DERIVATIVE INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2013

DERIVATIVE INSTRUMENTS

Schedule of derivative contracts

The following derivative contracts were in place at March 31, 2013:

Crude Oil			Volume/Month		Price/Unit		Fair Value
Apr 2013-Dec 2013		Swap	14,000 Bbls	$	101.25 (1)	$	559,262
Apr 2013-Dec 2013		Swap	9,000 Bbls		109.13 (2)		90,989
Apr 2013-Jun 2013		Swap	6,000 Bbls		108.35 (2)		(21,678	)
Apr 2013-Dec 2013		Swap	6,000 Bbls		107.10 (2)		(48,805	)
Apr 2013-Jun 2013		Swap	7,000 Bbls		104.80 (2)		(99,799	)
Jul 2013-Sep 2013		Swap	6,000 Bbls		103.47 (2)		(82,032	)
Oct 2013-Dec 2013		Swap	3,000 Bbls		102.30 (2)		(36,529	)
Jan 2014-Dec 2014		Swap	7,500 Bbls		102.10 (2)		(79,460	)
Jan 2014-Jun 2014		Swap	2,000 Bbls		108.07 (2)		45,665
Jan 2014-Dec 2014		Swap	6,000 Bbls		106.40 (2)		236,162
Natural Gas
Apr 2013-Jun 2013		Collar	50,000 Mmbtu		Put $3.75-$4.00 Call (3)		(12,110	)
Apr 2013-Dec 2013		Collar	75,000 Mmbtu		Put $3.00-$4.25 Call (3)		(127,094	)
Apr 2013-Dec 2013		Collar	75,000 Mmbtu		Put $3.25-$4.00 Call (3)		(185,288	)
Apr 2013-Dec 2013		Collar	35,000 Mmbtu		Put $3.75-$4.21 Call (3)		(33,805	)
Apr 2013-Dec 2013		Swap	70,000 Mmbtu		$4.02 (3)		(53,207	)
Apr 2013-Dec 2014		Collar	42,500 Mmbtu		Put $3.75-$4.60 Call (3)		(42,669	)
Apr 2013-Dec 2014		Collar	42,500 Mmbtu		Put $3.50-$5.00 Call (3)		(32,588	)
	Total net fair value of derivative instruments					$	77,014

(1)   Commodity derivative based on West Texas Intermediate crude oil

(2)   Commodity derivative based on Brent crude oil

(3)   Commodity derivatives based on Henry Hub NYMEX natural gas prices

Schedule of effect of derivative contracts on the Consolidated Statements of Operations

Contract Type	Location of Gain or (Loss) Recognized in Income	Amount of Gain or (Loss) Recognized in Income
		Three months ended March 31,
		2013			2012
Crude oil contracts	Crude oil sales	$	(207,269	)	$	(161,597	)
Natural gas contracts	Natural gas sales		144,325			1,535,460
	Realized (loss) gain	$	(62,944	)	$	1,373,863
Crude oil contracts	Unrealized (loss) gain on derivative instruments	$	(809,413	)	$	(1,532,130	)
Natural gas contracts	Unrealized (loss) gain on derivative instruments		(1,073,577	)		1,006,497
	Unrealized loss	$	(1,882,990	)	$	(525,633	)

Summary of the fair value of derivatives outstanding on a gross and net basis

	March 31, 2013
	Gross		Netting (1)			Total
Assets:
Commodity derivatives	$	932,078	$	(697,665	)	$	234,413
Liabilities:
Commodity derivatives		855,064		(697,665	)		157,399

	December 31, 2012
	Gross		Netting (1)			Total
Assets:
Commodity derivatives	$	2,206,705	$	(246,700	)	$	1,960,005
Liabilities:
Commodity derivatives		246,700		(246,700	)		—

(1)   Represents counterparty netting under agreements governing such derivatives