Hedging Program and Derivatives

12 Months Ended

Dec. 31, 2011

Hedging Program and Derivatives [Abstract]

Hedging Program and Derivatives

14.  Hedging Program and Derivatives

The derivative instruments we utilize are based on index prices that may and often do differ from the actual oil and gas prices realized in our operations.  Our derivative contracts do not qualify for hedge accounting as prescribed by ASC 815; therefore, fluctuations in the market value of the derivative contracts are recognized in earnings during the current period.

The following table sets forth our derivative contracts as of December 31, 2011:

	Fixed Price Swap
	Oil				Gas
Contract Periods	Daily Volume (Bbl)		Swap Price (per Bbl)		Daily Volume (MMbtu)		Swap Price (per MMbtu)
2012		946	$	70.89		8,303	$	6.77
2013		705	$	80.79		5,962	$	6.84

 In order to mitigate our interest rate exposure, we entered into an interest rate swap, effective August 12, 2008, to fix our floating LIBOR-based debt.  The two-year interest rate swap for $100 million at a fixed rate of 3.367% originally expired on August 12, 2010.  This interest rate swap was amended in February 2009 lowering our fixed rate to 2.95%.   The interest rate swap was further amended in November 2009, lowering our fixed rate to 2.55% and extending the term through August 12, 2012.

The following table illustrates the impact of derivative contracts on the Company's balance sheet:

	December 31, 2010			December 31, 2011
	(In thousands)
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
NYMEX-based fixed price derivative contracts	Derivative asset - current	$	6,941	Derivative asset - current	$	11,416
NYMEX-based fixed price derivative contracts	Derivative asset – long-term	$	8,674	Derivative asset – long-term	$	6,412
NYMEX-based fixed price derivative contracts	Derivative liability - current	$	6,394	Derivative liability - current	$	10,094
NYMEX-based fixed price derivative contracts	Derivative liability – long-term	$	11,672	Derivative liability – long-term	$	4,307
Interest rate swap	Derivative liability - current	$	3,348	Derivative liability - current	$	1,546

Gains and losses from derivative activities are reflected as “Loss (gain) on derivative contracts” in the accompanying Consolidated Statement of Operations.