Summary of Significant Accounting Policies, Organization and Basis of Presentation

9 Months Ended

Sep. 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 September 30, 2011 and December 31, 2010 and the results of operations for the three and nine month periods ended September 30, 2011 and 2010, and cash flows for the nine month periods ended September 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 nine months ended September 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, 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 per Common Share

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

	Three months ended September 30,				Nine months ended September 30,
	2011		2010		2011		2010
Net income	$	11,776	$	1,564	$	10,801	$	6,711
Weighted average shares — basic		79,086,261		78,633,535		78,762,799		78,361,299
Dilutive effect		-		-		-		-
Weighted average shares — dilutive		79,086,261		78,633,535		78,762,799		78,361,299
Basic income per share	$	0.15	$	0.02	$	0.14	$	0.09
Diluted income per share	$	0.15	$	0.02	$	0.14	$	0.09

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”).