value Measurements and Disclosures,”
and does not impact the Company’s financial position, results of operations or cash flows.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30, 2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">December 31, 2008</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Carrying</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Estimated</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Carrying</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Estimated</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Fair Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-Term Debt
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>810,000</b></td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>856,535</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">867,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">807,508</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current Maturities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(20,000</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(20,704</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(35,857</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(35,796</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-Term Debt, excluding Current Maturities
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>790,000</b></td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>835,831</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">831,143</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">771,712</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Derivative Instruments and Hedging Activity</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In March 2008, the FASB issued guidance and amended the disclosure requirements prescribed in ASC
815, “Derivatives and Hedging.” Entities are now required to provide greater transparency about how
and why the entity uses derivative instruments, how the instruments and related hedged items are
accounted for under ASC 815 and how the instruments and related hedged items affect the financial
position, results of operations and cash flows of the entity. The Company adopted these new
disclosure requirements effective January 1, 2009. A tabular format including the fair value of
derivative instruments and their gains and losses, disclosure about credit risk-related derivative
features and cross-referencing within the footnotes are also new requirements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company periodically enters into derivative commodity instruments to hedge its exposure to
price fluctuations on natural gas and crude oil production. The Company’s credit agreement
restricts the ability of the Company to enter into commodity hedges other than to hedge or mitigate
risks to which the Company has actual or projected exposure or as permitted under the Company’s
risk management policies and not subjecting the Company to material speculative risks. All of the
Company’s derivatives are used for risk management purposes and are not held for trading purposes.
As of September 30, 2009, the Company had 26 cash flow hedges open: 14 natural gas price collar
arrangements, 10 natural gas price swap arrangements and two crude oil price swap arrangements.
During the first nine months of 2009, the Company entered into six new derivative contracts
covering anticipated natural gas production for 2012. These natural gas basis swaps did not qualify
for hedge accounting under ASC 815. These natural gas basis swaps mitigate the risk associated with
basis differentials that may expand or increase over time, thus reducing the exposure and risk of
basis fluctuations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of September 30, 2009, the Company had the following outstanding commodity derivatives:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="36%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Weighted-Average</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Contract</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Commodity</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Type</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Contract Price</b><sup style="font-size: 85%; vertical-align: text-top"> <b>(1)</b></sup></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Volume</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Period</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td colspan="2" align="left">
<div style="margin-left:30px; text-indent:-15px"><b>Derivatives
designated as Hedging Instruments under ASC 815</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas
</div></td>
<td> </td>
<td colspan="3" align="center">Collar</td>
<td> </td>
<td align="right">$</td>
<td align="right" nowrap="nowrap">12.39 / $9.40</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">per Mcf</td>
<td> </td>
<td> </td>
<td align="right">11,910</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Mmcf</td>
<td> </td>
<td> </td>
<td align="right">2009</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas
</div></td>
<td> </td>
<td colspan="3" align="center">Swap</td>
<td> </td>
<td align="right">$</td>
<td align="right">12.18</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">per Mcf</td>
<td> </td>
<td> </td>
<td align="right">4,053</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Mmcf</td>
<td> </td>
<td> </td>
<td align="right">2009</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas
</div></td>
<td> </td>
<td colspan="3" align="center">Swap</td>
<td> </td>
<td align="right">$</td>
<td align="right">11.43</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">per Mcf</td>
<td> </td>
<td> </td>
<td align="right">19,295</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Mmcf</td>
<td> </td>
<td> </td>
<td align="right">2010</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Crude Oil
</div></td>
<td> </td>
<td colspan="3" align="center">Swap</td>
<td> </td>
<td align="right">$</td>
<td align="right">125.25</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">per Bbl</td>
<td> </td>
<td> </td>
<td align="right">92</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Mbbl</td>
<td> </td>
<td> </td>
<td align="right">2009</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Crude Oil
</div></td>
<td> </td>
<td colspan="3" align="center">Swap</td>
<td> </td>
<td align="right">$</td>
<td align="right">125.00</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">per Bbl</td>
<td> </td>
<td> </td>
<td align="right">365</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Mbbl</td>
<td> </td>
<td> </td>
<td align="right">2010</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td colspan="2" align="left">
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives not qualifying as
Hedging Instruments under ASC 815</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas            
