Consolidating Financial Statements (Tables)

12 Months Ended

Dec. 31, 2012

Consolidating Balance Sheet

(In thousands, except share data)


	December 31, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	133,797		$	79,650		$	—		$	213,447
Short-term investments		25,891			—			—			25,891
Accounts receivable – oil and gas revenues		—			110,341			—			110,341
Accounts receivable – joint interest partners		—			99,194			—			99,194
Accounts receivable – affiliates		310			5,845			(6,155	)
Inventory		—			20,707			—			20,707
Prepaid expenses		313			1,457			—			1,770
Advances to joint interest partners		—			1,985			—			1,985
Derivative instruments		—			19,016			—			19,016
Other current assets		235			100			—			335

Total current assets		160,546			338,295			(6,155	)		492,686

Property, plant and equipment
Oil and gas properties (successful efforts method)		—			2,348,128			—			2,348,128
Other property and equipment		—			49,732			—			49,732
Less: accumulated depreciation, depletion, amortization and impairment		—			(391,260	)		—			(391,260	)

Total property, plant and equipment, net		—			2,006,600			—			2,006,600

Investments in and advances to subsidiaries		1,807,010			—			(1,807,010	)		—
Derivative instruments		—			4,981			—			4,981
Deferred income taxes		42,746			—			(42,746	)		—
Deferred costs and other assets		20,748			3,779			—			24,527

Total assets	$	2,031,050		$	2,353,655		$	(1,855,911	)	$	2,528,794


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	9		$	12,482		$	—		$	12,491
Accounts payable – affiliates		5,845			310			(6,155	)
Advances from joint interest partners		—			21,176			—			21,176
Revenues and production taxes payable		—			71,553			—			71,553
Accrued liabilities		100			189,763			—			189,863
Accrued interest payable		30,091			5			—			30,096
Derivative instruments		—			1,048			—			1,048
Deferred income taxes		—			4,558			—			4,558

Total current liabilities		36,045			300,895			(6,155	)		330,785

Long-term debt		1,200,000			—			—			1,200,000
Asset retirement obligations		—			22,956			—			22,956
Derivative instruments		—			380			—			380
Deferred income taxes		—			220,417			(42,746	)		177,671
Other liabilities		—			1,997			—			1,997

Total liabilities		1,236,045			546,645			(48,901	)		1,733,789

Stockholders’ equity
Capital contributions from affiliates		—			1,586,780			(1,586,780	)		—
Common stock, $0.01 par value; 300,000,000 shares authorized; 93,432,712 issued and 93,303,298 outstanding		925			—			—			925
Treasury stock, at cost; 129,414 shares		(3,796	)		—			—			(3,796	)
Additional paid-in-capital		657,943			8,743			(8,743	)		657,943
Retained earnings		139,933			211,487			(211,487	)		139,933

Total stockholders’ equity		795,005			1,807,010			(1,807,010	)		795,005

Total liabilities and stockholders’ equity	$	2,031,050		$	2,353,655		$	(1,855,911	)	$	2,528,794

Consolidating Balance Sheet

(In thousands, except share data)


	December 31, 2011
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	443,482		$	27,390		$	—		$	470,872
Short-term investments		19,994			—			—			19,994
Accounts receivable – oil and gas revenues		—			52,164			—			52,164
Accounts receivable – joint interest partners		—			67,268			—			67,268
Accounts receivable – affiliates		88			1,540			(1,628	)		—
Inventory		—			3,543			—			3,543
Prepaid expenses		309			1,831			—			2,140
Advances to joint interest partners		—			3,935			—			3,935
Deferred income taxes		—			3,233			—			3,233
Other current assets		18			473			—			491

Total current assets		463,891			161,377			(1,628	)		623,640

Property, plant and equipment
Oil and gas properties (successful efforts method)		—			1,235,357			—			1,235,357
Other property and equipment		—			20,859			—			20,859
Less: accumulated depreciation, depletion, amortization and impairment		—			(176,261	)		—			(176,261	)

Total property, plant and equipment, net		—			1,079,955			—			1,079,955

Investments in and advances to subsidiaries		958,880			—			(958,880	)		—
Derivative instruments		—			4,362			—			4,362
Deferred income taxes		13,158			—			(13,158	)		—
Deferred costs and other assets		15,742			3,683			—			19,425

