Property and Equipment

6 Months Ended

Jun. 30, 2011

4.	PROPERTY AND EQUIPMENT

At June 30, 2011 and December 31, 2010, property and equipment consisted of the following:


	June 30, 2011		December 31, 2010
	(In thousands)
Proved oil and natural gas properties	$	973,778	$	941,267
Costs not subject to amortization		439,750		352,479
Land, building and other equipment		7,697		7,314

Total property and equipment		1,421,225		1,301,060
Accumulated depreciation, depletion and amortization		(354,729)		(318,003)

Property and equipment, net	$	1,066,496	$	983,057

During the second quarter of 2011, the Company sold a substantial portion of its non-core area Barnett Shale properties to KKR Natural Resources, a partnership formed between an affiliate of Kohlberg Kravis Roberts & Co. L.P. (KKR) and Premier Natural Resources. Net proceeds received from the sale were approximately $98 million, which represent an agreed upon purchase price of approximately $104 million less net purchase price adjustments. Purchase price adjustments primarily relate to proceeds received by the Company for sales of hydrocarbons from such properties between the effective date of January 1, 2011 and the closing date of May 17, 2011. The proceeds from such sale were recognized as a reduction of proved oil and gas properties, net.

On August 4, 2010, the Company entered into a purchase and sale agreement with Reliance Marcellus II, LLC ("Reliance"), a wholly-owned subsidiary of Reliance Holding USA, Inc. and an affiliate of Reliance Industries Limited pursuant to which Reliance purchased 20% of our interests in oil and gas properties in parts of Pennsylvania in the Marcellus Shale for a combination of cash and a commitment to pay certain of our future development costs. Simultaneous with such transaction, our joint venture partner, ACP II Marcellus, LLC ("ACP II"), an affiliate of Avista Capital Holdings LP, entered into a purchase and sale agreement with Reliance under which it agreed to sell its entire interest in the same properties to Reliance. In June 2011, in accordance with the title and post-closing adjustment provisions of the purchase and sale agreements described above, the Company provided additional interests in oil and gas properties in parts of Pennsylvania in the Marcellus Shale to Reliance in substitution of properties included in the sale that were affected by certain alleged title defects. In exchange for such substitute properties, the Company received $0.3 million in cash from Reliance relating to the sale of 20% of its interest. Additionally, during the second quarter of 2011, the Company received cash distributions of $3.3 million on its B Unit investment in ACP II as a result of ACP II's distribution to Avista of remaining proceeds from its sale of oil and gas properties to an affiliate of Reliance. These distributions are recognized as a reduction of capitalized oil and gas property costs.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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