Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

The Notes (see Note 7) are guaranteed on a senior unsecured basis by the Guarantors, which are 100% owned by the Company. These guarantees are full and unconditional and joint and several among the Guarantors. Certain of the Company’s immaterial wholly owned subsidiaries do not guarantee the Notes (“Non-Guarantor Subsidiaries”).

The following financial information reflects consolidating financial information of the Company (“Issuer”) and its Guarantors on a combined basis, prepared on the equity basis of accounting. The Non-Guarantor Subsidiaries are immaterial and, therefore, not presented separately. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantors operated as independent entities. The Company has not presented separate financial and narrative information for each of the Guarantors because it believes such financial and narrative information would not provide any additional information that would be material in evaluating the sufficiency of the Guarantors.

Condensed Consolidating Balance Sheet

(In thousands, except share data)



	June 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	83,770		$	77,831		$	—		$	161,601
Accounts receivable – oil and gas revenues	—			130,518			—			130,518
Accounts receivable – joint interest partners	—			92,785			—			92,785
Accounts receivable – from affiliates	771			6,511			(7,282		)	—
Inventory	—			16,385			—			16,385
Prepaid expenses	—			6,121			—			6,121
Advances to joint interest partners	—			1,319			—			1,319
Derivative instruments	—			7,353			—			7,353
Other current assets	3			2			—			5
Total current assets	84,544			338,825			(7,282		)	416,087
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			2,675,902			—			2,675,902
Other property and equipment	—			144,518			—			144,518
Less: accumulated depreciation, depletion, amortization and impairment	—			(514,567		)	—			(514,567		)
Total property, plant and equipment, net	—			2,305,853			—			2,305,853
Investments in and advances to subsidiaries	1,990,470			—			(1,990,470		)	—
Derivative instruments	—			10,554			—			10,554
Deferred income taxes	60,406			—			(60,406		)	—
Deferred costs and other assets	19,450			6,200			—			25,650
Total assets	$	2,154,870		$	2,661,432		$	(2,058,158	)	$	2,758,144
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	22		$	30,660		$	—		$	30,682
Accounts payable – from affiliates	6,511			771			(7,282		)	—
Advances from joint interest partners	—			15,583			—			15,583
Revenues and production taxes payable	—			102,661			—			102,661
Accrued liabilities	27			180,961			—			180,988
Accrued interest payable	29,097			36			—			29,133
Deferred income taxes	—			1,030			—			1,030
Other current liabilities	—			688			—			688
Total current liabilities	35,657			332,390			(7,282		)	360,765
Long-term debt	1,200,000			—			—			1,200,000
Asset retirement obligations	—			26,268			—			26,268
Derivative instruments	—			291			—			291
Deferred income taxes	—			309,578			(60,406		)	249,172
Other liabilities	—			2,435			—			2,435
Total liabilities	1,235,657			670,962			(67,688		)	1,838,931
Stockholders’ equity
Capital contributions from affiliates	—			1,621,489			(1,621,489		)	—
Common stock, $0.01 par value; 300,000,000 shares authorized; 93,693,829 issued and 93,554,121 outstanding	925			—			—			925
Treasury stock, at cost; 139,708 shares	(4,160		)	—			—			(4,160		)
Additional paid-in-capital	663,545			8,743			(8,743		)	663,545
Retained earnings	258,903			360,238			(360,238		)	258,903
Total stockholders’ equity	919,213			1,990,470			(1,990,470		)	919,213
Total liabilities and stockholders’ equity	$	2,154,870		$	2,661,432		$	(2,058,158	)	$	2,758,144

Condensed 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 – from 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 – from 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

Condensed Consolidating Statement of Operations

(In thousands)



	Three Months Ended June 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	241,842		$	—		$	241,842
Well services and midstream revenues	—			12,740			—			12,740
Total revenues	—			254,582			—			254,582
Expenses
Lease operating expenses	—			18,266			—			18,266
Well services and midstream operating expenses	—			6,644			—			6,644
Marketing, transportation and gathering expenses	—			10,779			—			10,779
Production taxes	—			21,397			—			21,397
Depreciation, depletion and amortization	—			66,790			—			66,790
Exploration expenses	—			392			—			392
Impairment of oil and gas properties	—			208			—			208
General and administrative expenses	3,524			13,132			—			16,656
Total expenses	3,524			137,608			—			141,132
Operating income (loss)	(3,524		)	116,974			—			113,450
Other income (expense)
Equity in earnings in subsidiaries	82,506			—			(82,506		)	—
Net gain on derivative instruments	—			12,591			—			12,591
Interest expense, net of capitalized interest	(20,159		)	(1,233		)	—			(21,392		)
Other income	(738		)	1,032			—			294
Total other income (expense)	61,609			12,390			(82,506		)	(8,507		)
Income before income taxes	58,085			129,364			(82,506		)	104,943
Income tax benefit (expense)	9,034			(46,858		)	—			(37,824		)
Net income	$	67,119		$	82,506		$	(82,506	)	$	67,119

