Derivative and Other Hedging Instruments

6 Months Ended

Jun. 30, 2011

Derivative and Other Hedging Instruments [Abstract]

DERIVATIVE AND OTHER HEDGING INSTRUMENTS

NOTE 7 — DERIVATIVE AND OTHER HEDGING INSTRUMENTS

Trans Energy entered into derivative commodity price contracts to provide a measure of stability in the cash flows associated with Trans Energy’s oil and gas production and to manage exposure to commodity price fluctuations. Trans Energy does not designate its derivative financial instruments as hedging instruments for financial accounting purposes, and as a result, recognizes the change in the respective instruments’ fair value in earnings.

On July 13, 2007, as required by the CIT Credit Agreement, Trans Energy purchased a commodity put option on natural gas. In addition, on May 22, 2008, Trans Energy entered into a participating commodity put and call option on oil as a costless collar.

Natural Gas Derivatives

Trans Energy entered into participating commodity put options on natural gas whereby Trans Energy receives a floor price. The natural gas commodity put options are indexed to NYMEX Henry Hub prices. The following table shows the monthly volumes and the floor price.

			Average
Start	End	Volume	Floor
Month	Month	MMBTU/Month	$/MMBTU
Jul. ‘11	Dec. ‘11	5,244	$7.350

As of June 30, 2011 and December 31, 2010 the natural gas derivative had a total fair value of $72,078 and $152,087, respectively. Current portions consisted of $72,078 and $152,087, respectively.

Oil Derivatives

Trans Energy entered into participating commodity put and call options on crude oil as a costless collar. The oil costless collar is indexed to NYMEX WTI Oil prices. The following table shows the monthly volumes, the floor and ceiling prices.

Start	End	Volume	Floor	Ceiling
Month	Month	BBL/Month	$/BBL	$/BBL
Jul. ‘11	Dec. ‘11	449	$100	$172

As of June 30, 2011 and December 31, 2010 the oil derivative had a fair value of $4,608 and $35,303, respectively. Current portions consisted of $4,608 and $35,503, respectively.

For the six months ended June 30, 2011, Trans Energy had total gains on the derivative contracts of $10,019, of which $120,923 was a realized gain and $110,904 was an unrealized loss. During the six months ended June 30, 2010, Trans Energy had a total gain on the derivative contracts of $153,796, of which $156,936 was a realized gain and $3,140 was an unrealized loss.

Gas Purchase Agreements

Trans Energy has various agreements with Dominion Field Services, Inc. for fixed prices for gas transported through its pipeline. The monthly volume ranges from 10,000 to 20,000 decatherm (“Dth”) per month, and fixed prices vary from $10.57/Dth to $10.81/Dth through April 2012. A decatherm is equal to one MMBTU.