</div></td>
<td> </td>
<td colspan="3" align="center" nowrap="nowrap">Basis Swap</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(0.27</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="center">per Mcf</td>
<td> </td>
<td> </td>
<td align="right">16,123</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Mmcf</td>
<td> </td>
<td> </td>
<td align="right">2012</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td>
<td> </td>
<td>For collar derivatives, the amounts in this column represent the ceiling and
floor prices.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The change in the fair value of derivatives designated as hedges that is effective is initially
recorded to Accumulated Other Comprehensive Income / (Loss) in Stockholders’ Equity in the Balance
Sheet. The ineffective portion of the change in the fair value of derivatives designated as hedges,
and the change in fair value of derivatives not qualifying as hedges, are recorded currently in
earnings as a component of Natural Gas Production and Crude Oil and Condensate Revenue, as
appropriate.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following schedules reflect the fair values of derivative instruments on the Company’s
condensed consolidated financial statements as of September 30, 2009:
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Effect of derivative instruments on the Condensed Consolidated Balance Sheet</i></b>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="53%"> </td>
<td width="5%"> </td>
<td width="7%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td><!-- VRule -->
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="4" style="border-bottom: 1px solid #000000"><b>Asset Derivatives</b></td>
<td> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Liability Derivatives</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>(In thousands)</i></b></td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Balance Sheet Location</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Balance Sheet Location</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives designated as Hedging Instruments under ASC 815</b>
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas Commodity Contracts
</div></td>
<td> </td>
<td align="left" valign="top">Current Derivative Contracts</td>
<td> </td>
<td align="left" valign="top">$</td>
<td align="right" valign="top">146,239</td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top">$</td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas Commodity Contracts
</div></td>
<td> </td>
<td align="left" valign="top">Long-Term Derivative Contracts</td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">19,560</td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Crude Oil Commodity Contracts
</div></td>
<td> </td>
<td align="left" valign="top">Current Derivative Contracts</td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">20,548</td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Crude Oil Commodity Contracts
</div></td>
<td> </td>
<td align="left" valign="top"><font style="white-space: nowrap">Long-Term Derivative Contracts</font></td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">4,450</td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">—</td>
<td valign="top"> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" valign="top" style="border-top: 1px solid #000000"> </td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"><b>$</b></td>
<td align="right" valign="top"><b>190,797</b></td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives not qualifying as Hedging Instruments under ASC 815</b>
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas Commodity Basis Contracts
</div></td>
<td> </td>
<td align="left" valign="top">Long-Term Derivative Contracts</td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">339</td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td colspan="3" valign="top" align="center"><font style="white-space: nowrap">Other Liabilities</font></td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top"> </td>
<td align="right" valign="top">(757</td>
<td nowrap="nowrap" valign="top">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" valign="top" style="border-top: 1px solid #000000"> </td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" valign="top" style="border-top: 1px solid #000000"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"><b>$</b></td>
<td align="right" valign="top"><b>191,136</b></td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top"><b>$</b></td>
<td align="right" valign="top"><b>(757</b></td>
<td nowrap="nowrap" valign="top"><b>)</b></td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" valign="top" style="border-top: 3px double #000000"> </td>
<td valign="top"> </td>
<td style="border-right: 1px solid #000000"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" valign="top" style="border-top: 3px double #000000"> </td>
<td valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At September 30, 2009, a $190.8 million ($119.8 million, net of tax) unrealized gain was recorded
in Accumulated Other Comprehensive Income / (Loss). For the natural gas commodity basis contracts
that were not designated as hedging instruments, a $0.4 million unrealized loss was recorded in the
Condensed Consolidated Statement of Operations as a component of Natural Gas Production Revenue for
the nine months ended September 30, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Effect of derivative instruments on the Condensed Consolidated Statement of Operations</i></b>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="7%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Amount of</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Location of Gain</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Gain</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Amount of Gain</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Recognized in</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Recognized in</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Reclassified from</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Income on Derivative</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>OCI on</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(Ineffective Portion</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Derivative</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Location of Gain Reclassified from</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>OCI into Income</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>and Amount</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(Effective</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Accumulated OCI into Income</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(Effective</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000"><b>Excluded from</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>(In thousands)</i></b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Portion)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>(Effective Portion)</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Portion)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Effectiveness Testing)</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives designated as Hedging
