Escalera Resources (ESCR) 10-Q 14 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	Escalera Resources Co.
Entity Central Index Key	29,834
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,307,414
Entity Current Reporting Status	Yes

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 3,385	$ 5,933
Cash held in escrow	283	283
Accounts receivable, net	1,778	4,181
Assets from price risk management	4,734	3,546
Other current assets	952	2,131
Assets held for sale	13,344
Total current assets	24,476	16,074
Natural gas and oil properties and equipment, successful efforts method:
Developed properties	177,362	243,245
Wells in progress	2,761	4,039
Gas transportation pipeline	5,510	5,510
Undeveloped properties	1,669	1,967
Corporate and other assets	1,426	1,468
Total natural gas and oil properties and equipment, successful efforts method	188,728	256,229
Less accumulated depreciation, depletion and amortization	(120,444)	(149,573)
Net properties and equipment	68,284	106,656
Assets from price risk management	2,437	3,442
Other assets	2,513	1,707
TOTAL ASSETS	97,710	127,879
Current liabilities:
Accounts payable and accrued expenses	7,893	9,689
Accrued production taxes	2,292	2,418
Credit facility, current	47,515	47,515
Liabilities related to assets held for sale	2,054
Total current liabilities	59,754	59,622
Asset retirement obligation	7,863	8,853
Other long-term liabilities	91	526
Total liabilities	67,708	69,001
Preferred stock, $0.10 par value; 10,000,000 shares authorized; 1,610,000 shares issued and outstanding at June 30, 2015 and December 31, 2014	37,972	37,972
Stockholders' equity (deficit):
Common stock, $0.10 par value; 50,000,000 shares authorized; 14,279,450 issued and outstanding at June 30, 2015 and 14,266,453 issued and outstanding at December 31, 2014	1,428	1,427
Additional paid-in capital	43,482	43,200
Accumulated deficit	(52,880)	(23,721)
Total stockholders' (deficit) equity	(7,970)	20,906
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY	$ 97,710	$ 127,879

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets
Preferred stock, par value	$ 0.10	$ 0.10
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	1,610,000	1,610,000
Preferred stock, shares outstanding	1,610,000	1,610,000
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	14,279,450	14,266,453
Common stock, shares outstanding	14,279,450	14,266,453

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues:
Oil and gas sales	$ 3,394	$ 9,320	$ 7,719	$ 19,886
Transportation and gathering revenue	563	940	1,212	1,904
Price risk management activities	(212)	(751)	2,566	(3,267)
Other income	284	47	315	186
Total revenues	4,029	9,556	11,812	18,709
Costs and expenses:
Production costs	2,837	3,174	6,034	6,472
Production taxes	350	1,130	834	2,364
Exploration expenses including dry hole costs	12	22	49	56
Pipeline operating costs	536	1,115	1,457	2,310
Impairment and abandonment of equipment and properties	21,508	405	21,801	1,080
General and administrative	1,234	1,688	2,898	3,770
Depreciation, depletion and amortization	3,005	4,939	6,700	10,189
Total costs and expenses	29,482	12,473	39,773	26,241
Loss from operations	(25,453)	(2,917)	(27,961)	(7,532)
Interest expense, net	548	455	996	805
Provision for gas-to-liquids advance			202
Loss before income taxes	(26,001)	(3,372)	(29,159)	(8,337)
Deferred income tax benefit		289		869
NET LOSS	(26,001)	(3,083)	(29,159)	(7,468)
Preferred stock dividends (including undeclared and unpaid in 2015)	(931)	(931)	(1,862)	(1,862)
Net loss attributable to common stock	$ (26,932)	$ (4,014)	$ (31,021)	$ (9,330)
Net loss per common share:
Basic and diluted	$ (1.89)	$ (0.29)	$ (2.17)	$ (0.72)
Weighted average shares outstanding:
Basic and diluted	14,279,450	14,081,582	14,275,676	12,907,091

