Divestitures and Discontinued Operations

6 Months Ended

Jun. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

ASSETS HELD FOR SALE, DIVESTITURES AND DISCONTINUED OPERATIONS

Piceance Basin and NECO. In February 2013, we entered into a purchase and sale agreement with certain affiliates of Caerus Oil and Gas LLC (“Caerus”), pursuant to which we agreed to sell to Caerus our Piceance Basin, NECO and certain other non-core Colorado oil and gas properties, leasehold mineral interests and related assets. Additionally, certain firm transportation obligations and natural gas hedging positions were assumed by Caerus. On June 18, 2013, this divestiture was completed with total consideration of approximately $177.6 million, subject to customary post-closing adjustments, with an additional $17.0 million paid to our non-affiliated investor partners. The sale resulted in a pre-tax loss of $1.1 million. The proceeds from the asset disposal were used to pay down our revolving credit facility and to fund a portion of our 2013 capital budget. Following the sale to Caerus, we do not have significant continuing involvement in the operations of, or cash flows from, the Piceance Basin and NECO oil and gas properties. Accordingly, the results of operations related to these assets have been separately reported as discontinued operations in the condensed consolidated statement of operations for all periods presented. The sale of our other non-core Colorado oil and gas properties did not meet the requirements to be accounted for as discontinued operations.

Appalachian Basin. In early 2013, we developed a plan to market all of our shallow upper Devonian (non-Marcellus Shale) Appalachian Basin crude oil and natural gas properties located in West Virginia and Pennsylvania owned directly by us, as well as through our proportionate share of PDCM and our affiliated partnerships. The properties being marketed consist of approximately 3,500 gross shallow producing wells, related facilities and associated shallow leasehold acreage, limited to the upper Devonian and shallower formations. The company will retain all zones, formations and intervals below the upper Devonian formation including the Marcellus Shale, Utica Shale and Huron Shale. We anticipate that any proceeds from the sale of these shallow upper Devonian assets will be used to fund a portion of our Marcellus drilling program in the Appalachian Basin. We have classified the related assets owned directly by us, as well as through our proportionate share of PDCM and our affiliated partnerships, as held for sale in the condensed consolidated balance sheet as of June 30, 2013. The planned divestiture of these assets does not meet the requirements to be accounted for as discontinued operations.

Permian Basin. In December 2011, we executed a purchase and sale agreement with COG Operating LLC (“COG”), a wholly owned subsidiary of Concho Resources Inc., an unrelated third-party, for the sale of our core Permian Basin assets for a sale price of $173.9 million, subject to customary terms and adjustments. In February 2012, the divestiture closed with total proceeds received of $189.2 million after closing adjustments. Following the sale to COG, we do not have significant continuing involvement in the operations of, or cash flows from, these assets. Accordingly, the results of operations related to the Permian assets have been separately reported as discontinued operations in the condensed consolidated statement of operations for the three and six months ended June 30, 2012.

Selected financial information related to divested and discontinued operations.The tables below set forth selected financial information related to net assets held for sale and operating results related to discontinued operations. Net assets held for sale represents the Appalachian Basin assets that are expected to be sold, net of liabilities that are expected to be assumed by the purchaser.

The following table presents balance sheet data related to our pro rata share of these assets held for sale as of June 30, 2013:

Balance Sheet	Net Assets Held for Sale
	(in thousands)
Assets
Properties and equipment	$	130,243
Accumulated depreciation, depletion and amortization	(98,083		)
Total Assets	32,160
Liabilities
Asset retirement obligation	22,370
Net Assets	$	9,790

The following table presents statement of operations data related to our discontinued operations for the Piceance Basin, NECO and Permian Basin divestiture:

	Three Months Ended June 30,						Six Months Ended June 30,
Statements of Operations - Discontinued Operations	2013			2012			2013			2012
	(in thousands)
Revenues
Crude oil, natural gas and NGLs sales	$	10,182		$	5,537		$	20,456		$	18,348
Sales from natural gas marketing	586			304			1,036			757
Well operations, pipeline income and other	409			464			859			1,030
Total revenues	11,177			6,305			22,351			20,135
Costs, expenses and other
Production costs	2,564			5,682			7,957			12,784
Cost of natural gas marketing	540			271			994			672
Depreciation, depletion and amortization	—			10,609			2,258			22,511
Other	1,959			303			2,454			651
(Gain) loss on sale of properties and equipment	1,076			415			1,076			(19,920		)
Total costs, expenses and other	6,139			17,280			14,739			16,698
Income (loss) from discontinued operations	5,038			(10,975		)	7,612			3,437
Provision for income taxes	(1,622		)	4,068			(2,659		)	(1,273		)
Income (loss) from discontinued operations, net of tax	$	3,416		$	(6,907	)	$	4,953		$	2,164

While the reclassification of revenues and expenses related to discontinued operations for the prior period had no impact upon previously reported net earnings, the statement of operations table presents the revenues and expenses that were reclassified from the specified statement of operations line items to discontinued operations.