Impairment of Oil and Gas Properties

9 Months Ended

Sep. 30, 2015

Oil and Gas Exploration and Production Industries Disclosures [Abstract]

Note 9 Impairment of Oil and Gas Properties

Pursuant to full cost accounting rules, the Company must perform a ceiling test each quarter on its proved oil and natural gas assets within each separate cost center. All of the Company’s costs are included in one cost center because all of the Company’s operations are located in the United States. The Company’s ceiling test was calculated using trailing twelve-month, unweighted-average first-day-of-the-month prices for oil and natural gas as of September 30, 2015, which were based on a West Texas Intermediate oil price of $59.21 per Bbl and a Henry Hub natural gas price of $3.06 per MMBtu (adjusted for basis and quality differentials), respectively. The twelve-month, unweighted-average first-day-of-the –month price as of June 30, 2015 was $71.68 per Bbl and $3.39per MMBtu The twelve-month, unweighted-average first-day-of-the –month price as of March 31, 2015 was $78.82 per Bbl and $3.74 per MMBtu. Utilizing these prices, the calculated ceiling amount was less than the net capitalized cost of oil and natural gas properties as of September 30, 2015, and as a result, a pre-tax write-down of $9.7 million was recorded. At June 30, 2015 the calculated ceiling amount was less than net capitalized cost of oil and natural gas properties resulted in a pre-tax write-down of $11.4 million. At March 31, 2015 the calculated ceiling amount was less than net capitalized cost of oil and natural gas properties resulted in a pre-tax write-down of $16.4 million. Additional material write-downs of the Company’s oil and gas properties could occur in subsequent quarters in the event that oil and natural gas prices remain at current depressed levels, or if the Company experiences significant downward adjustments to its estimated proved reserves.