Financial Instruments and Derivatives

9 Months Ended

Sep. 30, 2011

Financial Instruments and Derivatives [Abstract]

FINANCIAL INSTRUMENTS AND DERIVATIVES

NOTE 7 — FINANCIAL INSTRUMENTS AND DERIVATIVES

We enter into certain commodity derivative instruments which are effective in mitigating commodity price risk associated with a portion of our future monthly natural gas and crude oil production and related cash flows. Our oil and gas operating revenues and cash flows are impacted by changes in commodity product prices, which are volatile and cannot be accurately predicted. Our objective for holding these commodity derivatives is to protect the operating revenues and cash flows related to a portion of our future crude oil and natural gas sales from the risk of significant declines in commodity prices, which helps insure our ability to fund our capital budget. We have not designated any of our commodity derivatives as hedges under the applicable accounting standards.

As of September 30, 2011, we had the following derivative instruments in place:

Natural Gas	Period	MMBTU/day		Price per MMBTU
Collars	Oct 2011 — Dec 2011		2,143	$	5.37 — $7.43
	Jan 2012 — Dec 2012		11,910	$	4.58 — $6.42
	Jan 2013 — Dec 2013		12,500	$	4.50 — $5.96
Swaps	Oct 2011 — Dec 2011		113	$	5.98
	Jan 2012 — Dec 2012		100	$	6.15
Ceilings sold (call)	Jan 2014 — Dec 2014		10,000	$	6.15
Crude Oil	Period	Bbls/day		Price per Bbl
Collars	Oct 2011 — Dec 2011		1,497	$	62.61 — $102.98
	Jan 2012 — Dec 2012		3,259	$	75.81 — $98.31
	Jan 2013 — Dec 2013		2,947	$	74.82 — $97.21
	Jan 2014 — Dec 2014		947	$	85.00 — $91.25
	Jan 2015 — Dec 2015		947	$	85.00 — $91.25
Swaps	Oct 2011 — Dec 2011		43	$	85.09
Floors sold (put)	Oct 2011 — Dec 2011		147	$	60.00
	Jan 2012 — Dec 2012		50	$	55.00
Floors purchased	Oct 2011 — Dec 2011		1260	$	84.37
	Jan 2012 — Dec 2012		153	$	80.00

The following table summarizes the fair value of our derivative contracts as of the dates indicated:

In thousands		Gross Derivative Assets				Gross Derivative Liabilities
Derivatives not designated as hedging		September 30,		December 31,		September 30,			December 31,
instruments	Balance Sheet Classification	2011		2010		2011			2010
Commodity
	Current Assets - Derivatives	$	14,552	$	—	$	(6,875	)	$	—
	Derivatives and Other Long Term Assets		24,166		—		(15,400	)		—
	Derivative and other Current Liabilities		—		1,743		—			(2,462	)
	Derivative and other Long Term Liabilities		—		500		—			(559	)
Total Commodity		$	38,718	$	2,243	$	(22,275	)	$	(3,021	)

The following tables summarize the net gain (loss) on derivative contracts for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended			Nine Months Ended
	September 30, 2011			September 30, 2011
	(in thousands)			(in thousands)
Realized (loss)	$	(45	)	$	(554	)
Unrealized gain		17,386			17,221
Net gain	$	17,341		$	16,667

	Three Months Ended			Nine Months Ended
	September 30, 2010			September 30, 2010
	(in thousands)			(in thousands)
Realized gain	$	441		$	3,529
Unrealized (loss)		(503	)		(1,181	)
Net gain (loss)	$	(62	)	$	2,348