Summary of Significant Accounting Policies, Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2011

Summary of Significant Accounting Policies, Organization and Basis of Presentation [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ORGANIZATION AND BASIS OF PRESENTATION

A — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ORGANIZATION AND BASIS OF PRESENTATION

1. Basis of Financial Statements

     The accompanying unaudited condensed consolidated financial statements present the financial position at June 30, 2011 and December 31, 2010 and the results of operations for the three and six month periods ended June 30, 2011 and 2010, and cash flows for the six month periods ended June 30, 2011 and 2010 of RAM Energy Resources, Inc. and its subsidiaries (the “Company”). These condensed consolidated financial statements include all adjustments, consisting of normal and recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the financial position and the results of operations for the indicated periods. The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011. Reference is made to the Company’s consolidated financial statements for the year ended December 31, 2010 included in the Company’s Annual Report on Form 10-K, for an expanded discussion of the Company’s financial disclosures and accounting policies.

2. Nature of Operations and Organization

     The Company operates exclusively in the upstream segment of the oil and natural gas industry with activities including the drilling, completion, and operation of oil and natural gas wells. The Company conducts the majority of its operations in the states of Texas, Oklahoma and Louisiana. The Company also owns and operates oil and natural gas properties in New Mexico, Mississippi and West Virginia.

3. Use of Estimates

     The preparation of financial statements in conformity with accounting principles, generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions that, in the opinion of management of the Company, are significant include oil and natural gas reserves, amortization relating to oil and natural gas properties, asset retirement obligations, contingent litigation settlements, derivative instrument valuations and income taxes. The Company evaluates its estimates and assumptions on a regular basis. Estimates are based on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates used in preparation of the Company’s financial statements. In addition, alternatives can exist among various accounting methods. In such cases, the choice of accounting method can have a significant impact on reported amounts.

4. Income (Loss) per Common Share

     Basic and diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. A reconciliation of net income (loss) and weighted average shares used in computing basic and diluted net income (loss) per share are as follows (in thousands, except share and per share amounts):

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011			2010
Net income (loss)	$	8,936	$	2,729	$	(975	)	$	5,147
Weighted average shares — basic		78,834,159		78,446,305		78,598,387			78,222,925
Dilutive effect		—		—		—			—
Weighted average shares — dilutive		78,834,159		78,446,305		78,598,387			78,222,925
Basic income (loss) per share	$	0.11	$	0.03	$	(0.01	)	$	0.07
Diluted income (loss) per share	$	0.11	$	0.03	$	(0.01	)	$	0.07

5. Subsequent Events

     The Company evaluates events and transactions that occur after the balance sheet date but before the financial statements are filed with the U.S. Securities and Exchange Commission (“SEC”).

6. New Accounting Pronouncements

     In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”).” This pronouncement was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. This update is effective for reporting periods beginning on or after December 15, 2011. The adoption of ASU 2011-04 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

     In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income.” ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Adoption of ASU 2011-05 will not have an impact on the Company’s consolidated financial position or results of operations.