Condensed Consolidating Statement of Operations

(In thousands)



	Three Months Ended June 30, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	145,203		$	—		$	145,203
Well services revenues	—			3,861			—			3,861
Total revenues	—			149,064			—			149,064
Expenses
Lease operating expenses	—			12,029			—			12,029
Well services operating expenses	—			1,207			—			1,207
Marketing, transportation and gathering expenses	—			1,970			—			1,970
Production taxes	—			13,720			—			13,720
Depreciation, depletion and amortization	—			44,213			—			44,213
Impairment of oil and gas properties	—			2,203			—			2,203
General and administrative expenses	2,644			10,893			—			13,537
Total expenses	2,644			86,235			—			88,879
Operating income (loss)	(2,644		)	62,829			—			60,185
Other income (expense)
Equity in earnings in subsidiaries	86,024			—			(86,024		)	—
Net gain on derivative instruments	—			74,595			—			74,595
Interest expense, net of capitalized interest	(13,414		)	(660		)	—			(14,074		)
Other income	118			658			—			776
Total other income (expense)	72,728			74,593			(86,024		)	61,297
Income before income taxes	70,084			137,422			(86,024		)	121,482
Income tax benefit (expense)	5,959			(51,398		)	—			(45,439		)
Net income	$	76,043		$	86,024		$	(86,024	)	$	76,043

Condensed Consolidating Statement of Operations

(In thousands)



	Six Months Ended June 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	483,493		$	—		$	483,493
Well services and midstream revenues	—			19,393			—			19,393
Total revenues	—			502,886			—			502,886
Expenses
Lease operating expenses	—			37,755			—			37,755
Well services and midstream operating expenses	—			9,558			—			9,558
Marketing, transportation and gathering expenses	—			14,168			—			14,168
Production taxes	—			43,486			—			43,486
Depreciation, depletion and amortization	—			133,051			—			133,051
Exploration expenses	—			2,249			—			2,249
Impairment of oil and gas properties	—			706			—			706
General and administrative expenses	6,400			24,110			—			30,510
Total expenses	6,400			265,083			—			271,483
Operating income (loss)	(6,400		)	237,803			—			231,403
Other income (expense)
Equity in earnings in subsidiaries	148,751			—			(148,751		)	—
Net loss on derivative instruments	—			(2,021		)	—			(2,021		)
Interest expense, net of capitalized interest	(40,678		)	(1,897		)	—			(42,575		)
Other income	(363		)	1,437			—			1,074
Total other income (expense)	107,710			(2,481		)	(148,751		)	(43,522		)
Income before income taxes	101,310			235,322			(148,751		)	187,881
Income tax benefit (expense)	17,660			(86,571		)	—			(68,911		)
Net income	$	118,970		$	148,751		$	(148,751	)	$	118,970

Condensed Consolidating Statement of Operations

(In thousands)



	Six Months Ended June 30, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	283,109		$	—		$	283,109
Well services and midstream revenues	—			4,521			—			4,521
Total revenues	—			287,630			—			287,630
Expenses
Lease operating expenses	—			21,845			—			21,845
Well services and midstream operating expenses	—			1,684			—			1,684
Marketing, transportation and gathering expenses	—			4,539			—			4,539
Production taxes	—			26,986			—			26,986
Depreciation, depletion and amortization	—			83,099			—			83,099
Exploration expenses	—			2,835			—			2,835
Impairment of oil and gas properties	—			2,571			—			2,571
General and administrative expenses	5,090			20,646			—			25,736
Total expenses	5,090			164,205			—			169,295
Operating income (loss)	(5,090		)	123,425			—			118,335
Other income (expense)
Equity in earnings in subsidiaries	112,286			—			(112,286		)	—
Net gain on derivative instruments	—			56,009			—			56,009
Interest expense, net of capitalized interest	(26,829		)	(1,144		)	—			(27,973		)
Other income	295			1,079			—			1,374
Total other income (expense)	85,752			55,944			(112,286		)	29,410
Income before income taxes	80,662			179,369			(112,286		)	147,745
Income tax benefit (expense)	11,822			(67,083		)	—			(55,261		)
Net income	$	92,484		$	112,286		$	(112,286	)	$	92,484

