Hedging Program and Derivatives

3 Months Ended

Mar. 31, 2013

Hedging Program and Derivatives [Abstract]

Hedging Program and Derivatives

Note 6.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.  Management has elected not to apply hedge accounting as prescribed by ASC 815. Accordingly, 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 at March 31, 2013:

	Fixed Price Swap
	Oil – WTI				Oil - Brent
Contract Periods	Daily Volume (Bbl)		Swap Price (per Bbl)		Daily Volume (Bbl)		Swap Price (per Bbl)
2013		1,007	$	84.76		510	$	105.00
2014		687	$	94.16		505	$	100.56
2015		560	$	83.03		500	$	97.04
2016		963	$	84.10		—	$	—
2017		500	$	84.18		—	$	—

At March 31, 2013, the aggregate fair value of our commodity derivative contracts was a liability of approximately $7.0 million.

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

Fair Value of Derivative Instruments as of March 31, 2013
	Asset Derivatives			Liability Derivatives
Derivatives not designated as hedging instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity price derivatives	Derivatives – current	$	92	Derivatives – current	$	4,216
Commodity price derivatives	Derivatives - long-term		381	Derivatives - long-term		3,244
		$	473		$	7,460

Fair Value of Derivative Instruments as of December 31, 2012
	Asset Derivatives			Liability Derivatives
Derivatives not designated as hedging instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity price derivatives	Derivatives – current	$	41	Derivatives – current	$	3,462
Commodity price derivatives	Derivatives – long-term		594	Derivatives – long-term		3,568
		$	635		$	7,030

Gains and losses from derivative activities are reflected as "Loss on derivative contracts" in the accompanying condensed consolidated statements of operations.