FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2011

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

15.   Fair Value Measurements

        The accounting guidance on fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: (i) Level 1, defined as quoted prices in active markets for identical instruments; (ii) Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and (iii) Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Our Level 2 fair value measurements consist of both quoted price inputs and inputs that are derived principally from or corroborated by observable market data. Our Level 3 fair value measurements consist of both quoted price inputs and unobservable quoted inputs.

        The guidance also requires that the fair value measurement of assets and liabilities reflect the nonperformance risk of counterparties and the reporting entity, as applicable. Therefore, using credit default spreads, we factored the impact of our own credit standing and the credit standing of our counterparties, as well as any potential credit enhancements (e.g. collateral) into the consideration of nonperformance risk for both derivative assets and liabilities. The results of this analysis were not material to the financial statements.

        The following fair value hierarchy table presents information about our commodity contracts measured at fair value using the market value approach on a recurring basis as of December 31, 2011:

Fair Value Measurements at Reporting Date Using

($ in 000's) Description	Assets/(Liabilities) at Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2011
Net derivative liabilities*	$	(9,848	)	$	(9,848	)		—		—
December 31, 2010
Net derivative liabilities*	$	(4,091	)	$	(4,091	)		—		—

*

The only recurring measurements are derivative related and assets and liabilities are netted together in the table above.

        The following tables present the change in net fair value of our Level 3 assets/liabilities during the twelve months ended December 31, 2011 and 2010 (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

($ in 000's)	2011 Net Derivatives(1)		2010 Net Derivatives(1)		2009 Net Derivatives(1)
Beginning Balance, January 1,	$	—	$	—	$	6,208
Total gains or losses (realized/unrealized)
Included in earnings (or changes in net assets)		—		—		—
Included in comprehensive income		—		—		(1,738	)
Purchases		—		—		—
Issuances		—		—		—
Settlements		—		—		—
Transfers in and/or out of Level 3		—		—		(4,470	)
Ending Balance, December 31,	$	—	$	—	$	—
Changes in unrealized gains relating to assets still held at reporting date	$	—	$	—	$	1,738

(1)

Net derivatives at December 31, 2011, 2010 and 2009 included no derivative assets or derivative liabilities.