Restatement of Previously Issued Condensed Consolidated Financial Statements

Overview. In connection with the preparation of our financial statements for the quarter ended September 30, 2014, we determined that the ceiling test calculation we had prepared at December 31, 2013, March 31, 2009 and December 31, 2008, to determine whether the net book value of the Company's oil and gas properties exceed the ceiling, incorrectly included the deferred income tax effect of the Company's asset retirement obligations when computing the ceiling test limitation of its oil and natural gas properties under the full-cost method of accounting. The Company determined that the error caused a material overstatement of its full-cost ceiling test write-down of oil and gas properties in periods prior to 2014, more specifically in the fourth quarter of 2013, in the first quarter of 2009 and the fourth quarter of 2008, including associated depletion for all periods presented. As a result of this error, in this Form 10-Q/A we are restating our unaudited condensed consolidated financial information for the three and six months ended June 30, 2014 and 2013.

As of June 30, 2014, the correction of this error principally increased the Company's net oil and gas property balances by approximately $48 million, increased net deferred tax liabilities by approximately $18 million, and increased retained earnings by approximately $30 million. The correction of the error resulted in an increase in our depreciation, depletion and amortization expense for the three months ended June 30, 2014 and 2013 of approximately $0.8 million and $0.3 million, respectively, and decreased net income for the three months ended June 30, 2014 and 2013 by approximately $0.5 million and $0.2 million, respectively (net of a decrease to the income tax provision for the three months ended June 30, 2014 and 2013, of approximately $0.3 million and $0.1 million, respectively). The correction of the error also results in an increase in our depreciation, depletion and amortization expense for the six months ended June 30, 2014 and 2013 of approximately $1.4 million and $0.7 million, respectively, and decreases net income for the six months ended June 30, 2014 and 2013 by approximately $0.9 million and $0.4 million, respectively (net of a decrease to the income tax provision for the six months ended June 30, 2014 and 2013, of approximately $0.5 million and $0.3 million, respectively).

Along with restating our financial statements to correct the error discussed above, we have recorded adjustments for certain previously identified immaterial accounting errors related to the periods covered by this Form 10-Q/A. When these financial statements were originally issued, we assessed the impact of these errors and concluded that they were not material to our financial statements for the three and six months ended June 30, 2014 and 2013. However, in conjunction with our need to restate our financial statements as a result of the error noted above, we have determined that it would be appropriate to make adjustments within this Form 10-Q/A for all such previously unrecorded adjustments.

The combined impacts of all adjustments to the applicable line items in our unaudited condensed consolidated financial statements for the periods covered by this Form 10-Q/A are provided in the tables below.

Financial Statement Presentation. In addition to the restatement of our unaudited condensed consolidated financial statements, we have restated the following notes to the unaudited condensed consolidated financial statements to reflect certain changes noted above.


•	Note 2. Summary of Significant Accounting Policies


•	Note 3. Share-Based Compensation


•	Note 4. Earnings Per Share

The following tables present the effect of the correction of the error and other adjustments on selected line items of our previously reported unaudited condensed consolidated financial statements for the three and six months ended June 30, 2014 and 2013 (in thousands):



	Consolidated Balance Sheets as of June 30, 2014
	(As Reported)			Adjustments			(As Restated)
Accounts Receivable	$	68,615		$	772		$	69,387
Deferred tax asset	4,829			4,966			9,795
Other Current Assets	21,033			(1		)	21,032
Total Current Assets	95,041			5,737			100,778
Accumulated depreciation, depletion, and amortization (1)	(3,308,992		)	47,320			(3,261,672		)
Property and Equipment, Net	2,614,465			47,320			2,661,785
Total Assets	2,724,536			53,057			2,777,593

Deferred Tax Liabilities (1)	229,107			22,375			251,482
Retained earnings (1)	296,831			30,682			327,513
Total Stockholders’ Equity	1,054,463			30,682			1,085,145
Total Liabilities and Stockholders’ Equity	2,724,536			53,057			2,777,593

(1) The adjustments column includes the impact of correcting the error in the ceiling test write-down as of June 30, 2014. Included in these amounts are approximately $48 million related to Accumulated depreciation, depletion, and amortization, $18 million related to the net deferred tax liabilities and $30 million related to retained earnings.