Total assets	$	1,451,671		$	1,249,377		$	(973,666	)	$	1,727,382


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	23		$	12,184		$	—		$	12,207
Accounts payable - affiliates		1,540			88			(1,628	)		—
Advances from joint interest partners		—			9,064			—			9,064
Revenues and production taxes payable		—			19,468			—			19,468
Accrued liabilities		103			119,589			—			119,692
Accrued interest payable		15,767			7			—			15,774
Derivative instruments		—			5,907			—			5,907
Other current liabilities		—			472			—			472

Total current liabilities		17,433			166,779			(1,628	)		182,584

Long-term debt		800,000			—			—			800,000
Asset retirement obligations		—			13,075			—			13,075
Derivative instruments		—			3,505			—			3,505
Deferred income taxes		—			106,141			(13,158	)		92,983
Other liabilities		—			997			—			997

Total liabilities		817,433			290,497			(14,786	)		1,093,144

Stockholders’ equity
Capital contributions from affiliates		—			941,575			(941,575	)		—
Common stock, $0.01 par value; 300,000,000 shares authorized; 92,483,393 issued and 92,460,914 outstanding		921			—			—			921
Treasury stock, at cost; 22,479 shares		(602	)		—			—			(602	)
Additional paid-in-capital		647,374			8,743			(8,743	)		647,374
Retained earnings (deficit)		(13,455	)		8,562			(8,562	)		(13,455	)

Total stockholders’ equity		634,238			958,880			(958,880	)		634,238

Total liabilities and stockholders’ equity	$	1,451,671		$	1,249,377		$	(973,666	)	$	1,727,382

Schedule of Consolidating Statement of Operations

Consolidating Statement of Operations

(In thousands)


	Years Ended December 31, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	670,491		$	—		$	670,491
Well services revenues		—			16,177			—			16,177

Total revenues		—			686,668			—			686,668

Expenses
Lease operating expenses		—			54,924			—			54,924
Well services operating expense		—			11,774			—			11,774
Marketing, transportation and gathering expenses		—			9,257			—			9,257
Production taxes		—			62,965			—			62,965
Depreciation, depletion and amortization		—			206,734			—			206,734
Exploration expenses		—			3,250			—			3,250
Impairment of oil and gas properties		—			3,581			—			3,581
Loss on sale of properties		—			—			—			—
General and administrative expenses		12,591			44,599			—			57,190

Total expenses		12,591			397,084			—			409,675

Operating income (loss)		(12,591	)		289,584			—			276,993

Other income (expense)
Equity in earnings of subsidiaries		202,924			—			(202,924	)		—
Net gain on derivative instruments		—			34,164			—			34,164
Interest expense		(67,651	)		(2,492	)		—			(70,143	)
Other income (expense)		1,118			3,742			—			4,860

Total other income (expense)		136,391			35,414			(202,924	)		(31,119	)

Income before income taxes		123,800			324,998			(202,924	)		245,874
Income tax benefit (expense)		29,588			(122,074	)		—			(92,486	)

Net income	$	153,388		$	202,924		$	(202,924	)	$	153,388

Consolidating Statement of Operations

(In thousands)


	Years Ended December 31, 2011
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Oil and gas revenues	$	—		$	330,422		$	—		$	330,422
Expenses
Lease operating expenses		—			32,707			—			32,707
Marketing, transportation and gathering expenses		—			1,365			—			1,365
Production taxes		—			33,865			—			33,865
Depreciation, depletion and amortization		—			74,981			—			74,981
Exploration expenses		—			1,685			—			1,685
Impairment of oil and gas properties		—			3,610			—			3,610
Loss on sale of properties		—			207			—			207
General and administrative expenses		5,505			23,930			—			29,435

Total expenses		5,505			172,350			—			177,855

Operating income (loss)		(5,505	)		158,072			—			152,567

Other income (expense)
Equity in earnings of subsidiaries		99,836			—			(99,836	)		—
Net gain on derivative instruments		—			1,595			—			1,595
Interest expense		(28,310	)		(1,308	)		—			(29,618	)
Other income (expense)		1,165			470			—			1,635

Total other income (expense)		72,691			757			(99,836	)		(26,388	)

