XML 130 R12.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Fair Value Measurements | 12 Months Ended
--- | ---
Dec. 31, 2012
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements The Company measures and reports certain assets and liabilities on a fair value basis and has classified and disclosed its fair value measurements using the following levels of the fair value hierarchy:
Level 1 |  | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 |  | Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 |  | Measurement based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).
Assets and liabilities that are measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, considers the market for the Company’s financial assets and liabilities, the associated credit risk and other factors. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. The Company has assets and liabilities classified as Level 1, Level 2 and Level 3, as described below. Level 1 Fair Value Measurements Restricted deposits. The fair value of restricted deposits invested in mutual funds or municipal bonds is based on quoted market prices. For restricted deposits held in savings accounts, carrying value approximates fair value. Investments. The fair value of investments, consisting of assets attributable to the Company’s deferred compensation plan, is based on quoted market prices. Investments are included in other assets in the accompanying consolidated balance sheets. Level 2 Fair Value Measurements Derivative contracts. The fair value of the Company’s oil and natural gas fixed price swaps, oil and natural gas collars and interest rate swap are based upon inputs that are either readily available in the public market, such as oil and natural gas futures prices, volatility factors, interest rates and discount rates, or can be corroborated from active markets. Fair value is determined through the use of a discounted cash flow model or option pricing model using the applicable inputs, discussed above. The Company applies a weighted average credit default risk rating factor for its counterparties or gives effect to its credit default risk rating, as applicable, in determining the fair value of these derivative contracts. Credit default risk ratings are based on current published credit default swap rates. Level 3 Fair Value Measurements Derivative contracts. The fair value of the Company’s oil basis swaps are based upon quotes obtained from counterparties to the derivative contracts. These values are reviewed internally for reasonableness through the use of a discounted cash flow model using non-exchange traded regional pricing information. Additionally, the Company applies a weighted average credit default risk rating factor for its counterparties or gives effect to its credit risk, as applicable, in determining the fair value of these derivative contracts. The significant unobservable input used in the fair value measurement of the Company’s oil basis swaps is the estimate of future oil basis differentials. Significant increases (decreases) in oil basis differentials could result in a significantly higher (lower) fair value measurement. At December 31, 2012, derivative contracts that were valued using Level 3 inputs consisted of oil basis swaps with a fair value of $(0.5) million. Prices of future oil basis differentials used in the fair value measurement ranged from $10.00 per barrel to $21.98 per barrel and had a weighted average value of $14.74 per barrel. The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis by the fair value hierarchy (in thousands): December 31, 2012
| Fair Value Measurements |  | Netting(1) |  | Assets/Liabilities at Fair Value
| Level 1 |  | Level 2 |  | Level 3 |  |
Assets |  |  |  |  |  |  |  |  |
Restricted deposits | $ | 27,947 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 27,947 |
Commodity derivative contracts | — |  |  | 130,220 |  |  | 183 |  |  | (35,764 | ) |  | 94,639 |
Investments | 10,348 |  |  | — |  |  | — |  |  | — |  |  | 10,348 |
| $ | 38,295 |  |  | $ | 130,220 |  |  | $ | 183 |  |  | $ | (35,764 | ) |  | $ | 132,934 |
Liabilities |  |  |  |  |  |  |  |  |
Commodity derivative contracts | $ | — |  |  | $ | 107,321 |  |  | $ | 695 |  |  | $ | (35,764 | ) |  | $ | 72,252 |
Interest rate swap | — |  |  | 2,395 |  |  | — |  |  | — |  |  | 2,395 |
| $ | — |  |  | $ | 109,716 |  |  | $ | 695 |  |  | $ | (35,764 | ) |  | $ | 74,647 |
December 31, 2011
| Fair Value Measurements |  | Netting(1) |  | Assets/Liabilities at Fair Value
| Level 1 |  | Level 2 |  | Level 3 |  |
Assets |  |  |  |  |  |  |  |  |
Restricted deposits | $ | 27,912 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 27,912 |
Commodity derivative contracts | — |  |  | 62,746 |  |  | 397 |  |  | (32,662 | ) |  | 30,481 |
Investments | 7,138 |  |  | — |  |  | — |  |  | — |  |  | 7,138 |
| $ | 35,050 |  |  | $ | 62,746 |  |  | $ | 397 |  |  | $ | (32,662 | ) |  | $ | 65,531 |
Liabilities |  |  |  |  |  |  |  |  |
Commodity derivative contracts | $ | — |  |  | $ | 182,694 |  |  | $ | 4,650 |  |  | $ | (32,662 | ) |  | $ | 154,682 |
Interest rate swap | — |  |  | 10,448 |  |  | — |  |  | — |  |  | 10,448 |
| $ | — |  |  | $ | 193,142 |  |  | $ | 4,650 |  |  | $ | (32,662 | ) |  | $ | 165,130 |
____________________ (1)Represents the impact of netting assets and liabilities with counterparties with which the right of offset exists. The table below sets forth a reconciliation of the Company’s assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2010, 2011 and 2012 (in thousands):
| Commodity Derivative Contracts |  | Interest Rate Swaps |  | Total
Balance of Level 3 at January 1, 2010 | $ | 46,153 |  |  | $ | (8,299 | ) |  | $ | 37,854 |
Total realized and unrealized gains (losses) | (50,872 | ) |  | (16,540 | ) |  | (67,412 | )