Instruments under ASC 815</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas Commodity Contracts
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">165,799</td>
<td> </td>
<td> </td>
<td align="left" valign="top">Natural Gas Production Revenues</td>
<td> </td>
<td align="left" valign="top">$</td>
<td align="right" valign="top">285,453</td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">N/A</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Crude Oil Commodity Contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">24,998</td>
<td> </td>
<td> </td>
<td align="left" valign="top"><font style="white-space: nowrap">Crude Oil and Condensate Revenues</font></td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">18,597</td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top">N/A</td>
<td valign="top"> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" valign="top" style="border-top: 1px solid #000000"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>190,797</b></td>
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="left" valign="top"><b>$</b></td>
<td align="right" valign="top"><b>304,050</b></td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" valign="top" style="border-top: 3px double #000000"> </td>
<td valign="top"> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="7%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Amount of Loss</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Recognized in</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Location of Loss Recognized in</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Income on</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>(In thousands)</i></b></td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Income on Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Derivative</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives not qualifying as Hedging Instruments
under ASC 815</b>
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td align="right" valign="top"> </td>
<td align="right" valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Natural Gas Commodity Contracts
</div></td>
<td> </td>
<td align="left" valign="top"><font style="white-space: nowrap">Natural Gas Production Revenues</font></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"><b>$</b></td>
<td align="right" valign="top"><b>(418</b></td>
<td nowrap="nowrap" valign="top"><b>)</b></td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Based upon estimates at September 30, 2009, the Company would expect to reclassify from Other
Comprehensive Income to the Condensed Consolidated Statement of Operations over the next 12 months
$104.7 million in after-tax
income associated with its commodity hedges. This reclassification
represents the net short-term receivable (after the impact of taxes) associated with open positions
currently not reflected in earnings at September 30, 2009 related to anticipated 2009 and 2010
production.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 8 - us-gaap:ComprehensiveIncomeNoteTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>8. COMPREHENSIVE INCOME / (LOSS)</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Comprehensive Income / (Loss) includes Net Income and certain items recorded directly to
Stockholders’ Equity and classified as Accumulated Other Comprehensive Income / (Loss). The
following tables illustrate the calculation of Comprehensive Income / (Loss) for the three and nine
month periods ended September 30, 2009 and 2008:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated Other Comprehensive
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Income / (Loss) — Beginning of Period
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>158,273</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(182,602</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net Income
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>38,897</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">66,990</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other Comprehensive Income / (Loss), net
of taxes:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Reclassification Adjustment for Settled Contracts,
net of taxes of $40,185 and $(3,758),
respectively
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(67,843</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,300</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Changes in Fair Value of Hedge Positions, net of
taxes of $(837) and $(171,149),
respectively
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>1,415</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">291,061</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Defined Benefit Pension and Postretirement Plans:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Amortization of Net Obligation at Transition,
net of taxes of $(59) and $(58),
respectively
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>99</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">100</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Amortization of Prior Service Cost, net of taxes
of $(66) and $(93),
respectively
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>113</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">158</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Amortization of Net Loss, net of taxes of
$(358) and $(152),
respectively
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>605</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>817</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">254</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">512</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign Currency Translation Adjustment, net of
taxes of $43 and $1,864,
respectively
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(73</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,189</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Other Comprehensive Income / (Loss)
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(65,684</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(65,684</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">294,684</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">294,684</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Comprehensive Income / (Loss)
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(26,787</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">361,674</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated Other Comprehensive
