DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2013

DERIVATIVE INSTRUMENTS

Schedule of derivative contracts

The following derivative contracts were in place at June 30, 2013:

		Volume/Month	Price/Unit		Fair Value
Crude Oil
Jul 2013-Dec 2013	Swap	14,000 Bbls	$	101.25 (1)	$	513,926
Jul 2013-Dec 2013	Swap	9,000 Bbls	109.13 (2)		444,279
Jul 2013-Dec 2013	Swap	6,000 Bbls	107.10 (2)		223,175
Jul 2013-Sep 2013	Swap	6,000 Bbls	103.47 (2)		35,530
Oct 2013-Dec 2013	Swap	3,000 Bbls	102.30 (2)		18,245
Jan 2014-Dec 2014	Swap	7,500 Bbls	102.10 (2)		394,075
Jan 2014-Jun 2014	Swap	2,000 Bbls	108.07 (2)		111,523
Jan 2014-Dec 2014	Swap	6,000 Bbls	106.40 (2)		622,903
Natural Gas
Jul 2013-Dec 2013	Collar	75,000 Mmbtu	Put $3.00-$4.25 Call (3)		(14,454		)
Jul 2013-Dec 2013	Collar	75,000 Mmbtu	Put $3.25-$4.00 Call (3)		(15,256		)
Jul 2013-Dec 2013	Collar	35,000 Mmbtu	Put $3.75-$4.21 Call (3)		40,606
Jul 2013-Dec 2013	Swap	70,000 Mmbtu	$4.02 (3)		153,979
Jul 2013-Dec 2014	Collar	42,500 Mmbtu	Put $3.75-$4.60 Call (3)		120,855
Jul 2013-Dec 2014	Collar	42,500 Mmbtu	Put $3.50-$5.00 Call (3)		70,850
Total net fair value of derivative instruments					$	2,720,236

(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

		Amount of Gain or (Loss) Recognized in Income
	Location of Gain or (Loss)	Three months ended June 30,						Six months ended June 30,
Contract Type	Recognized in Income	2013			2012			2013			2012
Crude oil contracts	Crude oil sales	$	603,205		$	586,360		$	395,936		$	424,673
Natural gas contracts	Natural gas sales	(82,495		)	1,990,720			61,830			3,526,180
	Realized gain	$	520,710		$	2,577,080		$	457,766		$	3,950,853
Crude oil contracts	Unrealized gain on derivative instruments	$	1,799,880		$	5,724,945		$	1,650,927		$	4,192,815
Natural gas contracts	Unrealized (loss) gain on derivative instruments	843,341			(2,687,212		)	(890,696		)	(1,680,715		)
	Unrealized gain	$	2,643,221		$	3,037,733		$	760,231		$	2,512,100

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

	June 30, 2013
	Gross		Netting (1)			Total
Assets:
Commodity derivatives	$	2,749,946	$	(29,710	)	$	2,720,236
Liabilities:
Commodity derivatives	29,710		(29,710		)	—

	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