Purchases | 23,196 |  |  | — |  |  | 23,196 |
Settlements (received) paid | (224,337 | ) |  | 8,145 |  |  | (216,192 | )
Balance of Level 3 at December 31, 2010 | (205,860 | ) |  | (16,694 | ) |  | (222,554 | )
Total realized and unrealized gains (losses) | 44,075 |  |  | (3,168 | ) |  | 40,907 |
Settlements paid | 50,713 |  |  | 9,414 |  |  | 60,127 |
Transfers(1) | 106,820 |  |  | 10,448 |  |  | 117,268 |
Balance of Level 3 at December 31, 2011 | (4,252 | ) |  | — |  |  | (4,252 | )
Total realized and unrealized gains (losses) | (5,460 | ) |  | — |  |  | (5,460 | )
Purchases | 5,697 |  |  | — |  |  | 5,697 |
Settlements paid | 3,503 |  |  | — |  |  | 3,503 |
Balance of Level 3 at December 31, 2012 | $ | (512 | ) |  | $ | — |  |  | $ | (512 | )
____________________
(1) | Fair values related to the Company’s oil and natural gas fixed price swaps, natural gas collars and interest rate swap were transferred from Level 3 to Level 2 in the fourth quarter of 2011 due to enhancements to the Company’s internal valuation process, including the use of observable inputs to assess the fair value. During the years ended December 31, 2012 and 2010, the Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements. The Company’s policy is to recognize transfers between fair value hierarchy levels as of the end of the quarterly reporting period in which the event or change in circumstances causing the transfer occurred.
Unrealized losses of $0.5 million on the Company’s Level 3 commodity derivative contracts outstanding at December 31, 2012 have been included in (gain) loss on derivative contracts in the accompanying consolidated statement of operations for the year ended December 31, 2012. See Note 14 for further discussion of the Company’s derivative contracts. Fair Value of Financial Instruments The Company measures the fair value of its senior notes using pricing for the Company’s senior notes that is readily available in the public market. The Company classifies these inputs as Level 2 in the fair value hierarchy. The estimated fair values and carrying values of the Company’s senior notes at December 31, 2012 and 2011 were as follows (in thousands):
| December 31, 2012 |  | December 31, 2011
| Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
Senior Floating Rate Notes due 2014 | $ | — |  |  | $ | — |  |  | $ | 339,381 |  |  | $ | 350,000 |
9.875% Senior Notes due 2016(1) | 392,913 |  |  | 356,657 |  |  | 396,568 |  |  | 354,579 |
8.0% Senior Notes due 2018 | 790,313 |  |  | 750,000 |  |  | 765,000 |  |  | 750,000 |
8.75% Senior Notes due 2020(2) | 490,500 |  |  | 444,127 |  |  | 475,875 |  |  | 443,568 |
7.5% Senior Notes due 2021(3) | 1,257,250 |  |  | 1,179,328 |  |  | 909,000 |  |  | 900,000 |
8.125% Senior Notes due 2022 | 823,125 |  |  | 750,000 |  |  | — |  |  | — |
7.5% Senior Notes due 2023(4) | 882,750 |  |  | 820,971 |  |  | — |  |  | — |
____________________ (1)Carrying value is net of $8,843 and $10,921 discount at December 31, 2012 and 2011, respectively. (2)Carrying value is net of $5,873 and $6,432 discount at December 31, 2012 and 2011, respectively.
(3) | Carrying value includes a premium of $4,328 at December 31, 2012 applicable to notes issued in August 2012.
(4)Carrying value is net of $4,029 discount at December 31, 2012. The carrying value of the Company’s mortgage note payable at December 31, 2011 approximated fair value based on rates applicable to similar instruments. See Note 13 for discussion of the Company’s long-term debt, including the purchase and redemption of all outstanding Senior Floating Rate Notes due 2014 (the “Senior Floating Rate Notes”) and the issuance of the 8.125% Senior Notes due 2022, additional 7.5% Senior Notes due 2021 and 7.5% Senior Notes due 2023 (collectively, the “2012 Senior Notes”), all of which occurred during 2012. Allocation of Purchase Price in Business Combinations The estimated fair values of assets acquired and liabilities assumed in business combinations are based on market assumptions as to future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk-adjusted discount rates. See Note 3 for additional information regarding the Company’s acquisitions. Impairment Assessments As deemed necessary based on events in the fourth quarter of 2012, the Company analyzed its gas treating plants and CO 2 compression facilities for impairment. Estimated fair values of these assets were calculated using a discounted cash flow method, under which estimated future cash flows were calculated based on management’s expectations for the future use of these assets and estimates of future natural gas production and discounted at a risk-adjusted rate. See Note 8 for further discussion of these impairment assessments.

X
- Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13504-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15C, 15D -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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44A, 44B -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 Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15A -Subparagraph a-d -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 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 3, 10, 14, 15 -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 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -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 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13537-108611 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15B -Subparagraph a, b -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 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32, 33, 34 -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 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration