Hedging Activities

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements [Abstract]

NOTE F - HEDGE CONTRACTS

We are exposed to financial and market risks that affect our businesses. We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. As a result of our variable rate bank credit facilities including the variable rate credit facility of Compressco Partners, to the extent we have debt outstanding, we face market risk exposure related to changes in applicable interest rates. We have concentrations of credit risk as a result of trade receivables owed to us by companies in the energy industry. In addition, we have market risk exposure in the sales prices we receive for the remainder of our oil and gas production. Our financial risk management activities may involve, among other measures, the use of derivative financial instruments, such as swap and collar agreements, to hedge the impact of market price risk exposures. Prior to the execution of the purchase and sale agreement in April 2011 pursuant to which we sold substantially all of our remaining Maritech oil and gas properties in May 2011, we utilized cash flow commodity hedge transactions to reduce our exposure related to the volatility of oil and gas prices. For these and other hedge contracts, we formally document all relationships between hedging instruments and hedged items, as well as our risk management objectives, our strategies for undertaking various hedge transactions, and our methods for assessing and testing correlation and hedge ineffectiveness. All hedging instruments are linked to the hedged asset, liability, firm commitment, or forecasted transaction. We also assess, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are used in these hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. As indicated below, these cash flow commodity hedge contracts were liquidated in the second quarter of 2011.

Derivative Hedge Contracts

In April 2011, following the execution of the purchase and sale agreement pursuant to which Maritech agreed to sell approximately 79% of its proved reserves as of December 31, 2010, we liquidated our remaining oil hedge contracts and paid $14.2 million to the counterparty. Therefore, during the three months ended September 30, 2011, we had no remaining cash flow hedging swap contracts outstanding associated with our Maritech subsidiary's oil or gas production.

Pretax gains and losses associated with oil and gas derivative swap contracts are summarized below:

	Three Months Ended September 30, 2010
Derivative Swap Contracts	Oil			Natural Gas			Total
	(In Thousands)
Amount of pretax gain reclassified from accumulated other comprehensive
income into product sales revenue (effective portion)	$	6,753		$	6,384		$	13,137
Amount of pretax gain (loss) from change in derivative fair value
recognized in other comprehensive income		(4,872	)		1,938			(2,934	)
Amount of pretax gain (loss) recognized in other income (expense)
(ineffective portion)		-			(108	)		(108	)

	Nine Months Ended September 30, 2011
Derivative Swap Contracts	Oil			Natural Gas		Total
	(In Thousands)
Amount of pretax gain reclassified from accumulated other comprehensive
income into product sales revenue (effective portion)	$	1,177		$	-	$	1,177
Amount of pretax gain (loss) from change in derivative fair value
recognized in other comprehensive income		(7,854	)		-		(7,854	)
Amount of pretax gain (loss) recognized in other income (expense)
(ineffective portion)		(13,947	)		-		(13,947	)

	Nine Months Ended September 30, 2010
Derivative Swap Contracts	Oil		Natural Gas		Total
	(In Thousands)
Amount of pretax gain reclassified from accumulated other comprehensive
income into product sales revenue (effective portion)	$	16,821	$	18,609	$	35,430
Amount of pretax gain (loss) from change in derivative fair value
recognized in other comprehensive income		4,577		9,225		13,802
Amount of pretax gain (loss) recognized in other income (expense)
(ineffective portion)		125		107		232