5. Property and Equipment, Net

At December 31, 2012 and 2011, property and equipment, net consisted of the following:



	December 31,
	2012			2011
	(In thousands)
Proved oil and gas properties	$	1,713,827		$	1,235,487
Accumulated depreciation, depletion and amortization	(561,279		)	(397,737		)
Proved oil and gas properties, net	1,152,548			837,750
Unproved properties, not being amortized
Unevaluated leasehold and seismic costs	238,833			277,425
Exploratory wells in progress	43,803			70,533
Capitalized interest	41,052			46,471
Total costs not subject to amortization	323,688			394,429
Other property and equipment	17,079			12,835
Accumulated depreciation	(5,641		)	(4,097		)
Other property and equipment, net	11,438			8,738
Total property and equipment, net	$	1,487,674		$	1,240,917

Costs not subject to amortization totaling $323.7 million at December 31, 2012 were incurred in the following periods: $177.0 million in 2012, $110.0 million in 2011, $34.7 million in 2010 and $2.0 million in 2009 and prior years.

Sale of Barnett Shale Properties

During the second quarter of 2011, the Company sold a substantial portion of its non-core area Barnett Shale properties to KKR Natural Resources (“KKR”), a partnership formed between an affiliate of Kohlberg Kravis Roberts & Co. L.P. and Premier Natural Resources. Net proceeds received from the sale were approximately $98.0 million, which represents an agreed upon price of approximately $104.0 million less net purchase price adjustments. Purchase price adjustments primarily relate to proceeds received by the Company for sales of hydrocarbons from such properties between the effective date of January 1, 2011 and the closing date of May 17, 2011. The proceeds from such sale were recognized as a reduction of proved oil and gas properties.

During the second quarter of 2012, the Company sold a significant portion of its Barnett Shale properties to an affiliate of Atlas

Resource Partners, L.P. (“Atlas”). Net proceeds received from the sale were approximately $187.4 million, which represents an agreed upon price of $190.0 million less net purchase price adjustments. Purchase price adjustments primarily relate to proceeds received by the Company for sales of hydrocarbons from such properties between the effective date of January 1, 2012 and the closing date of April 30, 2012. The proceeds from such sale were recognized as a reduction of proved oil and gas properties.

Sale of Gulf Coast Properties

During the third quarter of 2012, the Company completed the sale of substantially all of its legacy producing properties along the onshore Gulf of Mexico located primarily in Texas and Louisiana. Net proceeds received from the sale were approximately $17.6 million, which represents an agreed upon price of $19.3 million less net purchase price adjustments. Purchase price adjustments primarily relate to proceeds received by the Company for sales of hydrocarbons from such properties between the effective date of July 1, 2012 and the closing date of September 27, 2012. The proceeds from such sale were recognized as a reduction of proved oil and gas properties.

Sale of Utica Properties

In October 2012, the Company sold substantially all of its interests in oil and gas properties dedicated to its Utica joint venture in the northern portion of the Utica Shale play to a third party and received net cash proceeds of $51.7 million, after final post-closing adjustments. The proceeds from such sale were recognized as a reduction of proved oil and gas properties, net. Other assets included in the sale were an existing drilling pad and approved well drilling permits associated with the properties. The properties sold are located in Mercer and Crawford counties in Pennsylvania and Trumbull county in Ohio.

In connection with and prior to the Utica sale transactions described above, the Company elected to exercise its option to increase its participating interest from 10% to 50% in the same oil and gas properties on a “net proceeds basis” so that the Company received net proceeds with respect to 50% of the properties subject to the sale rather than the 10% for which it held record title. For additional information see “Note 11. Related Party Transactions.”