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Income — End of Period
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>92,589</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">112,082</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22"><b>Nine Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>2009</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated Other Comprehensive
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Income / (Loss) — Beginning of Period
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>186,426</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(894</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net Income
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>111,979</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">167,590</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other Comprehensive Income / (Loss), net
of taxes:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Reclassification Adjustment for Settled Contracts,net
of taxes of $113,598 and $(13,541), respectively
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(190,452</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">22,957</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Changes in Fair Value of Hedge Positions, net of
taxes of $(52,441) and $(55,122), respectively
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>87,204</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">93,513</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Defined Benefit Pension and Postretirement Plans:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Amortization of Net Obligation at Transition,
net of taxes of $(177) and $(175), respectively
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>297</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">299</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Amortization of Prior Service Cost, net of taxes
of $(200) and $(279), respectively
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>338</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">473</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Amortization of Net Loss, net of taxes of
$(1,075) and $(452), respectively
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>1,815</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>2,450</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">766</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,538</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign Currency Translation Adjustment, net of
taxes of $(4,124) and $3,033, respectively
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>6,961</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,032</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Other Comprehensive Income / (Loss)
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(93,837</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(93,837</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">112,976</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">112,976</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Comprehensive Income
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>18,142</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">280,566</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated Other Comprehensive
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Income — End of Period
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>92,589</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">112,082</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Changes in the components of Accumulated Other Comprehensive Income, net of taxes, for the
nine months ended September 30, 2009 were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Defined Benefit</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Foreign</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Net Gains on</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Pension and</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Currency</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><b>Accumulated Other Comprehensive Income, net</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Cash Flow</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Postretirement</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Translation</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><b>of taxes</b><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Hedges</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Plans</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Adjustment</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at December 31, 2008
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">223,068</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(29,608</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(7,034</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">186,426</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net change in unrealized gain on cash flow
hedges, net of taxes of $61,157
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(103,248</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(103,248</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net change in defined benefit pension and
postretirement plans, net of taxes of $(1,452)
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,450</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,450</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Change in foreign currency translation
adjustment, net of taxes of $(4,124)
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,961</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,961</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance at September 30, 2009</b>
</div></td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>119,820</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"><b>$</b></td>
<td align="right"><b>(27,158</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="right"><b>$</b></td>
<td align="right"><b>(73</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>92,589</b></td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 9 - us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>9. PENSION AND OTHER POSTRETIREMENT BENEFITS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The components of net periodic benefit costs for the three and nine months ended September 30, 2009
and 2008 were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Nine Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td style="border-bottom: 1px solid #000000"> </td>
<td colspan="7" align="left" style="border-top: 0px solid #000000">     </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Qualified and Non-Qualified Pension Plans</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current Period Service Cost
