
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. During the third quarter
of 2005, the Company entered into interest rate swap agreements with respect to
amounts outstanding under the Second Lien Credit Facility. These arrangements
are designed to manage the Company’s exposure to interest rate fluctuations during
the period beginning January 1, 2006 through June 30, 2007 by effectively exchanging
existing obligations to pay interest based on floating rates for obligations to
pay interest based on fixed LIBO rates. At December 31, 2005, the unrealized gain
related to the marked-to-market value of these swap arrangements totaled $0.6
million. This derivative will be marked-to-market at the end of each reporting
period and the realized and unrealized gain or loss will be reported as marked-tomarket
gains or losses on derivatives, net in other income and expense on the Statement
of Operations. The Company’s outstanding positions
under these interest rate swap agreements at December 31, 2005 are as follows
(dollars in thousands): 
13.
SUPPLEMENTARY FINANCIAL INFORMATION
ON OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES (UNAUDITED)
The following disclosures provide unaudited information
required by SFAS No. 69, “Disclosures About Oil and Gas Producing Activities.”
Costs Incurred Costs incurred
in oil and natural gas property acquisition, exploration and development activities
are summarized below: |