Oil and Gas Reserve Information Unaudited

12 Months Ended

Dec. 31, 2011

Oil and Gas Reserve Information - Unaudited [Abstract]

OIL AND GAS RESERVE INFORMATION UNAUDITED

NOTE 16 — OIL AND GAS RESERVE INFORMATION – UNAUDITED:

Our estimated net proved oil and gas reserves at December 31, 2011 have been prepared in accordance with guidelines established by the SEC. Accordingly, the following reserve estimates are based upon existing economic and operating conditions at the respective dates. In December 2008, the SEC issued a final rule, “Modernization of Oil and Gas Reporting,” which adopted revisions to the SEC’s oil and gas reporting requirements. Among other things, the revisions: (1) replaced the single-day year-end pricing with a twelve-month average pricing assumption; (2) permit the reporting of probable and possible reserves in addition to the existing requirement to disclose proved reserves; (3) allow the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volumes; (4) require the disclosure of the independence and qualifications of third party preparers of reserves; and (5) require the filing of reports when a third party is relied upon to prepare or audit reserve estimates. We were required to adopt the provisions of the new rule as of December 31, 2009. In January 2010, the FASB issued its final standard on oil and gas reserves estimation and disclosures aligning its requirements with the SEC’s final rule. The new rules were considered a change in accounting principle that is inseparable from a change in accounting estimate, which did not require retroactive revision.

There are numerous uncertainties inherent in estimating quantities of proved reserves and in providing the future rates of production and timing of development expenditures. The following reserve data represents estimates only and should not be construed as being exact. In addition, the present values should not be construed as the market value of the oil and gas properties or the cost that would be incurred to obtain equivalent reserves.

The following table sets forth an analysis of the estimated quantities of net proved and proved developed oil (including condensate) and natural gas reserves, all of which are located onshore and offshore the continental United States. Estimated proved oil and natural gas reserves at December 31, 2011, 2010 and 2009 are prepared in accordance with the SEC’s new rule, “Modernization of Oil and Gas Reporting”.

	Oil (MBbls)			Natural Gas (MMcf)			Oil and Natural Gas (MMcfe)
Estimated proved reserves as of December 31, 2008		36,564			299,554			518,935
Revisions of previous estimates		1,964			(53,423	)		(41,636	)
Extensions, discoveries and other additions		417			12,198			14,703
Sale of reserves		(402	)		(300	)		(2,714	)
Production		(6,207	)		(41,335	)		(78,577	)
Estimated proved reserves as of December 31, 2009		32,336			216,694			410,711
Revisions of previous estimates		3,299			13,439			33,231
Extensions, discoveries and other additions		2,668			82,846			98,854
Purchase of producing properties		637			3,816			7,637
Sale of reserves		(23	)		(153	)		(289	)
Production		(5,714	)		(41,937	)		(76,221	)
Estimated proved reserves as of December 31, 2010		33,203			274,705			473,923
Revisions of previous estimates		2,988			(23,801	)		(5,869	)
Extensions, discoveries and other additions		3,544			93,520			114,784
Purchase of producing properties		14,396			24,595			110,971
Sale of reserves		(1,950	)		(2,150	)		(13,850	)
Production		(6,427	)		(39,517	)		(78,079	)
Estimated proved reserves as of December 31, 2011		45,754			327,352			601,880
Estimated proved developed reserves:
as of December 31, 2009		24,380			172,452			318,729
as of December 31, 2010		25,000			174,876			324,876
as of December 31, 2011		31,026			174,067			360,224

The following narrative provides the reasons for the significant changes in the quantities of our estimated proved reserves by year.

Year Ended December 31, 2011. Extensions, discoveries and other additions were primarily the result of our Appalachia drilling program (94 Bcfe), our deep gas development project at LaPosada (11 Bcfe) and our GOM drilling program at Mississippi Canyon Block 109 (6 Bcfe). Purchase of producing properties primarily relates to our acquisition of the Pompano and Mica fields (102 Bcfe) and our acquisition of an additional 15% working interest in the Pyrenees project (6 Bcfe). Sale of reserves primarily relates to the sale of our non-operated interest in the Main Pass Block 296 and 311 fields (13 Bcfe).

Year Ended December 31, 2010. Revisions of previous estimates were the result of positive reserve report pricing changes extending the economic limits of reservoirs (28 Bcfe) and well performance (5 Bcfe). Extensions, discoveries and other additions were primarily the result of our Appalachia drilling program (77 Bcfe) and our GOM drilling program primarily at Mississippi Canyon Block 109 (18 Bcfe).

Year Ended December 31, 2009. Revisions of previous estimates were almost entirely the result of changes in reserve report prices for oil and natural gas increasing (in the case of oil) or decreasing (in the case of gas) economic limits of reservoirs.

The following tables present the standardized measure of future net cash flows related to estimated proved oil and gas reserves together with changes therein, including a reduction for estimated plugging and abandonment costs that are also reflected as a liability on the balance sheet at December 31, 2011. You should not assume that the future net cash flows or the discounted future net cash flows, referred to in the tables below, represent the fair value of our estimated oil and gas reserves. Prior to December 31, 2009, we were required to determine estimated future net cash flows using period-end market prices for oil and gas without considering hedge contracts in place at the end of the period. Effective December 31, 2009, the SEC issued a final rule which changed prices used in reserves calculations. Prices are no longer based on a single-day, period-end price. Rather, they are now based on either the preceding 12-months’ average price based on closing prices on the first day of each month, or prices defined by existing contractual arrangements. The 2011 average 12-month oil and gas prices net of differentials were $100.97 per barrel of oil and $4.74 per Mcf of gas. The 2010 average 12-month oil and gas prices net of differentials were $77.68 per barrel of oil and $4.46 per Mcf of gas. The 2009 average 12-month oil and gas prices net of differentials were $58.95 per barrel of oil and $3.49 per Mcf of gas. Future production and development costs are based on current costs with no escalations. Estimated future cash flows net of future income taxes have been discounted to their present values based on a 10% annual discount rate.

	Standardized Measure Year Ended December 31,
	2011			2010			2009
Future cash inflows	$	6,171,279		$	3,803,004		$	2,663,285
Future production costs		(1,747,806	)		(1,191,718	)		(950,434	)
Future development costs		(1,219,214	)		(907,956	)		(912,500	)
Future income taxes		(852,364	)		(330,651	)		(38,845	)
Future net cash flows		2,351,895			1,372,679			761,506
10% annual discount		(808,933	)		(415,050	)		(146,519	)
Standardized measure of discounted future net cash flows	$	1,542,962		$	957,629		$	614,987

	Changes in Standardized Measure Year Ended December 31,
	2011			2010			2009
Standardized measure at beginning of year	$	957,629		$	614,987		$	793,104
Sales and transfers of oil and gas produced, net of production costs		(670,347	)		(487,418	)		(546,737	)
Changes in price, net of future production costs		502,324			485,272			284,504
Extensions and discoveries, net of future production and development costs		293,168			270,629			21,249
Changes in estimated future development costs, net of development costs incurred during the period		97,852			119,986			183,058
Revisions of quantity estimates		(27,854	)		147,509			(150,609	)
Accretion of discount		118,722			64,836			79,904
Net change in income taxes		(300,363	)		(196,219	)		(27,436	)
Purchases of reserves in-place		567,286			21,264			—
Sales of reserves in-place		(36,278	)		1,424			3,152
Changes in production rates due to timing and other		40,823			(84,641	)		(25,202	)
Net increase (decrease) in standardized measure		585,333			342,642			(178,117	)
Standardized measure at end of year	$	1,542,962		$	957,629		$	614,987