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>861</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">828</td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>2,583</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,485</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Cost
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>928</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">818</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>2,784</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,454</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected Return on Plan Assets
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(671</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(884</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(2,013</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,651</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of Prior Service Cost
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>13</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>39</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of Net Loss
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>794</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">294</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>2,382</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">881</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net Periodic Pension Cost
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>1,925</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,069</td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>5,775</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,207</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Postretirement Benefits Other than Pension Plans</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Current Period Service Cost
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>320</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">271</td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>960</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">812</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Cost
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>398</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">345</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>1,195</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,035</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of Prior Service Cost
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>167</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">238</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>500</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">714</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of Net Loss
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>169</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">112</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>507</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">336</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of Net Obligation at Transition
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>158</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">158</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>474</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">474</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Postretirement Benefit Cost
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>1,212</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,124</td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>3,636</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,371</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Employer Contributions</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The funding levels of the pension and postretirement plans are in compliance with standards set by
applicable law or regulation. The Company does not have any required minimum funding obligations
for its qualified pension plan in 2009. The Company previously disclosed in its financial
statements for the year ended December 31, 2008 that it expected to contribute $0.3 million to its
non-qualified pension plan and $0.8 million to the postretirement benefit plan during 2009. It is
anticipated that these contributions will be made prior to December 31, 2009. In May 2009, the
Company made a contribution of $10 million to its qualified pension plan.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 10 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>10. STOCK-BASED COMPENSATION</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Compensation expense charged against income for stock-based awards (including the supplemental
employee incentive plans) during the nine months ended September 30, 2009 and 2008 was $16.6
million and $29.6 million, respectively, and is included in General and Administrative Expense in
the Condensed Consolidated Statement of Operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the third quarter of 2009, the Company realized a $13.1 million tax benefit related
primarily to the federal tax deduction in excess of book compensation cost for employee stock-based
compensation for 2008 and, to a lesser extent, book compensation cost exceeding federal tax
deduction for 2009 and state tax deductions for 2007. For regular federal income tax purposes, the
Company was in a net operating loss position in 2008. In accordance with ASC 718, the Company is
able to recognize this tax benefit only to the extent it reduces the Company’s income taxes
payable. As the Company carried back net operating losses concurrent with its 2008 tax return
filing, the income tax benefit related to stock-based compensation was recorded in 2009. As
disclosed in the Form 10-K, the Company realized a $10.7 million tax benefit during the year ended
December 31, 2008 related to the 2007 federal tax deduction in excess of book compensation cost for
employee stock-based compensation. For further information regarding Stock-Based Compensation or
the Company’s Incentive Plans, please refer to Note 10 of the Notes to the Consolidated Financial
Statements in the Form 10-K.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Restricted Stock Awards</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the first nine months of 2009, the Compensation Committee granted 140,060 restricted stock
awards with a weighted-average grant date per share value of $34.74. The fair value of restricted
stock grants is based on the average of the high and low stock price on the grant date. During the
first nine months of 2009, 39,240 restricted stock awards vested with a weighted-average grant date
per share value of $27.29.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Compensation expense recorded for all unvested restricted stock awards for the nine months ended
September 30, 2009 and 2008 was $0.7 million and $1.2 million, respectively. Compensation expense
recorded for all unvested restricted stock awards for the third quarter of 2009 and 2008 was $0.3
