Note 6 - DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Text Block]

(6)            DERIVATIVE INSTRUMENTS

Commodity Derivatives - From time to time we enter into certain commodity derivative instruments which allow us to mitigate 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 sales from the risk of significant declines in commodity prices. We have not designated any of our commodity derivatives as hedges.  As of June 30, 2011, we hold no commodity derivative positions.

Our purchased commodity derivatives are recorded at their estimated fair values within other current assets in the accompanying consolidated condensed balance sheets. Estimated fair values of our purchased commodity derivatives were as follows (in thousands):

						Fair Value
Commodity	Type	Volume	Duration	Price			June 30,  2011	December 31, 2010
Crude Oil	Floor	5,000 bbls	Feb 11 - July 11	$	60.00	$	-	$	3
						$	-	$	3

As of June 30, 2011, neither we, nor any of our consolidated companies, hold any derivative instruments which are designated as fair value hedges, cash flow hedges or foreign currency hedges. Settlements of our oil and gas commodity derivatives are based on the difference between fixed option prices and the New York Mercantile Exchange closing prices for each month during the life of the contracts. We monitor our crude oil and natural gas production prices compared to New York Mercantile Exchange prices to assure our commodity derivatives are effective in mitigating our commodity price risk.

We did not hold any derivative instruments designated as hedging instruments as of June 30, 2011. A summary of the fair values of our derivative instruments not designated as hedging instruments as of June 30, 2011 and December 31, 2010 are as follows (in thousands):

		Fair Value
Asset Derivatives	Balance Sheet Location	June 30, 2011		December 31, 2010
Commodity contracts	Other assets	$	-	$	3
Total derivatives		$	-	$	3

We have recorded realized losses for expired crude oil contracts of $12 thousand and $24 thousand for the three and six months ended June 30, 2011, respectively, in our consolidated condensed statement of operations. In addition, we have recorded unrealized gains of $11 thousand and $21 thousand in interest and other income, related to our open crude oil commodity derivatives for the three and six months ended June 30, 2011, respectively.

Unrealized and realized losses (gains) related to all of our derivative instruments are included in the consolidated condensed statement of operations for the three and six months ended June 30, 2011 and 2010 as follows (in thousands):

		Amount of Gain or (Loss) Recognized in Income on Derivatives
	Location of Gain or (Loss)	Three Months Ended June 30,						Six Months Ended June 30,
Derivatives	Recognized in Income on Derivatives	2011			2010			2011			2010
Commodity contracts	Interest and other income	$	11		$	-		$	21		$	-
Commodity contracts	Interest expense and other losses		(12	)		(5	)		(24	)		37
		$	(1	)	$	(5	)	$	(3	)	$	37