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At December 31, 2003 and 2004 the Company had
the following outstanding hedge positions:
In addition to the hedge positions above, during
the second quarter of 2003, the Company acquired options to sell
6,000 MMBtu of natural gas per day for the period July 2003 through
August 2003 (552,000 MMBtu) at $8.00 per MMBtu for approximately
$119,000. The Company acquired these options to protect its cash
position against potential margin calls on certain natural gas derivatives
due to large increases in the price of natural gas. These options
were classified as derivatives. As of December 31, 2003, these options
have expired and a charge of $119,000 has been included in other
income and expenses for the year ended December 31, 2003.
In November 2001, the Company had no-cost
collars with an affiliate of Enron Corp. which, because of Enron's
financial condition, were no longer considered effective. An allowance
was recorded at that time for the full value of the collars (the
"Enron Claim") that was classified as other expense. The Company
sold its Enron Claim to a financial institution for $0.5 million
that was recorded in the third quarter of 2004 as other income.
14. SUBSEQUENT EVENT
Effective February 1, 2005, the Company sold
to a private company its interest in the Patterson Prospect Area
in St. Mary Parish, Louisiana, including the Shadyside #1 well and
any anticipated follow-up wells, for approximately $9.0 million.
The Company's average daily production from the Shadyside #1 during
the fourth quarter 2004 was approximately 970 Mcfe per day. Proceeds
from the sale are expected to be used in the 2005 Barnett Shale
and Gulf Coast drilling program and for general corporate purposes.
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