			December 31,
				2012		2011
Oil and gas properties under the full cost method:
	Subject to amortization		$	915,801	$	496,667
	Not subject to amortization:
		Acquired in 2012		141,837		-
		Acquired in 2011		107,510		138,912
		Acquired in 2010		47,148		47,208
		Acquired prior to 2010		52,938		72,214
				1,265,234		755,001

Computers, furniture and fixtures				8,863		6,421
	Total property and equipment			1,274,097		761,422

Accumulated depreciation, depletion and amortization				(270,656)		(212,226)

Net property and equipment			$	1,003,441	$	549,196

These costs are transferred to the amortization base when it is determined whether or not proved reserves can be assigned to such properties. This analysis is dependent upon well performance, results of infield drilling, approval of development plans, drilling results and development of identified projects and periodic assessment of reserves. We expect acquisition costs excluded from amortization to be transferred to the amortization base over the next five years due to a combination of well performance and results of infield drilling relating to currently producing assets and the drilling and development of identified projects acquired, such as the Rochelle field. We expect exploration costs not subject to amortization to be transferred to the amortization base over the next three years as development plans are completed and production commences on existing discoveries.

The following is a summary of our oil and gas properties not subject to amortization as of December 31, 2012:

Costs Incurred in the Year Ended December 31,
		2012		2011		2010		Prior to 2010		Total

Acquisition costs		$	47,995	$	48,904	$	23,648	$	15,176	$	135,723
Exploration costs			72,490		54,729		23,500		37,762		188,481
Capitalized interest			21,352		3,877		-		-		25,229

Total oil and gas properties not
	subject to amortization	$	141,837	$	107,510	$	47,148	$	52,938	$	349,433

During 2012, 2011 and 2010, we capitalized $17.9 million, $13.3 million and $13.1 million, respectively, in certain directly related employee costs. During 2012, 2011 and 2010, we capitalized $26.9 million, $14.7 million and $3.9 million, respectively, in interest.

During 2012, 2011 and 2010, we recorded $53.1 million, $65.7 million and $7.7 million, respectively, of impairment through the application of the full cost ceiling test. The 2012 impairment was primarily due to the decline in U.S. oil and gas prices. The 2011 impairment was primarily related to declines in U.S. gas prices and the impact of our determination that the likely economic returns in the future would not warrant further investment in our test wells in the Alabama area. Our decision to discontinue activities in that area resulted in the reclassification of related amounts as being evaluated for full cost accounting purposes.

The impairment during 2010 was also related to our U.S. oil and gas properties, pre-tax, and was primarily due to the declaration of two wells as dry holes during the first quarter of 2010 – the Alligator Bayou well which was spud in 2008 and a well under a participation agreement.

On February 23, 2011, we closed our acquisition of an additional 20% working interest in the Bacchus field for approximately $9.2 million in cash paid at closing and approximately $6.2 million in cash paid in 2012. In addition, we paid capital costs incurred by the seller of $9.4 million. Following the acquisition, we hold an aggregate 30% working interest in the Bacchus field.

During 2010, we entered into a participation agreement with a private oil and gas operator, and acquired interests in certain acreage in North Louisiana/East Texas and Western Pennsylvania, primarily in the Haynesville and Marcellus areas. Our initial investment was $15 million in cash, and we will pay a share of that operator's drilling and completion expenditures as wells are drilled in Haynesville over the next few years. Under this agreement, we also acquired additional acreage in the Marcellus area for approximately $7.5 million during the second quarter of 2010.

On October 26, 2012, we completed a nonmonetary exchange with our domestic co-venturer whereby we exchanged our Bull Bayou Haynesville and Willow Springs Cotton Valley properties for all of the co-venturer's upstream and midstream interests in the Pennsylvania Marcellus area. In parallel, we secured a third party gas gathering agreement for the Daniel Project in Cameron County, Pennsylvania. We now operate and control the Marcellus assets while retaining a 50% position in our remaining producing Haynesville acreage.

During 2010, we also acquired interests in an exploratory gas shale play in Alabama with an initial net investment of approximately $8.0 million. During the third quarter of 2011, we completed our analysis of our test wells in the Alabama area and determined that the likely economic returns in the future would not warrant further investment and therefore reclassified these amounts as evaluated for full cost accounting purposes.

On May 31, 2012, we closed the Alba Acquisition, which consisted of an additional 23.43% interest in the Alba field. This increased our total working interest in the Alba field to 25.68%. The Alba Acquisition was closed for aggregate cash consideration of approximately $229.6 million.

On October 19, 2010, we completed the Cygnus Sale for $110 million in cash, and recorded a gain of $87 million. The cash proceeds were not burdened by any current taxes payable and were primarily used to accelerate our development projects.