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At December 31, 2007 the Company had the following
outstanding derivative positions:
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(1) Based on Houston Ship Channel and WAHA spot prices.
(2) Based on West Texas intermediate index prices.
The fair value of the outstanding oil and
natural gas derivatives at December 31, 2007 and 2006 was an asset
of $0.8 million and $6.0 million, respectively.
Interest Rate Derivatives. 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 were 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.
In connection with an amendment to the Second Lien Credit Facility,
the remaining open derivative positions on interest rate swapswere
cash settled, resulting in a realized gain of $0.6 million on December
21, 2006.
During 2007, the Company entered into new
derivative positions in the form of interest rate swaps on the entire
outstanding principal of its Second Lien Credit Facility, covering
the year ended December 31, 2008. The Company’s outstanding
position under the interest rate swap agreements at December 31,
2007 was as follows (dollars in thousands):
The fair value of the outstanding interest
derivatives at December 31, 2007 was a liability of $2.8 million.
11. SUBSEQUENT
EVENT
In February 2008, the Company completed
an underwritten public offering of 2,587,500 shares of its common
stock under an effective shelf registration statement at a price
of $54.50 per share. The number of shares sold was approximately
9.2% of the
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