COMMODITY PRICE RISK MANAGEMENT

12 Months Ended

Dec. 31, 2013

COMMODITY PRICE RISK MANAGEMENT [Abstract]

COMMODITY PRICE RISK MANAGEMENT

D.      COMMODITY PRICE RISK MANAGEMENT

Through our wholly-owned subsidiary Energy One, we have entered into commodity derivative contracts (“economic hedges”) Wells Fargo, as described below.  The derivative contracts are priced using West Texas Intermediate (“WTI”) quoted prices.  The Company is a guarantor of Energy One’s obligations under the economic hedges.  The objective of utilizing the economic hedges is to reduce the effect of price changes on a portion of our future oil production, achieve more predictable cash flows in an environment of volatile oil and gas prices and to manage our exposure to commodity price risk. The use of these derivative instruments limits the downside risk of adverse price movements.  However, there is a risk that such use may limit our ability to benefit from favorable price movements. Energy One may, from time to time, add incremental derivatives to hedge additional production, restructure existing derivative contracts or enter into new transactions to modify the terms of current contracts in order to realize the current value of its existing positions.  The Company does not engage in speculative derivative activities or derivative trading activities, nor does it use derivatives with leveraged features.

Energy One's commodity derivative contracts as of December 31, 2013 are summarized below:

			Quantity
Settlement Period	Counterparty	Basis	(Bbls/day)		Strike Price
Crude Oil Costless Collar
01/01/14 - 06/30/14	Wells Fargo	WTI		300	Put:	$	90.00
					Call:	$	95.00
Crude Oil Costless Collar
01/01/14 - 06/30/14	Wells Fargo	WTI		300	Put:	$	90.00
					Call:	$	97.25
Crude Oil Costless Collar
07/01/14 - 12/31/14	Wells Fargo	WTI		300	Put:	$	90.00
					Call:	$	98.40

The following table details the fair value of the derivatives recorded in the applicable consolidated balance sheet, by category:

	As of December 31, 2013
	(in thousands)
	Derivative Assets			Derivative Liabilities
	Balance Sheet	Fair		Balance Sheet	Fair
	Classification	Value		Classification	Value
Crude oil costless collars	Current Asset	$	14	Current Liability	$	280
	As of December 31, 2012
	(in thousands)
	Balance Sheet	Fair		Balance Sheet	Fair
	Classification	Value		Classification	Value
Crude oil costless collars	Current Asset	$	472	Current Liability	$	--

Unrealized gains and losses resulting from derivatives are recorded at fair value on the consolidated balance sheet and changes in fair value are recognized in the unrealized gain (loss) on risk management activities line on the consolidated statement of operations.  Realized gains and losses resulting from the contract settlement of derivatives are recognized in the commodity price risk management activities line on the consolidated statement of operations.  The following table summarizes the unrealized and realized derivative (gain) loss presented in the accompanying statements of operations:

	(In thousands)
	Year Ended December 31,
	2013			2012		2011
Realized derivative gain (loss)	$	(338	)	$	21	$	(1,974	)
Unrealized derivative gain (loss)	$	(737	)	$	1,070	$	1,126
Total realized and unrealized derivative gain (loss)	$	(1,075	)	$	1,091	$	(848	)