Accounting Policies And Disclosures

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Accounting Policies And Disclosures

ACCOUNTING POLICIES AND DISCLOSURES

The accompanying condensed consolidated interim financial statements have not been audited. In management’s opinion, the accompanying condensed consolidated interim financial statements contain all adjustments necessary to fairly present our financial position as of March 31, 2013 and our results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results for interim periods are not necessarily indicative of annual results.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during each reporting period. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties, which may cause actual results to differ materially from management’s estimates.

Certain disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2012 Annual Report on Form 10-K.

Restatement of Previously Issued Unaudited Financial Statements

The consolidated financial statements as of and for the three months ended March 31, 2012 were restated as more fully disclosed within Item 8, Note 2 and the Supplemental Selected Quarterly Financial Data in the 2012 Annual Report on Form 10-K. The restatement is the result of our documentation failing to give consideration to all sources of ineffectiveness for derivatives entered into during 2012 that had fair value on the dates they were initially designated as hedges. These derivatives did not qualify for hedge accounting in 2012 and their changes in value required recognition in earnings. Because the derivatives did not qualify for hedge accounting, their inclusion in the U.S. and Canadian full cost ceiling was inappropriate. Thus, our full cost ceiling calculations were revised and resulted in restatements to increase impairment expense recognized. Also, we determined that the deferred taxes used in our Canadian ceiling test included temporary differences for non-property related items. Income taxes have also been restated to reflect the foregoing restated items.

The derivative restatement decreased production revenue by $3.6 million and $1.8 million for the U.S. and Canada, respectively, while derivative gains increased $20.7 million and $12.0 million for the U.S. and Canada, respectively. Impairment expense increased as the result of these derivatives no longer being included in the cost center ceiling by $115.7 million and $139.5 million for the U.S. and Canada, respectively. The income tax impact of these adjustments resulted in an increase to the tax benefit of $41.9 million and $34.2 million for the U.S. and Canada, respectively. Our consolidated net loss increased $151.6 million, which decreased our retained earnings by the same amount. Other comprehensive income and AOCI decreased $33.0 million as a result of these adjustments. The restatement increased diluted net loss per share by $0.89, from diluted net loss per share of $0.35 as previously reported, to diluted net loss per share of $1.24.

Recently Issued Accounting Standards

Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements to determine their impact, if any, on our financial statements. No pronouncements materially affecting our financial statements have been issued since the filing of our 2012 Annual Report on Form 10-K.