Income before income taxes		67,186			158,829			(99,836	)		126,179
Income tax benefit (expense)		12,204			(58,993	)		—			(46,789	)

Net income	$	79,390		$	99,836		$	(99,836	)	$	79,390

Consolidating Statement of Operations

(In thousands)


	Year Ended December 31, 2010
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations		Consolidated
Oil and gas revenues	$	—		$	128,927		$	—	$	128,927
Expenses
Lease operating expenses		—			14,118			—		14,118
Marketing, transportation and gathering expenses		—			464			—		464
Production taxes		—			13,768			—		13,768
Depreciation, depletion and amortization		—			37,832			—		37,832
Exploration expenses		—			297			—		297
Impairment of oil and gas properties		—			11,967			—		11,967
Stock-based compensation expenses		—			8,743			—		8,743
General and administrative expenses		2,780			16,965			—		19,745

Total expenses		2,780			104,154			—		106,934

Operating income (loss)		(2,780	)		24,773			—		21,993

Other income (expense)
Equity in earnings of subsidiaries		(28,124	)		—			28,124		—
Net loss on derivative instruments		—			(7,653	)		—		(7,653	)
Interest expense		—			(1,357	)		—		(1,357	)
Other income (expense)		255			29			—		284

Total other income (expense)		(27,869	)		(8,981	)		28,124		(8,726	)

Income (loss) before income taxes		(30,649	)		15,792			28,124		13,267
Income tax benefit (expense)		954			(43,916	)		—		(42,962	)

Net loss	$	(29,695	)	$	(28,124	)	$	28,124	$	(29,695	)

Schedule of Consolidating Statement of Cash Flows

Consolidating Statement of Cash Flows

(In thousands)


	Year Ended December 31, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	153,388		$	202,924		$	(202,924	)	$	153,388
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries		(202,924	)		—			202,924			—
Depreciation, depletion and amortization		—			206,734			—			206,734
Impairment of oil and gas properties		—			3,581			—			3,581
Deferred income taxes		(29,588	)		122,067			—			92,479
Derivative instruments		—			(34,164	)		—			(34,164	)
Stock-based compensation expenses		10,219			114			—			10,333
Debt discount amortization and other		2,277			533			—			2,810
Working capital and other changes:
Change in accounts receivable		(222	)		(94,106	)		4,225			(90,103	)
Change in inventory		—			(29,313	)		—			(29,313	)
Change in prepaid expenses		(4	)		350			—			346
Change in other current assets		(217	)		373			—			156
Change in other assets		25			(120	)		—			(95	)
Change in accounts payable and accrued liabilities		18,612			62,319			(4,225	)		76,706
Change in other current liabilities		—			(472	)		—			(472	)

Net cash provided by (used in) operating activities		(48,434	)		440,820			—			392,386

Cash flows from investing activities:
Capital expenditures		—			(1,053,315	)		—			(1,053,315	)
Derivative settlements		—			6,545			—			6,545
Purchases of short-term investments		(126,213	)		—			—			(126,213	)
Redemptions of short-term investments		120,316			—			—			120,316
Advances to joint interest partners		—			1,950			—			1,950
Advances from joint interest partners		—			12,112			—			12,112

Net cash used in investing activities		(5,897	)		(1,032,708	)		—			(1,038,605	)

Cash flows from financing activities:
Proceeds from issuance of senior notes		400,000			—			—			400,000
Purchases of treasury stock		(3,194	)		—			—			(3,194	)
Debt issuance costs		(7,307	)		(705	)		—			(8,012	)
Investment in / capital contributions from subsidiaries		(644,853	)		644,853			—			—

Net cash provided by (used in) financing activities		(255,354	)		644,148			—			388,794

Increase (decrease) in cash and cash equivalents		(309,685	)		52,260			—			(257,425	)
Cash and cash equivalents at beginning of period		443,482			27,390			—			470,872

Cash and cash equivalents at end of period	$	133,797		$	79,650		$	—		$	213,447

Consolidating Statement of Cash Flows

(In thousands)