Marcellus Shale Joint Venture

In connection with the formation of ACP II Marcellus LLC (“ACP II”), the Company’s partner in one of its two joint ventures in the Marcellus Shale, the Company was issued a class of interests (“B Units”) in ACP II. The B Units entitle the Company to certain percentages of cash distributions to affiliates of Avista Capital Partners, LP (together with its affiliates, “Avista”), if, when and only to the extent that those cash distributions exceed certain internal rates-of-return and return-on-investment thresholds with respect to Avista’s investment in ACP II. During the second quarter of 2011, ACP II declared and paid cash distributions to Avista that exceeded Avista’s internal rates-of-return and return-on-investment thresholds. Therefore, the Company received cash distributions of approximately $3.3 million in the second quarter of 2011on its B Units, which were recognized as reductions of proved oil and gas properties.

In June 2011, in accordance with the title and post-closing adjustment provisions of the sale and purchase agreements of the September 2010 sale by the Company of certain oil and gas properties to Reliance Marcellus II, LLC (“Reliance”), the Company provided additional interests in oil and gas properties in parts of Pennsylvania in the Marcellus Shale to Reliance in substitution of properties included in the sale that were affected by certain alleged title defects. In exchange for such substitute properties, the Company received $0.3 million in cash from Reliance relating to the sale of 20% of its interest.

Eagle Ford Joint Venture

On September 28, 2011, the Company completed the sale of 20% of its interests in oil and gas properties in parts of the Eagle Ford Shale to GAIL GLOBAL (USA) INC. (“GAIL”), a wholly owned subsidiary of GAIL (India) Limited, effective September 1, 2011. Under the purchase and participation agreement for this transaction, the Company received $63.7 million in cash which was recognized as a reduction of proved oil and gas properties. As part of the consideration for the purchase, GAIL committed to pay a “development carry” of 50% of certain of the Company’s future development costs up to approximately $31.3 million, which was fully utilized in 2012. The agreement provides for an ongoing joint venture between the Company and GAIL with respect to the interests purchased by GAIL. The Company serves as operator for the joint venture properties. The joint venture agreement also provides for an area of mutual interest including the purchased interests and specified areas adjacent to such interests. GAIL will have the right to purchase certain interests acquired by the Company in the area of mutual interest at a specified premium to the price paid by the Company.

Niobrara Joint Ventures

OIL India (USA) Inc. and IOCL (USA) Inc. In October 2012, the Company completed the sale of 30% of substantially all of its interests in oil and gas properties in the Niobrara Formation to OIL India (USA) Inc. and IOCL (USA) Inc., subsidiaries of OIL India Ltd. and Indian Oil Corporation Ltd., respectively, effective October 1, 2012. For convenience, in these Notes to Consolidated Financial Statements the term “OIL JV Partners” is used to refer collectively to OIL India (USA) Inc. and IOCL (USA) Inc. Under the purchase and participation agreement for this transaction, the Company received approximately $41.25 million in cash and the OIL JV Partners have committed to pay a “development carry” of 50% of certain of the Company’s future development costs up to an aggregate of approximately $41.25 million, as further described below. The proceeds from such sale was recognized as a reduction of proved oil and gas properties.

The agreement also provides for an ongoing joint venture between the Company and the OIL JV Partners with respect to the interests purchased. The development carry obligation extends until the full utilization of the approximately $41.25 million development carry. The Company operates the joint venture properties, and currently expects the development carry to be fully utilized by early 2014. The Niobrara Formation assets conveyed to the OIL JV Partners under the terms of the agreement are located primarily in Weld and Adams counties, Colorado.

Haimo Oil & Gas LLC. In December 2012, the Company completed the sale of a portion of its remaining interest in the same oil and gas properties sold to the OIL JV Partners in the transaction described above to Haimo Oil & Gas LLC (“Haimo”), a subsidiary of Lanzhou Haimo Technologies Co. Ltd., effective October 1, 2012, for a cash payment of $27.5 million. The proceeds from such sale were recognized as a reduction of proved oil and gas properties. The purchase and participation agreement for this transaction provides for an ongoing joint venture between the Company and Haimo, with respect to the interests purchased. The Company will operate the joint venture properties. Following the closing of the Haimo transaction late in the fourth quarter of 2012, the Company, the OIL JV Partners , and Haimo own 60%, 30% and 10% of the joint venture acreage, respectively.