FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2011

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

(7) FAIR VALUE MEASUREMENTS

The Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2011 are set forth in the table below.

Description	Using Significant Other Observable Inputs (Level 2)(1)
	(In Thousands)
Assets:
Derivative instruments(2)
Commodity	$	50,176
Interest rate	20,773
Total assets	$	70,949
Liabilities:
Derivative instruments(2)
Commodity	$	47,818
Interest rate	—
Total liabilities	$	47,818

(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.

	June 30, 2011				December 31, 2010
	Carrying Amount		Fair Value(1)		Carrying Amount		Fair Value(1)
	(In Thousands)
Assets:
Cash and cash equivalents	$	479,149	$	479,149	$	218,145	$	218,145
Derivative instruments	70,949		70,949		68,426		68,426
Liabilities:
Derivative instruments	47,818		47,818		36,413		36,413
8% senior notes due 2011	286,031		293,051		287,092		300,658
7% senior subordinated notes due 2013	12		12		12		12
81/2% senior notes due 2014	584,677		653,250		581,790		660,000
71/4% senior notes due 2019	1,000,449		1,022,480		1,000,478		1,022,670
Canadian Credit Facility	280,973		280,973		—		—

(1) The Company used various assumptions and methods in estimating the fair values of its financial instruments. The carrying amount of cash and cash equivalents approximated fair value due to the short original maturities (three months or less) and high liquidity of the cash equivalents. The fair values of the senior notes and senior subordinated notes were estimated based on quoted market prices. The carrying amount of the Canadian Credit Facility approximates fair value since borrowings under the credit facility 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 to the Condensed Consolidated Financial Statements for more information on the derivative instruments.