	Condensed Consolidated Statements of Operations For the Three Months Ended June 30,
	2014							2013
	(As Reported)		Adjustments			(As Restated)		(As Reported)		Adjustments		(As Restated)
Oil and Gas Sales	$	158,214	$	273		$	158,487	$	140,892	$	1,611	$	142,503
Total Revenues	155,721		273			155,994		142,466		1,611		144,077
General and Administrative, net	12,412		(354		)	12,058		11,191		—		11,191
Depreciation, depletion, and amortization	72,205		885			73,090		59,458		315		59,773
Lease operating cost	21,932		1,640			23,572		26,957		—		26,957
Total Costs and Expenses	142,062		2,171			144,233		131,451		315		131,766
Income (Loss) from Continuing Operations Before Income Taxes	13,659		(1,898		)	11,761		11,015		1,296		12,311
Provision (Benefit) for Income Taxes	5,621		(687		)	4,934		4,293		469		4,762
Net Income (Loss)	8,038		(1,211		)	6,827		6,722		827		7,549

Basic EPS: Net Income (Loss)	$	0.18	$	(0.02	)	$	0.16	$	0.15	$	0.02	$	0.17
Diluted EPS: Net Income (Loss)	$	0.18	$	(0.03	)	$	0.15	$	0.15	$	0.02	$	0.17



	Condensed Consolidated Statements of Operations For the Six Months Ended June 30,
	2014							2013
	(As Reported)		Adjustments			(As Restated)		(As Reported)		Adjustments			(As Restated)
Oil and Gas Sales	$	306,772	$	772		$	307,544	$	287,369	$	1,665		$	289,034
Total Revenues	299,402		772			300,174		288,703		1,665			290,368
General and Administrative, net	23,151		(567		)	22,584		23,916		—			23,916
Depreciation, depletion, and amortization	133,890		1,851			135,741		119,578		651			120,229
Lease operating cost	47,199		1,340			48,539		54,381		(540		)	53,841
Transportation and gas processing	11,305		—			11,305		10,895		(1,292		)	9,603
Severance and other taxes	18,638		—			18,638		20,276		250			20,526
Total Costs and Expenses	274,082		2,624			276,706		266,102		(931		)	265,171
Income (Loss) from Continuing Operations Before Income Taxes	25,320		(1,852		)	23,468		22,601		2,596			25,197
Provision (Benefit) for Income Taxes	11,869		(670		)	11,199		8,670		940			9,610
Net Income (Loss)	13,451		(1,182		)	12,269		13,931		1,656			15,587

Basic EPS: Net Income (Loss)	$	0.31	$	(0.03	)	$	0.28	$	0.32	$	0.04		$	0.36
Diluted EPS: Net Income (Loss)	$	0.30	$	(0.02	)	$	0.28	$	0.32	$	0.04		$	0.36



	Consolidated Statements of Cash Flows For the Six Months Ended June 30,
	2014									2013
	(As Reported)			Adjustments			(As Restated)			(As Reported)			Adjustments			(As Restated)
Net income (loss)	$	13,451		$	(1,182	)	$	12,269		$	13,931		$	1,656		$	15,587
Depreciation, depletion, and amortization	133,890			1,851			135,741			119,578			651			120,229
Deferred income taxes	11,869			(670		)	11,199			8,670			940			9,610
Share-based compensation expense	3,953			(270		)	3,683			6,018			—			6,018
Other	(2,439		)	—			(2,439		)	(6,024		)	(297		)	(6,321		)
(Increase) decrease in accounts receivable	2,132			(772		)	1,360			601			(1,665		)	(1,064		)
Increase (decrease) in accounts payable and accrued liabilities	4,852			1,043			5,895			3,605			(1,285		)	2,320
Net Cash Provided by Operating Activities	170,303			—			170,303			149,531			—			149,531