Deferred Revenue from Volumetric Production Payment

12 Months Ended

Dec. 31, 2012

Deferred Revenue Disclosure [Abstract]

Deferred Revenue from Volumetric Production Payment

The net proceeds from the VPP discussed in Note 4 are recorded as a non-current liability in the consolidated balance sheets. Deferred revenue from VPP will be amortized over the life of the VPP and will be recognized in oil and gas sales in the consolidated statements of operations and comprehensive income (loss).

Changes in deferred revenue from the VPP are as follows:



	December 31, 2012			December 31, 2011
	(In thousands)
Beginning of period	$	—		$	—
Deferred revenue from VPP	45,479			—
Amortization of deferred revenue from VPP	(8,295		)	—
End of period	$	37,184		$	—

Under the terms of the VPP, SWR conveyed to a third party a term overriding royalty interest covering approximately 725,000 BOE of estimated future oil and gas production. As of December 31, 2012, we have a remaining obligation to deliver approximately 607,000 BOE.

- Definition

The entire disclosure for deferred revenues at the end of the reporting period, and description and amounts of significant changes that occurred during the reporting period. Deferred revenue is a liability as of the balance sheet date related to a revenue producing activity for which revenue has not yet been recognized. Generally, an entity records deferred revenue when it receives consideration from a customer before achieving certain criteria that must be met for revenue to be recognized in conformity with GAAP.

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