Oil and Gas Properties
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2011
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Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Properties |
Oil and Natural Gas Properties
The following table discloses certain financial data relating to the Company's oil and natural gas activities, all of which are located in the United States.
Unevaluated property costs, primarily including lease acquisition costs incurred at federal and state lease sales, unevaluated drilling costs, seismic, capitalized interest and certain overhead costs related to exploration and development being excluded from the amortizable evaluated property base, consisted of $841 incurred in 2011 and $1,762 in 2010. These costs are directly related to the acquisition and evaluation of unproved properties and major development projects. The excluded costs and related reserves are included in the amortization base as the properties are evaluated and proved reserves are established or impairment is determined. The Company expects that the majority of these costs will be evaluated over the next three to five years. The Company’s unevaluated property balance, which primarily relates to the Company’s Federal onshore property prospect lease, decreased by $5,503 to $2,603 at December 31, 2011 compared to December 31, 2010. The decrease primarily related to the write-off of leases, primarily in the Gulf of Mexico shelf region, that the Company elected not to renew.
Depletion per unit-of-production (Boe) amounted to $26.42, $19.00 and $16.98 for the years ended December 31, 2011, 2010, and 2009, respectively. Lease operating expense, or production costs, per unit-of-production (Boe) amounted to $11.04, $10.58, and $9.37 for the years ended December 31, 2011, 2010, and 2009, respectively.
Under the full-cost accounting rules of the SEC, the Company reviews the carrying value of its proved oil and natural gas properties each quarter. Under these rules, capitalized costs of oil and natural gas properties, net of accumulated depreciation, depletion and amortization and deferred income taxes, may not exceed the present value of estimated future net cash flows from proved oil and natural gas reserves, discounted at 10%, plus the lower of cost or fair value of unevaluated properties, net of related tax effects (the full-cost ceiling amount). These rules generally require pricing based on the preceding 12-months’ average oil and natural gas prices based on closing prices on the first day of each month and require a write-down if the “ceiling” is exceeded. Given the volatility of oil and natural gas prices, it is reasonably possible that the Company’s estimate of discounted future net cash flows from proved oil and natural gas reserves could change in the near term. If oil and natural gas prices decline significantly, even if only for a short period of time, it is possible that write-downs of oil and natural gas properties could occur in the future. For the years ended December 31, 2011, 2010, and 2009, the Company recorded no impairment charges related to its oil and natural gas properties as a result of this calculation.
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