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Ceiling Test
12 Months Ended
Dec. 31, 2011
Ceiling Test [Abstract]  
Ceiling Test

Note 11—Ceiling Test

The Company uses the full cost method to account for its oil and natural gas operations. Accordingly, the costs to acquire, explore for and develop oil and natural gas properties are capitalized. Capitalized costs of oil and gas properties, net of accumulated DD&A and related deferred taxes, are limited to the estimated future net cash flows from proved oil and gas reserves, including the effects of cash flow hedges in place, discounted at 10%, plus the lower of cost or fair value of unproved properties, as adjusted for related income tax effects (the full cost ceiling). If capitalized costs exceed the full cost ceiling, the excess is charged to ceiling test write down of oil and gas properties in the quarter in which the excess occurs. The Company recorded $18.9 million and $156.1 million of ceiling test write-downs during 2011 and 2009, respectively. No such write-down occurred during 2010.