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Six Months Ended June 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	118,970		$	148,751		$	(148,751	)	$	118,970
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(148,751		)	—			148,751			—
Depreciation, depletion and amortization	—			133,051			—			133,051
Impairment of oil and gas properties	—			706			—			706
Deferred income taxes	(17,660		)	85,634			—			67,974
Derivative instruments	—			2,021			—			2,021
Stock-based compensation expenses	5,263			108			—			5,371
Debt discount amortization and other	2,189			(436		)	—			1,753
Working capital and other changes:
Change in accounts receivable	(461		)	(13,972		)	665			(13,768		)
Change in inventory	—			(4,200		)	—			(4,200		)
Change in prepaid expenses	313			(4,715		)	—			(4,402		)
Change in other current assets	232			98			—			330
Change in accounts payable and accrued liabilities	(388		)	49,754			(665		)	48,701
Change in other current liabilities	—			688			—			688
Change in other liabilities	—			612			—			612
Net cash provided by (used in) operating activities	(40,293		)	398,100			—			357,807
Cash flows from investing activities:
Capital expenditures	—			(429,296		)	—			(429,296		)
Derivative settlements	—			2,932			—			2,932
Redemptions of short-term investments	25,000			—			—			25,000
Advances to joint interest partners	—			666			—			666
Advances from joint interest partners	—			(5,593		)	—			(5,593		)
Net cash provided by (used in) investing activities	25,000			(431,291		)	—			(406,291		)
Cash flows from financing activities:
Purchases of treasury stock	(364		)	—			—			(364		)
Debt issuance costs	—			(2,998		)	—			(2,998		)
Investment in / capital contributions from affiliates	(34,370		)	34,370			—			—
Net cash provided by (used in) financing activities	(34,734		)	31,372			—			(3,362		)
Decrease in cash and cash equivalents	(50,027		)	(1,819		)	—			(51,846		)
Cash and cash equivalents at beginning of period	133,797			79,650			—			213,447
Cash and cash equivalents at end of period	$	83,770		$	77,831		$	—		$	161,601

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Six Months Ended June 30, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	92,484		$	112,286		$	(112,286	)	$	92,484
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(112,286		)	—			112,286			—
Depreciation, depletion and amortization	—			83,099			—			83,099
Impairment of oil and gas properties	—			2,571			—			2,571
Deferred income taxes	(11,822		)	66,983			—			55,161
Derivative instruments	—			(56,009		)	—			(56,009		)
Stock-based compensation expenses	3,793			105			—			3,898
Debt discount amortization and other	960			305			—			1,265
Working capital and other changes:
Change in accounts receivable	(178		)	(28,661		)	1,999			(26,840		)
Change in inventory	—			(21,636		)	—			(21,636		)
Change in prepaid expenses	246			1,254			—			1,500
Change in other current assets	17			473			—			490
Change in other assets	(7,305		)	(60		)	—			(7,365		)
Change in accounts payable and accrued liabilities	9,657			32,364			(1,999		)	40,022
Change in other current liabilities	—			2,470			—			2,470
Change in other liabilities	—			750			—			750
Net cash provided by (used in) operating activities	(24,434		)	196,294			—			171,860
Cash flows from investing activities:
Capital expenditures	—			(440,781		)	—			(440,781		)
Derivative settlements	—			(2,465		)	—			(2,465		)
Redemptions of short-term investments	19,994			—			—			19,994
Advances to joint interest partners	—			1,978			—			1,978
Advances from joint interest partners	—			19,380			—			19,380
Net cash provided by (used in) investing activities	19,994			(421,888		)	—			(401,894		)
Cash flows from financing activities:
Purchases of treasury stock	(1,206		)	—			—			(1,206		)
Debt issuance costs	(46		)	(700		)	—			(746		)
Investment in / capital contributions from affiliates	(242,130		)	242,130			—			—
Net cash provided by (used in) financing activities	(243,382		)	241,430			—			(1,952		)
Increase (decrease) in cash and cash equivalents	(247,822		)	15,836			—			(231,986		)
Cash and cash equivalents at beginning of period	443,482			27,390			—			470,872
Cash and cash equivalents at end of period	$	195,660		$	43,226		$	—		$	238,886