million and $0.2 million, respectively. The Company used an annual forfeiture rate ranging from 0%
to 7.1% based on approximately ten years of the Company’s history for this type of award to various
employee groups.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Restricted Stock Units</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the nine months ended September 30, 2009, 33,150 restricted stock units were granted to
non-employee directors of the Company with a grant date per share value of $22.63. The fair value
of these units is measured at the average of the high and low stock price on grant date and
compensation expense is recorded immediately. These units immediately vest and are paid out when
the director ceases to be a director of the Company. The compensation cost, which reflects the
total fair value of these units, recorded in the first nine months of both 2009 and 2008 was $0.8
million. There was no expense recorded in the third quarter of either 2009 or 2008.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Stock Appreciation Rights</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the first nine months of 2009, the Compensation Committee granted 221,780 stock appreciation
rights (SARs) to employees. These awards allow the employee to receive the intrinsic value over
the $22.63 grant date market price that may result from the price appreciation on a set number of
common shares during the contractual term of seven years. As these SARs are paid out in stock,
rather than in cash, the Company calculates the fair value in the same manner as stock options, by
using a Black-Scholes model.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The assumptions used in the Black-Scholes fair value calculation for SARs are as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Nine Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>September 30, 2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-Average Value per Stock Appreciation Right
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted During the Period
</div></td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>9.35</b></td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Assumptions
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Stock Price Volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"><b>50.5</b></td>
<td nowrap="nowrap"><b>%</b></td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Risk Free Rate of Return
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"><b>1.7</b></td>
<td nowrap="nowrap"><b>%</b></td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Expected Dividend
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"><b>0.5</b></td>
<td nowrap="nowrap"><b>%</b></td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Expected Term (in years)
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>4.5</b></td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Compensation expense recorded during the first nine months of both 2009 and 2008 for SARs was
$1.5 million. Included in these amounts were $0.7 million and $0.5 million in the first nine
months of 2009 and 2008, respectively, related to the immediate expensing of shares granted in 2009
and 2008 to retirement-eligible employees. Compensation expense in the third quarter of 2009 and
2008 was $0.2 million and $0.3 million, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Performance Share Awards</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2009, the Compensation Committee granted three types of performance share awards to
employees for a total of 785,350 performance shares. The performance period for two of the three
types of these awards commenced on January 1, 2009 and ends December 31, 2011. Both of these types
of awards vest on January 1, 2012.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">Awards totaling 207,730 performance shares are earned, or not earned, based on the comparative
performance of the Company’s common stock measured against sixteen other companies in the Company’s
peer group over a three year performance period. The grant date per share value of the equity
portion of this award was $17.63. Depending on the Company’s performance, employees may receive an
aggregate of up to 100% of the fair market value of a share of common stock payable in common stock
plus up to 100% of the fair market value of a share of common stock payable in cash.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Awards totaling 376,510 performance shares are earned, or not earned, based on the Company’s
internal performance metrics rather than performance compared to a peer group. The grant date per
share value of this award was $22.63. These awards represent the right to receive up to 100% of
the award in shares of common stock. The actual number of shares issued at the end of the
performance period will be determined based on the Company’s performance against three performance
criteria set by the Company’s Compensation Committee. An employee will earn one-third of the
award granted for each internal performance metric that the Company meets at the end of the
performance period. These performance criteria measure the Company’s average production, average
finding costs and average reserve replacement over three years. Based on the Company’s probability
assessment at September 30, 2009, it is considered probable that these three criteria will be met.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The third type of performance share award, totaling 201,110 performance shares, with a grant date
per share value of $22.63, has a three-year graded vesting schedule, vesting one-third on each
anniversary date following the date of grant, provided that the Company has $100 million or more of
operating cash flow for the year preceding the vesting date. If the Company does not have $100
million or more of operating cash flow for the year preceding a vesting date, then the portion of
the performance shares that would have vested on that date will be forfeited. As of September 30,
2009, it is considered probable that this performance metric will be met for 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For all performance share awards granted to employees in 2009 and 2008, an annual forfeiture rate
ranging from 0% to 5.2% has been assumed based on the Company’s history for this type of award to
various employee groups.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For awards that are based on the internal metrics (performance condition) of the Company and for
awards that were granted prior to the adoption of ASC 718 on January 1, 2006, fair value is
measured based on the average of the high and low stock price of the Company on grant date and
expense is amortized over the three year vesting period. To determine the fair value for awards
that were granted after January 1, 2006 that are based on the Company’s comparative performance
