Derivative Instruments And Hedging Activities

12 Months Ended

Dec. 31, 2012

Derivative Instruments And Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

Note 17 — Derivative Instruments and Hedging Activities

Derivatives designated as hedging instruments as defined in FASB Codification Topic No. 815 Derivatives in Hedging are as follows (in thousands): 

	As of December 31, 2012			As of December 31, 2011
	Balance Sheet		Fair	Balance Sheet		Fair
	Location		Value	Location		Value
Asset Derivatives:
Natural gas contracts	Other current assets	$	-	Other current assets	$	12,957
Oil contracts	Other current assets		-	Other current assets		8,567
Natural gas contracts	Other assets, net		-	Other assets, net		857
Interest rate swaps	Other assets, net		-	Other assets, net		327
		$	-		$	22,708
Liability Derivatives:
Oil contracts	Accrued liabilities	$	-	Accrued liabilities	$	886
Interest rate swaps	Accrued liabilities		-	Accrued liabilities		202
Oil contracts	Other long-term liabilities		-	Other long-term liabilities		1,712
		$	-		$	2,800

Derivatives that were not designated as hedging instruments are as follows (in thousands): 

	As of December 31, 2012			As of December 31, 2011
	Balance Sheet		Fair	Balance Sheet		Fair
	Location		Value	Location		Value
Asset Derivatives:
Oil contracts	Other current assets	$	5,800	Other current assets	$	-
Foreign exchange forwards	Other current assets		146	Other current assets		55
		$	5,946		$	55
Liability Derivatives:
Oil contracts	Accrued liabilities	$	15,777	Accrued liabilities	$	-
Interest rate swaps	Accrued liabilities		489	Accrued liabilities		-
Foreign exchange forwards	Accrued liabilities		-	Accrued liabilities		159
Interest rate swaps	Other long-term liabilities		32	Other long-term liabilities		-
		$	16,298		$	159

As a result of recent declines in natural gas production from our properties, including the effects Hurricane Isaac had on our properties in August 2012, sales of certain of our natural gas producing properties and the continued deferral of initiating production from our Nancy well in the Bushwood field, we de-designated four of our natural gas derivative contracts as hedging instruments.  We concluded that these contracts no longer qualified for hedge accounting treatment because we could no longer forecast that we would have the necessary production volumes to cover the volumes in these contracts.  All four of these contracts were settled as of December 31, 2012.  The mark-to-market adjustments associated with these contracts are recorded as a component of “Income (loss) from discontinued operations, net of tax” in the accompanying consolidated statements of operations. 

As a result of the announcement of the sale of ERT, we de-designated all of our remaining oil and natural gas derivative contracts as hedging instruments.  In addition, under the terms of our Credit Agreement (Note 7), we are required to use at a minimum 60% of the after-tax proceeds from the sales of the Caesar, the Express and ERT to make payments to reduce our Term Loan debt and borrowings under the Revolving Credit Facility.  Because it is probable that we will pay off the Term Loan debt before the expiration of our interest rate swaps, we also concluded that the swaps no longer qualified as cash flow hedges.  At December 31, 2012, we recorded the mark-to-market adjustments for these derivatives to reflect the changes in their fair values and to recognize amounts previously recorded in accumulated other comprehensive income (loss) and related deferred taxes into earnings.  The mark-to-market adjustments related to our commodity derivative contracts and interest rate swaps are reflected in “Non-hedge loss on commodity derivative contracts” and “Other income (expense), net”, respectively, in the accompanying consolidated statements of operations.  In February 2013, we settled all of our remaining commodity derivative contracts and interest rate swap contracts for approximately $22.5 million and $0.6 million, respectively.

The following tables present the impact that derivative instruments designated as cash flow hedges had on our accumulated comprehensive income (loss) and our consolidated statements of operations for the years ended December 31, 2012,  2011  and 2010 (in thousands).  The amount of any ineffectiveness associated with our oil contracts was immaterial for the years ended December 31, 2012, 2011 and 2010.  These amounts are reflected in  “Income (loss) from discontinued operations, net of tax” in the accompanying consolidated statements of operations.  Ineffectiveness associated with our interest rate swaps was immaterial for all periods presented.

		Gain (Loss) Recognized in OCI on Derivatives
		(Effective Portion)
		Year Ended December 31,
		2012		2011		2010
Oil and natural gas commodity contracts	$	(12,860)	$	28,749	$	(6,486)
Interest rate swaps		(81)		1,294		(1,213)
	$	(12,941)	$	30,043	$	(7,699)

			Gain (Loss) Reclassified from
	Reclassified from		Accumulated OCI into Income
	Location of Gain (Loss)		(Effective Portion)
	Accumulated OCI into Income		Year Ended December 31,
	(Effective Portion)		2012		2011		2010
Oil and natural gas commodity contracts	Income (loss) from discontinued operations, net of tax	$	3,184	$	(21,659)	$	25,575
Interest rate swaps	Net interest expense		(523)		(2,010)		(1,849)
		$	2,661	$	(23,669)	$	23,726

The following table presents the impact that derivative instruments not designated as hedges had on our consolidated statement of operations for the years ended December 31, 2012,  2011 and 2010 (in thousands): 

			Gain (Loss) Recognized in Income
	Location of Gain (Loss)		on Derivatives
	Recognized in Income		Year Ended December 31,
	on Derivatives		2012		2011		2010
Oil and natural gas commodity contracts	Income (loss) from discontinued operations, net of tax	$	5,550	$	-	$	1,088
Oil and natural gas commodity contracts	Non-hedge loss on commodity derivative contracts		(10,507)		-		-
Interest rate swaps	Other income (expense), net		(567)		-		-
Foreign exchange forwards	Other income (expense), net		411		249		(2,560)
		$	(5,113)	$	249	$	(1,472)