Supplemental Information about Oil & Natural Gas Producing Activities (Unaudited)

The reserve estimates were made in accordance with oil and natural gas reserve estimation and disclosure authoritative accounting guidance issued by the Financial Accounting Standards Board effective for reporting periods ending on or after December 31, 2009. This guidance was issued to align the accounting oil and natural gas reserve estimation and disclosure requirements with the requirements in the SEC's "Modernization of Oil and Gas Reporting" rule, which was also effective for annual reports for fiscal years ending on or after December 31, 2009.

The above-mentioned rules include updated definitions of proved oil and natural gas reserves, proved undeveloped oil and natural gas reserves, oil and natural gas producing activities, and other terms used in estimating proved oil and natural gas reserves. Proved oil and natural gas reserves were calculated based on the prices for oil and natural gas during the twelve month period before the reporting date, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period. This average price is also used in calculating the aggregate amount and changes in future cash inflows related to the standardized measure of discounted future cash flows. In addition, the SEC generally requires that reserves classified as proved undeveloped be capable of conversion into proved developed within five years of classification unless specific circumstances justify a longer time.

Changes in Estimated Reserve Quantities

The following table sets forth the Company's estimates of its net proved, net proved developed, and net proved undeveloped oil and natural gas reserves as of December 31, 2011, 2010 and 2009, and changes in its net proved oil and natural gas reserves for the years then ended. For the years presented, the estimates of proved reserves and related valuations were based 100% on reports prepared by the Company's independent petroleum engineers, DeGolyer and MacNaughton (D&M).



	2011						2010						2009
	Oil MBOE		Natural Gas MMcf		MBOE		Oil MBOE		Natural Gas MMcf		MBOE		Oil MBOE		Natural Gas MMcf		MBOE
Proved developed and undeveloped reserves:
Beginning of year	166,181		630,192		271,213		129,940		632,178		235,303		125,251		724,135		245,940
Revision of previous estimates	(4,054	)	(146,349	)	(28,446	)	4,288		(46,860	)	(3,522	)	2,786		(34,564	)	(2,975	)
Improved recovery	—		—		—		1,700		—		1,700		—		—		—
Extensions and discoveries	19,601		65,992		30,600		12,774		43,469		20,019		8,989		54,664		18,100
Property sales	—		—		—		—		—		—		—		(126,600	)	(21,100	)
Production	(9,041	)	(23,907	)	(13,025	)	(7,925	)	(23,989	)	(11,923	)	(7,186	)	(22,657	)	(10,962	)
Purchase of reserves in place	13,193		8,351		14,584		25,404		25,394		29,636		100		37,200		6,300
End of year	185,880		534,279		274,926		166,181		630,192		271,213		129,940		632,178		235,303
Proved developed reserves:
Beginning of year	88,917		268,566		133,678		82,870		255,520		125,456		74,616		361,575		134,879
End of year	107,849		221,606		144,783		88,917		268,566		133,678		82,870		255,520		125,456

Notable changes in proved reserves for the years ended December 31, 2011, 2010, 2009 included:


•	Purchase of Reserves in Place. In 2011 and 2010 the Company acquired reserves of 14,584 MBOE, 29,636 MBOE and primarily in the Wolfberry trend in the Permian. See Note 2 to the Financial Statements. In 2009, the Company acquired reserves of 6,300 MBOE primarily in the Piceance.

•

Extensions and Discoveries. In 2011, the Company had a total of 30,600 MBOE of extensions and discoveries, which were primarily due to successful drilling and completion activities in the Diatomite, McKittrick, Utah, Piceance and Permian assets. In 2010, the Company had a total of 20,019 MBOE of extensions and discoveries, which were primarily due to the successful drilling and completion activities in the Diatomite, Permian, Utah and E. Texas assets. In 2009, the Company had a total of 18,100 MBOE of extensions and discoveries, which were primarily due to the successful drilling and completion activities in the Diatomite and Piceance assets.

•

Revisions to Previous Estimates. In 2011, the Company had negative revisions of 28,446 MBOE, which were primarily due to removing proved undeveloped reserves related to assets that reached aging limitations, as mandated by the SEC and negative performance revisions. Specifically, the decrease is due to a 19,632 MBOE decrease in E. Texas, a 5,779 MBOE decrease in Piceance and a 2,576 MBOE decrease in Utah. In 2010, the Company had negative revisions 3,522 MBOE, which were primarily due to negative performance revisions and the Company's future development plans. Specifically, the decrease is due to a 3,666 MBOE decrease in E. Texas, a 3,890 MBOE decrease in the Piceance, and a 840 MBOE decrease in Uinta, offset by a 971 MBOE increase in the Permian and a 3,903 MBOE increase in California. In 2009, the Company had negative revisions of 2,975 MBOE, which were primarily due to negative performance revisions. Specifically, the decrease is due to a 9,108 MBOE decrease in E. Texas, offset by a 398 MBOE increase in California and 5,735 MBOE increase in Utah and Piceance.