against a peer group (market condition), the equity and liability components are bifurcated. On
the grant date, the equity component was valued using a Monte Carlo binomial model and is amortized
on a straight-line basis over three years. The liability component is valued at each reporting
period by using a Monte Carlo binomial model.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The four primary inputs for the Monte Carlo model are the risk-free rate, volatility of returns,
correlation in movement of total shareholder return and the expected dividend. An interpolated
risk-free rate was generated from the Federal Reserve website for constant maturity treasuries for
two and three year bonds (as of the reporting date) set equal to the remaining duration of the
performance period. Volatility was set equal to the annualized daily volatility for the remaining
duration of the reporting period ending on the reporting date. Correlation in movement of total
shareholder return was determined based on a correlation matrix that was created which identifies
total shareholder return correlations for each pair of companies in the peer group, including the
Company. The paired returns in the correlation matrix ranged from approximately 50% to
approximately 88% for the Company and its peer group. The expected dividend is calculated using
the total Company annual dividends expected to be paid ($0.12 per share) divided by the September
30, 2009 closing price of the Company’s stock ($35.75). Based on these inputs discussed above, a
ranking was projected identifying the Company’s rank relative to the peer group for each award
period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following assumptions were used as of September 30, 2009 for the Monte Carlo model to value the
liability components of the peer group measured performance share awards. The equity portion of
the award was valued on the date of grant using the Monte Carlo model and this portion was not
marked to market.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>September 30, 2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk Free Rate of Return
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td nowrap="nowrap" align="right"><b>0.1% - 1.1</b></td>
<td nowrap="nowrap"><b>%</b></td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Stock Price Volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td nowrap="nowrap" align="right"><b>42.4% - 81.9</b></td>
<td nowrap="nowrap"><b>%</b></td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected Dividend
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"><b>0.3</b></td>
<td nowrap="nowrap"><b>%</b></td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Monte Carlo value per share for the liability component for all outstanding market condition
performance share awards ranged from $8.02 to $12.06 at September 30, 2009. The long-term
liability for market condition performance share awards, included in Other Liabilities in the
Condensed Consolidated Balance Sheet, at September 30, 2009 and December 31, 2008 was $1.2 million
and $0.3 million, respectively. The short-term liability, included in Accrued Liabilities in the
Condensed Consolidated Balance Sheet, at September 30, 2009 and December 31, 2008, for market
condition performance share awards was $0.7 million and $2.5 million, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the first nine months of 2009, 332,642 performance shares vested. As discussed in Note 10
of the Notes to the Consolidated Financial Statements in the Form 10-K, the performance period
ended on December 31, 2008 for two types of performance shares awarded in 2006. A total of 105,800
shares measured based on the Company’s performance against a peer group (valued at $1.7 million)
were awarded in addition to cash of $1.8 million. A total of 155,800 shares measured based on
internal performance metrics of the Company (valued at $3.8 million) were also awarded. During the
first quarter of 2009, 60,740 shares vested (valued at $2.5 million) which represents one-third of
the three-year graded vesting schedule performance share awards granted in 2008 and 2007 with a
grant date per share value of $48.48 and $35.22, respectively. These awards met the performance
criteria that the Company had positive operating income for 2008 and 2007. During the second
quarter of 2009, 10,302 performance shares vested as a result of early vesting schedules for
certain employees. Additionally, 63,960 performance shares were forfeited during the first nine
months of 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of September 30, 2009, 250,800 shares of the Company’s common stock representing vested
performance share awards were deferred into the Rabbi Trust Deferred Compensation Plan. During the
third quarter of 2009, 5,600 shares were sold out of the plan. For the first nine months of 2009,
an increase to the rabbi trust deferred compensation liability of $2.3 million was recognized,
primarily representing the increase in the closing price of all shares from December 31, 2008 to
September 30, 2009. This increase in stock-based compensation expense was included in General and
Administrative expense in the Condensed Consolidated Statement of Operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Total compensation cost recognized for both the equity and liability components of all performance
share awards as well as expense related to the shares deferred into the rabbi trust during the nine
months ended September 30, 2009 and 2008 was $13.5 million and $10.3 million, respectively. Total
compensation cost recognized for both the equity and liability components of all performance share
awards as well as expense related to the shares deferred into the rabbi trust during the third
quarter of 2009 and 2008 was a charge of $4.7 million and a credit of $10.2 million, respectively.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - cog:IncreaseInAuthorizedSharesTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11. INCREASE IN AUTHORIZED SHARES</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2009, the stockholders of the Company approved an increase in the authorized number of
shares of common stock from 120 million to 240 million shares. The Company also decreased the
number of shares of Series A Junior Participating Preferred Stock reserved for issuance from
1,200,000 to 800,000. The shares of Series A Junior Participating Preferred Stock are issuable
pursuant to the Company’s Preferred Stock Purchase Rights Plan.
</div>
</div>
65101000
24974000
71564000
23012000
false
--12-31
2009-09-30
10-Q
0000858470
103654113
Yes
Large Accelerated Filer
6999000000
CABOT OIL & GAS CORP
No
Yes
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202200
202200
3349000
3349000
1649000
418000
100901000
104495000
104583000
104917000
99858000
103351000
103603000
103647000