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Properties and Equipment, Net | 12 Months Ended
--- | ---
Dec. 31, 2012
Properties and Equipment, Net |
Properties and Equipment, Net | 2. Properties and Equipment, Net Properties and equipment, net are comprised of the following:
|  | December 31, |
--- | --- | --- | ---
(In thousands) |  | 2012 |  | 2011 |
Proved oil and gas properties |  | $ | 5,724,940 |  | $ | 5,006,846 |
Unproved oil and gas properties |  |  | 467,483 |  |  | 478,942 |
Gathering and pipeline systems |  |  | 239,656 |  |  | 238,660 |
Land, building and other equipment |  |  | 86,137 |  |  | 80,908 |
|  |  | 6,518,216 |  |  | 5,805,356 |
Accumulated depreciation, depletion and amortization |  |  | (2,207,239 | ) |  | (1,870,772 | )
|  | $ | 4,310,977 |  | $ | 3,934,584 |
Capitalized Exploratory Well Costs The following table reflects the net changes in capitalized exploratory well costs:
|  | Year Ended December 31, |
--- | --- | --- | ---
(In thousands) |  | 2012 |  | 2011 |  | 2010 |
Beginning balance at January 1 |  | $ | 5,328 |  | $ | 4,285 |  | $ | 4,179 |
Additions to capitalized exploratory well costs pending the determination of proved reserves |  |  | 10,390 |  |  | 5,328 |  |  | 4,285 |
Reclassifications to wells, facilities, and equipment based on the determination of proved reserves |  |  | — |  |  | (1,138 | ) |  | (4,148 | )
Capitalized exploratory well costs charged to expense |  |  | (5,328 | ) |  | (3,147 | ) |  | (31 | )
Ending balance at December 31 |  | $ | 10,390 |  | $ | 5,328 |  | $ | 4,285 |
The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed:
|  | December 31, |
--- | --- | --- | ---
(In thousands) |  | 2012 |  | 2011 |  | 2010 |
Capitalized exploratory well costs that have been capitalized for a period of one year or less |  | $ | 10,390 |  | $ | 5,328 |  | $ | 4,285 |
Capitalized exploratory well costs that have been capitalized for a period greater than one year |  |  | — |  |  | — |  |  | — |
|  | $ | 10,390 |  | $ | 5,328 |  | $ | 4,285 |
Impairments During 2010, the Company recorded an impairment of $40.9 million associated with its oil and gas properties and other assets. The Company recorded a $35.8 million impairment of oil and gas properties due to price declines and limited activity in two south Texas fields. These fields were reduced to fair value of approximately $15.4 million. An impairment of $5.1 million was recorded related to drilling and service equipment that was primarily used for drilling activities in West Virginia. The impairment was a result of decreased activity in West Virginia and the decision to sell the drilling and service equipment. These assets were reduced to fair value of approximately $4.0 million. The Company also recorded an impairment loss of approximately $5.8 million during 2010 associated with the sale of certain properties in Colorado, which was recognized in Gain / (loss) on sale of assets in the Consolidated Statement of Operations. The fair value of the impaired properties was approximately $3.0 million and was determined using a market approach which considered the execution of a purchase and sale agreement the Company entered into on June 30, 2010. Accordingly, the inputs associated with the fair value of assets held for sale were considered Level 2 in the fair value hierarchy. Fair value of oil and gas properties was determined using the income approach utilizing discounted future cash flows. The fair value of the impaired oil and gas properties and other assets was based on significant inputs that were not observable in the market and are considered to be Level 3 inputs. Refer to Note 14 for more information and a description of fair value hierarchy. Key assumptions include (1) natural gas and crude oil prices (adjusted to quality and basis differentials), (2) projections of estimated quantities of oil and gas reserves and production, (3) estimates of future development and operating costs and (4) risk adjusted discount rates (14% at September 30, 2010). Fair value of drilling and service equipment was determined using the market approach which considered broker quotes from market participants in the oil field services sector. Divestitures The Company recognized an aggregate gain on sale of assets of $50.6 million, $63.4 million and $106.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. In December 2012, the Company sold certain proved oil and gas properties located in south Texas to a private company for $29.9 million, subject to post closing adjustments, and recognized an $18.2 million loss on sale of assets. In June 2012, the Company sold a 35% non-operated working interest associated with certain of its Pearsall Shale undeveloped leaseholds in south Texas to a wholly owned subsidiary of Osaka Gas Co., Ltd. (Osaka) for total consideration of approximately $251.0 million. The Company received $125.0 million in cash proceeds and Osaka agreed to fund 85% of the Company's share of future drilling and completion costs associated with these leaseholds until it has paid approximately $126.0 million in accordance with a joint development agreement entered into at closing. The drilling and completion carry will terminate two years after the closing of the transaction. The Company recognized a $67.0 million gain on sale of assets associated with this sale. In 2012, the Company also sold various other unproved properties and other assets for total proceeds of $14.4 million and recognized an aggregate gain of $1.8 million. In October 2011, the Company sold certain proved oil and gas properties located in Colorado, Utah and Wyoming to Breitburn Operating L.P., a wholly owned subsidiary of Breitburn Energy Partners L.P. for $285.0 million. The Company received $283.2 million in cash proceeds, after closing adjustments, and recognized a $4.2 million gain on sale of assets. In May 2011, the Company sold certain of its unproved Haynesville and Bossier Shale oil and gas properties in east Texas to a third party. The Company received approximately $47.0 million in cash proceeds and recognized a $34.2 million gain on sale of assets. In February and April 2011, respectively, the Company entered into two participation agreements with third parties related to certain of its Haynesville and Bossier Shale leaseholds in east Texas. Under the terms of the participation agreements, the third parties agreed to fund 100% of the cost to drill and complete certain Haynesville and Bossier Shale wells in the related leaseholds over a multi-year period in exchange for a 75% working interest in the leaseholds. During 2011, the Company received a reimbursement of drilling costs incurred of approximately $12.9 million associated with wells that had commenced drilling prior to the execution of the participation agreements. In 2011, the Company also sold various other unproved properties and other assets for total proceeds of $73.5 million and recognized an aggregate gain of $25.0 million. In December 2010, the Company sold its existing Pennsylvania gathering infrastructure of approximately 75 miles of pipeline and two compressor stations to Williams Field Services (Williams), a subsidiary of Williams Partners L.P., for $150 million and recognized a $49.3 million gain on sale of assets, which included the accrual of $17.9 million related to certain obligations that were required under the terms of the purchase and sale agreement. In November 2010, the Company sold its investment in common stock of Tourmaline Oil Corporation for $61.3 million and recognized a gain of $40.7 million which is included in Gain/(loss) on sale of assets in the Consolidated Statement of Operations. In 2010, the Company also sold various other proved and unproved properties and other assets for total proceeds of $32.2 million and recognized an aggregate gain of $16.3 million.

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- Definition The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.13-14) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 5 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6391035&loc=d3e2868-110229 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2921-110230 + Details
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