•	Property Sales. In 2009, the Company had total reserve sales of 21,100 MBOE from sale of its DJ assets. See Note 2 to the Financial Statements.

Standardized Measure of Discounted Future Net Cash Flows

Future oil and natural gas sales are calculated applying the prices used in estimating the Company's proved oil and natural gas reserves to the year-end quantities of those reserves. Future production and development costs, which include costs related to plugging of wells, removal of facilities and equipment, and site restoration, are calculated by estimating the expenditures to be incurred in producing and developing the proved oil and natural gas reserves at the end of each year, based on year-end costs and assuming continuation of existing economic conditions. Future income tax expenses are computed by applying the appropriate year-end statutory income tax rates to the estimated future pre-tax net cash flows relating to proved oil and natural gas reserves, less the tax bases of the properties involved. The future income tax expenses give effect to income tax deductions, credits, and allowances relating to the proved oil and natural gas reserves. All cash flow amounts, including income taxes, are discounted at 10%.

The following table presents the standardized measure of discounted future net cash flows related to proved oil and natural gas reserves:



	Year Ended December 31,
	2011			2010			2009
	(in thousands)
Future cash inflows	$	19,568,628		$	14,354,627		$	9,028,991
Future production costs	(5,226,044		)	(4,446,183		)	(3,826,832		)
Future development costs	(1,975,429		)	(1,789,001		)	(1,159,465		)
Future income tax expense	(3,770,512		)	(2,272,184		)	(969,771		)
Future net cash flows	8,596,643			5,847,259			3,072,923
10% annual discount for estimated timing of cash flows	(4,561,364		)	(3,048,103		)	(1,627,176		)
Standardized measure of discounted future net cash flows	$	4,035,279		$	2,799,156		$	1,445,747
Average price during the 12-month period: (1)
Oil ($/BOE)	$	93.72		$	69.04		$	52.06
Natural gas ($/Mcf)	4.02			4.57			3.58
BOE ($/BOE)	$	71.18		$	52.93		$	38.37

______________________________


(1)	Differences between the average benchmark prices and the average prices used in the calculation of the standardized measure are attributable to adjustments made for transportation, quality and basis differentials.

The present value (at a 10% annual discount) of future net cash flows from the Company’s proved reserves is not necessarily the same as the current market value of its estimated oil and natural gas reserves. The Company bases the estimated discounted future net cash flows from its proved reserves on prices and costs in effect on the day of estimate in accordance with the applicable accounting guidance. However, actual future net cash flows from its oil and natural gas properties will also be affected by factors such as actual prices the Company receives for oil and natural gas, the amount and timing of actual production, supply of and demand for oil and natural gas and changes in governmental regulations or taxation.

The timing of both the Company’s production and incurrence of expenses in connection with the development and production of oil and natural gas properties will affect the timing of actual future net cash flows from proved reserves, and thus their actual present value. In addition, the 10% annual discount factor the Company uses when calculating discounted future net cash flows may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Company or the oil and natural gas industry in general.

A summary of changes in the standardized measure of discounted future net cash flows is as follows:



	Year ended December 31,
	2011			2010			2009
	(in thousands)
Standardized measure—beginning of year	$	2,799,156		$	1,445,747		$	1,135,581
Sales of oil and natural gas produced, net of production costs	(599,679		)	(406,390		)	(353,052		)
Revisions to estimates of proved reserves:
Net changes in sales prices and production costs	1,473,454			1,724,212			637,882
Revisions of previous quantity estimates	(281,765		)	(49,784		)	(33,943		)
Improved recovery	—			24,033			—
Extensions and discoveries	601,313			283,011			206,542
Change in estimated future development costs	(274,122		)	(152,096		)	(52,824		)
Purchases of reserves in place	164,383			307,205			29,348
Sales of reserves in place	—			—			(138,265		)
Development costs incurred during the period	433,660			144,086			110,200
Accretion of discount	383,418			184,917			131,745
Income taxes	(634,747		)	(593,272		)	(190,727		)
Other	(29,792		)	(112,513		)	(36,740		)
Net increase	1,236,123			1,353,409			310,166
Standardized measure—end of year	$	4,035,279		$	2,799,156		$	1,445,747

The following table presents costs incurred in oil and natural gas property acquisition, exploration, and development activities:



	Year ended December 31,
	2011		2010		2009
	(in thousands)
Property acquisitions
Proved properties	$	149,158	$	334,409	$	13,497
Unproved properties	6,632		—		—
Development	544,114		320,927		138,168
Exploration	627		2,310		209
Total(1)	$	700,531	$	657,646	$	151,874

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(1)The total above does not reflect $29.1 million, $28.3 million, and $30.1 million of capitalized interest incurred in 2011, 2010, and 2009, respectively.