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 we are restating our unaudited condensed consolidated financial information for the three and nine months ended September 30, 2013.

For the 2013 periods presented herein, the correction of the error principally results in an increase in our depreciation, depletion and amortization expense for the three and nine months ended September 30, 2013 of approximately $0.3 million and $1.0 million, respectively, and decreased net income for the three and nine months ended September 30, 2013 by approximately $0.2 million and $0.6 million, respectively (net of a decrease to the income tax benefit for the three and nine months ended September 30, 2013, of approximately $0.1 million and $0.4 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. 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 nine months ended September 30, 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 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 are provided in the tables below.

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 nine months ended September 30, 2013 (in thousands):



	Condensed Consolidated Statements of Operations For the Three Months Ended September 30, 2013							Condensed Consolidated Statements of Operations For the Nine Months Ended September 30, 2013
	(As Reported)		Adjustments			(As Restated)		(As Reported)		Adjustments			(As Restated)
Oil and Gas Sales	$	155,049	$	(2,068	)	$	152,981	$	442,418	$	(403	)	$	442,015
Total Revenues	153,001		(2,068		)	150,933		441,704		(403		)	441,301
Depreciation, depletion, and amortization	66,948		326			67,274		186,526		977			187,503
Lease operating cost	23,078		—			23,078		77,459		(540		)	76,919
Transportation and gas processing	5,783		—			5,783		16,678		(1,292		)	15,386
Severance and other taxes	11,695		—			11,695		31,971		250			32,221
Total Costs and Expenses	137,623		326			137,949		403,725		(605		)	403,120
Income (Loss) from Continuing Operations Before Income Taxes	15,378		(2,394		)	12,984		37,979		202			38,181
Provision (Benefit) for Income Taxes	6,492		(867		)	5,625		15,162		73			15,235
Net Income (Loss)	8,886		(1,527		)	7,359		22,817		129			22,946

Basic EPS: Net Income (Loss)	$	0.20	$	(0.03	)	$	0.17	$	0.53	$	—		$	0.53
Diluted EPS: Net Income (Loss)	$	0.20	$	(0.03	)	$	0.17	$	0.52	$	0.01		$	0.53



	Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2013
	(As Reported)			Adjustments			(As Restated)
Net income (loss)	$	22,817		$	129		$	22,946
Depreciation, depletion, and amortization	186,526			977			187,503
Deferred income taxes	15,162			73			15,235
Other	(3,796		)	(297		)	(4,093		)
(Increase) decrease in accounts receivable	(3,696		)	403			(3,293		)
Increase (decrease) in accounts payable and accrued liabilities	3,873			(1,285		)	2,588
Net Cash Provided by Operating Activities	225,607			—			225,607