Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Drilling and Completion Commitments

We have agreements to purchase oil and gas well drilling and well completion services from third parties with original terms of up to 3 years. As of March 31, 2013, there were no well drilling or well completion agreements with terms that extended beyond September 30, 2013. The well drilling agreements include early termination provisions that would require us to pay penalties if we terminate the agreements prior to the end of their original terms. The amount of penalty is based on the number of days remaining in the contractual term and declines as time passes. As of March 31, 2013, the penalty amount would have been $3.8 million if we had terminated our agreements on that date.

Legal and Regulatory

We are involved, from time to time, in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, our management believes that these claims will not have a material effect on our financial position, results of operations or cash flows. During 2010, we established a $0.9 million reserve for a litigation matter pertaining to certain properties that remains outstanding as of March 31, 2013. In addition to the reserve for litigation, we maintain a suspense account which includes approximately $1.8 million representing the excess of revenues received over costs incurred attributable to these properties. As of March 31, 2013, we also have AROs of approximately $4.6 million attributable to the plugging of abandoned wells.