Property and Equipment

6 Months Ended

Jun. 30, 2012

Property and Equipment

Property and Equipment

Note 5 — Property and Equipment

Net property and equipment as of June 30, 2012 and December 31, 2011 consists of the following:

(in thousands)	June 30, 2012			December 31, 2011
Oil and gas properties
Proved oil and gas properties	$	91,754		$	89,392
Unproved properties not subject to depletion	1,518			1,369
Accumulated depreciation, depletion, amortization and impairment	(57,723		)	(40,502		)
Net oil and gas properties	35,549			50,259
Furniture and fixtures, computer hardware and software, and other equipment	775			728
Accumulated depreciation and amortization	(489		)	(441		)
Net other property and equipment	286			287
Total net property and equipment	$	35,835		$	50,546

As of June 30, 2012 and December 31, 2011, the Company had approximately $1.5 million and $1.4 million, respectively, of unproved oil and gas properties not subject to depletion.  The costs not subject to depletion relate to unproved properties that are excluded from amortized capital costs until it is determined whether or not proved reserves can be assigned to such properties.  The excluded properties are assessed for impairment at least annually.  Subject to industry conditions, evaluation of most of these properties and the inclusion of their costs in amortized capital costs is expected to be completed within five years.

The Company capitalized overhead applicable to acquisition, development and exploration activities of approximately $275,000 and $198,000 for the six months ended June 30, 2012 and 2011, respectively.

Depletion expense related to oil and gas properties for the three and six months ended June 30, 2012 was approximately $826,000, or $1.28 per equivalent Mcfe, and approximately $1.8 million, or $1.36 per equivalent Mcfe, respectively and approximately $363,000, or $1.49 per equivalent Mcfe, and approximately $729,000, or $1.42 per equivalent Mcfe for the three and six months ended June 30, 2011, respectively.  Oil and natural gas property ceiling test impairments of approximately $9.9 million and $15.4 million were recognized for the three and six months ended June 30, 2012, respectively, and approximately $1.1 million and $8.4 million for the three and six months ended June 30, 2011, respectively.  Depreciation and amortization expense related to furniture and fixtures, computer hardware and software and other equipment for the six months ended June 30, 2012 and 2011 was approximately $48,000 and $18,000, respectively.