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Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2012
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on Recurring Basis
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.
Reconciliation of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis using Significant Unobservable Inputs
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.
Estimated Fair Value and Carrying Value of Senior Notes
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.