Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2011

Financial Instruments (Tables) [Abstract]

Notional volumes of commodity position

Commodity	Instrument	Unit	2011		2012		2013
Natural gas	Calls	MMBtu/d		10,000		—		—
Natural gas	Call Spreads	MMBtu/d		7,100		—		—
Natural gas	Swaps	MMBtu/d		10,000		—		—
NGLs	Puts	Bbl/d		7,950		4,500		1,300
NGLs	Swaps	Bbl/d		1,500		—		—
Crude oil	Puts	Bbl/d		2,700		1,500		750
At December 31, 2010, the notional volumes of our commodity positions were:
Commodity	Instrument	Unit	2011		2012		2013
Natural gas	Calls	MMBtu/d		10,000		—		—
Natural gas	Call Spreads	MMBtu/d		7,100		—		—
Natural gas	Swaps	MMBtu/d		10,000		—		—
NGLs	Puts	Bbl/d		7,950		3,500		—
NGLs	Swaps	Bbl/d		1,500		—		—
Crude oil	Puts	Bbl/d		2,700		1,500		400

Fair value measurements on hedging instruments

	Fair Value Measurements on
	Hedging Instruments(a)
	June 30, 2011
	Level 1		Level 2			Level 3		Total
	(In thousands)
Assets:
Natural Gas:
Short-term — Designated(b)	$	—	$	—		$	4	$	4
Short-term — Not designated(b)		—		151			—		151
Long-term — Designated(c)		—		—			—		—
Long-term — Not designated(c)		—		—			—		—
Natural Gas Liquids:
Short-term — Designated(b)		—		—			3,416		3,416
Short-term — Not designated(b)		—		—			10		10
Long-term — Designated(c)		—		—			8,667		8,667
Long-term — Not designated(c)		—		—			—		—
Crude Oil:
Short-term — Designated(b)		—		—			1,034		1,034
Short-term — Not designated(b)		—		—			1		1
Long-term — Designated(c)		—		—			4,245		4,245
Long-term — Not designated(c)		—		—			—		—
Total	$	—	$	151		$	17,377	$	17,528
Liabilities:
Natural Gas:
Short-term — Not designated(d)	$	—	$	260		$	—	$	260
Natural Gas Liquids:
Short-term — Designated(d)		—		—			5,050		5,050
Long-term — Designated(e)		—		—			—		—
Interest Rate:
Short-term — Not designated(d)		—		4,474			—		4,474
Long-term — Not designated(e)		—		1,041			—		1,041
Total	$	—	$	5,775		$	5,050	$	10,825
Total designated assets	$	—	$	—		$	12,316	$	12,316
Total not designated (liabilities)/assets	$	—	$	(5,624	)	$	11	$	(5,613	)

(a)	Instruments re-measured on a recurring basis.
(b)	Included on the consolidated balance sheets as a current asset under the heading of “Risk management assets.”
(c)	Included on the consolidated balance sheets as a noncurrent asset under the heading of “Risk management assets.”
(d)	Included on the consolidated balance sheets as a current liability under the heading of “Risk management liabilities.”

(e) Included on the consolidated balance sheets as a noncurrent liability under the heading of “Risk management and other noncurrent liabilities.”

	Fair Value Measurements on
	Hedging Instruments(a)
	December 31, 2010
	Level 1		Level 2			Level 3		Total
	(In thousands)
Assets:
Natural Gas:
Short-term — Designated(b)	$	—	$	—		$	87	$	87
Natural Gas Liquids:
Short-term — Designated(b)		—		—			6,812		6,812
Short-term — Not designated(b)		—		—			14		14
Long-term — Designated(c)		—		—			6,391		6,391
Crude Oil:
Short-term — Designated(b)		—		—			904		904
Short-term — Not designated(b)		—		—			19		19
Long-term — Designated(c)		—		—			5,552		5,552
Total	$	—	$	—		$	19,779	$	19,779
Liabilities:
Natural Gas:
Short-term — Not designated(d)	$	—	$	82		$	—	$	82
Natural Gas Liquids:
Short-term — Designated(d)		—		—			4,867		4,867
Interest Rate:
Short-term — Not designated(d)		—		4,408			—		4,408
Long-term — Not designated(e)		—		2,469			—		2,469
Total	$	—	$	6,959		$	4,867	$	11,826
Total designated assets	$	—	$	—		$	14,879	$	14,879
Total not designated (liabilities)/assets	$	—	$	(6,959	)	$	33	$	(6,926	)

(a)	Instruments re-measured on a recurring basis.
(b)	Included on the consolidated balance sheets as a current asset under the heading of “Risk management assets.”
(c)	Included on the consolidated balance sheets as a noncurrent asset under the heading of “Risk management assets.”
(d)	Included on the consolidated balance sheets as a current liability under the heading of “Risk management liabilities.”
(e)	Included on the consolidated balance sheets as a noncurrent liability under the heading of “Risk management and other noncurrent liabilities.”

Reconciliation of changes in the fair value of derivatives classified as level 3 in the fair value hierarchy

	Three Months Ended June 30, 2011
				Natural Gas
	Natural Gas			Liquids			Crude Oil			Total
	(In thousands)
Assets balance, beginning of period	$	31		$	5,053		$	4,904		$	9,988
Total gains or losses:
Non-cash amortization of option premium		(1,470	)		(3,905	)		(1,982	)		(7,357	)
Other amounts included in earnings		—			(3,155	)		303			(2,852	)
Included in accumulated other comprehensive loss		1,443			6,352			2,055			9,850
Settlements		—			2,698			—			2,698
Asset balance, end of period	$	4		$	7,043		$	5,280		$	12,327
Change in unrealized income included in earnings related to instruments still held as of the end of the period	$	—		$	(174	)	$	(92	)	$	(266	)

	Six Months Ended June 30, 2011
				Natural Gas
	Natural Gas			Liquids			Crude Oil			Total
	(In thousands)
Assets balance, beginning of period	$	87		$	8,350		$	6,475		$	14,912
Total gains or losses:
Non-cash amortization of option premium		(2,924	)		(7,761	)		(3,942	)		(14,627	)
Other amounts included in earnings		—			(5,098	)		790			(4,308	)
Included in accumulated other comprehensive loss		2,841			(510	)		157			2,488
Purchases		—			7,364			1,800			9,164
Settlements		—			4,698			—			4,698
Asset balance, end of period	$	4		$	7,043		$	5,280		$	12,327
Change in unrealized (income) loss included in earnings related to instruments still held as of the end of the period	$	—		$	(314	)	$	59		$	(255	)

	Three Months Ended June 30, 2010
				Natural Gas
	Natural Gas			Liquids			Crude Oil			Total
	(In thousands)
Assets balance, beginning of period	$	722		$	25,498		$	16,805		$	43,025
Total gains or losses:
Non-cash amortization of option premium		(1,472	)		(4,106	)		(2,492	)		(8,070	)
Other amounts included in earnings		—			4,567			5,500			10,067
Included in accumulated other comprehensive loss		1,403			14,673			3,388			19,464
Purchases		—			—			3,425			3,425
Settlements		—			(4,395	)		(5,097	)		(9,492	)
Asset balance, end of year	$	653		$	36,237		$	21,529		$	58,419
Change in unrealized loss (income) included in earnings related to instruments still held as of the end of the period	$	—		$	27		$	(185	)	$	(158	)

	Six Months Ended June 30,
	2010
				Natural Gas
	Natural Gas			Liquids			Crude Oil			Total
	(In thousands)
Assets balance, beginning of period	$	2,752		$	15,641		$	24,213		$	42,606
Total gains or losses:
Non-cash amortization of option premium		(2,929	)		(8,163	)		(4,957	)		(16,049	)
Other amounts included in earnings		—			6,633			10,220			16,853
Included in accumulated other comprehensive loss		830			21,256			(1,334	)		20,752
Purchases		—			7,381			3,425			10,806
Settlements		—			(6,511	)		(10,038	)		(16,549	)
Asset balance, end of period	$	653		$	36,237		$	21,529		$	58,419
Change in unrealized (income) loss included in earnings related to instruments still held as of the end of the period	$	—		$	(29	)	$	154		$	125

The effect of derivative instruments on statements of operations

The Effect of Derivative Instruments on the Statements of Operations

							Amount of Gain
							(Loss) Recognized
							in Income
							on Derivative
	Amount of Gain			Amount of Gain			(Ineffective Portion
	(Loss) Recognized			(Loss) Reclassified			and Amount
Derivatives in	in OCI on			from Accumulated			Excluded from
ASC 815 Cash Flow	Derivatives			OCI into Income			Effectiveness			Statements of
Hedging Relationships	(Effective Portion)			(Effective Portion)			Testing)			Operations Location
(In thousands)
Three Months Ended June 30, 2011
Natural gas	$	(26	)	$	(1,470	)	$	—		Natural gas sales
Natural gas liquids		(463	)		(6,816	)		(177	)	Natural gas liquids sales
Crude oil		482			(1,573	)		(93	)	Condensate and other
Interest rate swaps		—			(83	)		—		Interest and other financing costs
Total	$	(7	)	$	(9,942	)	$	(270	)
Six Months Ended June 30, 2011
Natural gas	$	(83	)	$	(2,924	)	$	—		Natural gas sales
Natural gas liquids		(12,599	)		(12,088	)		(317	)	Natural gas liquids sales
Crude oil		(2,975	)		(3,132	)		40		Condensate and other
Interest rate swaps		(0	)		(180	)		—		Interest and other financing costs
Total	$	(15,657	)	$	(18,324	)	$	(277	)
Three Months Ended June 30, 2010
Natural gas	$	(70	)	$	(1,472	)	$	—		Natural gas sales
Natural gas liquids		14,926			253			27		Natural gas liquids sales
Crude oil		5,252			1,864			82		Condensate and other
Interest rate swaps		—			(121	)		—		Interest and other financing costs
Total	$	20,108		$	524		$	109
Six Months Ended June 30, 2010
Natural gas	$	(2,083	)	$	(2,912	)	$	—		Natural gas sales
Natural gas liquids		19,855			(1,401	)		(29	)	Natural gas liquids sales
Crude oil		2,901			4,235			107		Condensate and other
Interest rate swaps		—			(254	)		—		Interest and other financing costs
Total	$	20,673		$	(332	)	$	78

The following table presents derivatives that are not designated as cash flow hedges:

The Effect of Derivative Instruments on the Statements of Operations

	Amount of Gain
Derivatives Not Designated as	(Loss) Recognized in			Statement of
Hedging Instruments Under ASC 820	Income on Derivative			Operations Location
	(In thousands)
Three Months Ended June 30, 2011
Natural gas	$	(65	)	Natural gas sales
Natural gas liquids		(281	)	Natural gas liquids sales
Crude oil		396		Condensate and other
Interest rate swaps		(381	)	Interest and other financing costs
Total	$	(331	)
Six Months Ended June 30, 2011
Natural gas	$	(128	)	Natural gas sales
Natural gas liquids		(84	)	Natural gas liquids sales
Crude oil		749		Condensate and other
Interest rate swaps		(563	)	Interest and other financing costs
Total	$	(26	)
Three Months Ended June 30, 2010
Natural gas	$	116		Natural gas sales
Natural gas liquids		146		Natural gas liquids sales
Crude oil		334		Condensate and other
Interest rate swaps		(512	)	Interest and other financing costs
Total	$	84
Six Months Ended June 30, 2010
Natural gas	$	(108	)	Natural gas sales
Natural gas liquids		151		Natural gas liquids sales
Crude oil		83		Condensate and other
Interest rate swaps		(1,978	)	Interest and other financing costs
Total	$	(1,852	)