FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2012 and December 31, 2011 are set forth in the table below.

	March 31, 2012		December 31, 2011
	Using Significant Other Observable Inputs (Level 2)(1)
	(In Thousands)
Assets:
Derivative instruments(2):
Commodity	$	110,118	$	79,487
Interest rate	19,422		20,556
Total assets	$	129,540	$	100,043
Liabilities:
Derivative instruments(2):
Commodity	$	53,130	$	28,944
Interest rate	—		—
Total liabilities	$	53,130	$	28,944

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(1) The authoritative accounting guidance regarding fair value measurements for assets and liabilities measured at fair value establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers consist of: Level 1, defined as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions.

(2) The Company’s derivative assets and liabilities include commodity and interest rate derivatives (see Note 8 for more information on these instruments). The Company utilizes present value techniques and option-pricing models for valuing its derivatives. Inputs to these valuation techniques include published forward prices, volatilities, and credit risk considerations, including the incorporation of published interest rates and credit spreads. All of the significant inputs are observable, either directly or indirectly; therefore, the Company’s derivative instruments are included within the Level 2 fair value hierarchy.

The fair values and carrying amounts of the Company’s financial instruments are summarized below as of the dates indicated.

	March 31, 2012
					Fair Value Measurements:
	Carrying Amount		Total Fair Value(1)		Using Quoted Prices in Active Markets for Identical Assets (Level 1)		Using Significant Other Observable Inputs (Level 2)
	(In Thousands)
Assets:
Derivative instruments	$	129,540	$	129,540	$	—	$	129,540
Liabilities:
Derivative instruments	53,130		53,130		—		53,130
Credit facility	215,000		215,000		—		215,000
8½% Senior Notes due 2014	589,062		642,000		642,000		—
7¼% Senior Notes due 2019	1,000,407		985,000		985,000		—

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(1) The Company used various assumptions and methods in estimating the fair values of its financial instruments. The fair values of the senior notes were estimated based on quoted market prices. The carrying amount of the credit facility approximated fair value due to the short original maturities of the borrowings and because the borrowings bear interest at variable market rates. The methods used to determine the fair values of the derivative instruments are discussed above. See also Note 8 for more information on the derivative instruments.

	December 31, 2011
	Carrying Amount		Fair Value(1)
	(In Thousands)
Assets:
Derivative instruments	$	100,043	$	100,043
Liabilities:
Derivative instruments	28,944		28,944
Credit facility	105,000		105,000
8½% Senior Notes due 2014	587,611		653,250
7¼% Senior Notes due 2019	1,000,421		1,025,000

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(1) The Company used various assumptions and methods in estimating the fair values of its financial instruments. The fair values of the senior notes were estimated based on quoted market prices. The carrying amount of the credit facility approximated fair value due to the short original maturities of the borrowings and because the borrowings bear interest at variable market rates. The methods used to determine the fair values of the derivative instruments are discussed above. See also Note 8 for more information on the derivative instruments