	Year Ended December 31, 2011
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	79,390		$	99,836		$	(99,836	)	$	79,390
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries		(99,836	)		—			99,836			—
Depreciation, depletion and amortization		—			74,981			—			74,981
Impairment of oil and gas properties		—			3,610			—			3,610
Loss on sale of properties		—			207			—			207
Deferred income taxes		(12,204	)		58,993			—			46,789
Derivative instruments		—			(1,595	)		—			(1,595	)
Stock-based compensation expenses		3,656			—			—			3,656
Debt discount amortization and other		1,196			365			—			1,561
Working capital and other changes:
Change in accounts receivable		(88	)		(66,134	)		1,322			(64,900	)
Change in inventory		—			(2,550	)		—			(2,550	)
Change in prepaid expenses		(73	)		(1,527	)		—			(1,600	)
Change in other current assets		(18	)		(473	)		—			(491	)
Change in other assets		(100	)		(39	)		—			(139	)
Change in accounts payable and accrued liabilities		17,127			20,511			(1,322	)		36,316
Change in other current liabilities		—			472			—			472
Change in other liabilities		—			317			—			317

Net cash provided by (used in) operating activities		(10,950	)		186,974			—			176,024

Cash flows from investing activities:
Capital expenditures		—			(613,223	)		—			(613,223	)
Derivative settlements		—			(3,841	)		—			(3,841	)
Purchases of short-term investments		(184,907	)		—			—			(184,907	)
Redemptions of short-term investments		164,913			—			—			164,913
Advances to joint interest partners		—			(497	)		—			(497	)
Advances from joint interest partners		—			5,963			—			5,963
Proceeds from equipment and property sales		—			2,202			—			2,202

Net cash used in investing activities		(19,994	)		(609,396	)		—			(629,390	)

Cash flows from financing activities:
Proceeds from issuance of senior notes		800,000			—			—			800,000
Purchases of treasury stock		(602	)		—			—			(602	)
Debt issuance costs		(16,838	)		(1,842	)		—			(18,680	)
Investment in / capital contributions from subsidiaries		(428,074	)		428,074			—			—

Net cash provided by financing activities		354,486			426,232			—			780,718

Increase in cash and cash equivalents		323,542			3,810			—			327,352
Cash and cash equivalents at beginning of period		119,940			23,580			—			143,520

Cash and cash equivalents at end of period	$	443,482		$	27,390		$	—		$	470,872

Consolidating Statement of Cash Flows

(In thousands)


	Year Ended December 31, 2010
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net loss	$	(29,695	)	$	(28,124	)	$	28,124		$	(29,695	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries		28,124			—			(28,124	)		—
Depreciation, depletion and amortization		—			37,832			—			37,832
Impairment of oil and gas properties		—			11,967			—			11,967
Deferred income taxes		(954	)		43,916			—			42,962
Derivative instruments		—			7,653			—			7,653
Stock-based compensation expenses		1,227			8,743			—			9,970
Debt discount amortization and other		—			470			—			470
Working capital and other changes:
Change in accounts receivable		—			(44,756	)		306			(44,450	)
Change in inventory		—			(498	)		—			(498	)
Change in prepaid expenses		(236	)		(120	)		—			(356	)
Change in other assets		—			(164	)		—			(164	)
Change in accounts payable and accrued liabilities		306			13,917			(306	)		13,917
Change in other liabilities		—			4			—			4

Net cash provided by (used in) operating activities		(1,228	)		50,840			—			49,612

Cash flows from investing activities:
Capital expenditures		—			(226,544	)		—			(226,544	)
Acquisition of oil and gas properties		—			(86,393	)		—			(86,393	)
Derivative settlements		—			(120	)		—			(120	)
Advances to joint interest partners		—			1,010			—			1,010
Advances from joint interest partners		—			2,512			—			2,512

Net cash used in investing activities		—			(309,535	)		—			(309,535	)

Cash flows from financing activities:
Proceeds from sale of common stock		399,669			—			—			399,669
Proceeds from credit facility		—			72,000			—			72,000
Principal payments on credit facility		—			(107,000	)		—			(107,000	)
Debt issuance costs		—			(1,788	)		—			(1,788	)
Investment in / capital contributions from subsidiaries		(278,501	)		278,501			—			—

Net cash provided by financing activities		121,168			241,713			—			362,881

Increase (decrease) in cash and cash equivalents		119,940			(16,982	)		—			102,958
Cash and cash equivalents at beginning of period		—			40,562			—			40,562

Cash and cash equivalents at end of period	$	119,940		$	23,580		$	—		$	143,520