COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES

(16) COMMITMENTS AND CONTINGENCIES

Litigation

We are the subject of, or party to, a number of pending or threatened legal actions and claims arising in the ordinary course of our business. While many of these matters involve inherent uncertainty, we believe that the amount of the liability, if any, ultimately incurred with respect to proceedings or claims will not have a material adverse effect on our consolidated financial position as a whole or on our liquidity, capital resources or future annual results of operations. We will continue to evaluate our litigation on a quarter-by-quarter basis and will establish and adjust any litigation reserves as appropriate to reflect our assessment of the then current status of litigation.

Transportation and Gathering Contracts

As of September 30, 2012, future minimum firm transportation and gathering contracts are as follows (in thousands):

	Transportation and Gathering Contracts
2012 (remaining)	$	35,581
2013		145,981
2014		143,925
2015		153,468
2016		155,828
Thereafter		861,431
	$	1,496,214

Drilling Contracts

As of September 30, 2012, we have contracts with drilling contractors to use three drilling rigs with terms of up to four years with minimum future commitments of $5.9 million in fourth quarter 2012, $23.2 million in fiscal year 2013, $9.9 million in fiscal year 2014 and $2.2 million in fiscal year 2015. Early termination of these contracts at September 30, 2012 would require us to pay maximum penalties of $30.0 million. We do not expect to pay early termination penalties related to these contracts.