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net loss	$ (29,159)	$ (7,468)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion of asset retirement obligation	6,839	10,311
Impairment and abandonment of equipment and properties	21,801	1,080
Gain on settlement of asset retirement obligation		(92)
Settlement of asset retirement obligation	(54)	(294)
Gain on sale of corporate assets and non-producing properties	(268)
Deferred income tax benefit		869
Benefit for deferred income taxes		(869)
Change in fair value of derivative contracts	(183)	1,795
Stock-based compensation expense	286	383
Changes in current assets and liabilities:
Decrease in accounts receivable	1,694	92
Decrease in other current assets	205	(420)
(Decrease) increase in accounts payable and accrued expenses	(304)	201
(Decrease) Increase in accrued production taxes	288	1,293
NET CASH PROVIDED BY OPERATING ACTIVITIES	1,145	6,012
Cash flows from investing activities:
Sales of corporate assets and undeveloped properties	281
Payments to acquire and develop producing properties and equipment, net	(3,805)	(2,050)
Payments to acquire corporate and non-producing properties	(167)	(284)
NET CASH USED IN INVESTING ACTIVITIES	(3,691)	(2,334)
Cash flows from financing activities:
Net proceeds from sale of common stock		4,158
Dividends paid on preferred stock		(1,862)
Net repayments on credit facility		(1,500)
Tax withholdings related to net share settlement of restricted stock awards	(2)	(44)
NET CASH PROVIDED BY FINANCING ACTIVITIES	(2)	752
Change in cash and cash equivalents	(2,548)	4,430
Cash and cash equivalents at beginning of period	5,933	2,799
CASH AND CASH EQUIVALENTS AT END OF PERIOD	3,385	7,229
Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest	1,092	764
Interest capitalized	46	31
Additions to developed properties included in current liabilities	$ 2,271	$ 218

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2015
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	1. Summary of Significant Accounting Policies Basis of presentation The accompanying unaudited interim consolidated financial statements and related notes were prepared by Escalera Resources Co. (“Escalera Resources” or the “Company”), in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and were prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in the annual audited consolidated financial statements have been condensed or omitted as allowed by such rules and regulations. These consolidated financial statements include all of the adjustments, which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations. All such adjustments are of a normal recurring nature only. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2014, and are supplemented in the notes to this Quarterly Report on Form 10-Q. The unaudited interim consolidated financial statements presented herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on April 15, 2015 . Going Concern The market price for natural gas and oil decreased significantly during the second half of 2014 with continued weakness into 2015. The decrease in the market prices for the Company’s production directly reduces its operating cash flow and indirectly impacts its other sources of potential liquidity. Lower market prices for the Company’s production led to a decrease in the Company’s borrowing base during its spring 2015 borrowing base redetermination, resulting in a borrowing base deficiency of $3,515 , as discussed in Note 3. Although the Company’s lender has agreed to forbear from exercising certain rights and remedies relating to the Company’s obligation to repay this deficiency through September 1, 2015, there is uncertainty as to the Company’s ultimate ability to repay the deficiency from its cash flow or through obtaining alternative debt financing. Additionally, the Company has reported net operating losses for the past three years and for the three and six months ended June 30, 2015, which may impact the Company’s access to additional capital. Collectively, the negative impacts to the Company’s liquidity resulting from unfavorable industry conditions and increased uncertainty regarding its ability to repay its borrowing base deficiency or comply with the covenants contained in its credit agreement raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company’s long-term debt is reflected as a current liability on the consolidated balance sheets (as discussed in Note 3). The classification as a current obligation is based on the uncertainty regarding the Company’s ability to comply with certain covenants contained in its credit agreements during the next 12 months. The Company began implementing plans designated to improve its liquidity, including the elimination of capital projects for 2015 unless economic conditions improve; reducing operating and general and administrative costs; and continuing its efforts to sell certain non-core assets. In July 2015, the Company closed a transaction to sell its interests in oil and gas properties on the Pinedale Anticline for approximately $12.0 million (as discussed in Note 12). Even if the Company is successful at reducing its costs and increasing its liquidity through asset sales, the Company may not have sufficient liquidity to satisfy its debt service obligations, meet other financial obligations, and comply with covenants contained in the Company’s credit agreement . The Company has engaged advisors to assist with the evaluation of its options to obtain alternative debit financing, improve its liquidity position and evaluate strategic alternatives. The strategic alternatives may include, but are not limited to, seeking a merger partner, restructuring, amendment or refinancing of our outstanding debt through a private restructuring or reorganization under Chapter 11 of the Bankruptcy Code , or a combination of such alternatives . However, there can be no assurances that the Company will be able to successfully restructure its indebtedness, improve its liquidity position, complete any strategic transactions or comply with debt covenant requirements for the remainder of 2015 or beyond. Principles of consolidation The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Petrosearch Energy Corporation and Eastern Washakie Midstream LLC (“EWM”). The Company has an agreement with EWM under which the Company pays a fee to EWM to gather, compress and transport gas produced at the Catalina Unit, in the eastern Washakie Basin of Wyoming. This fee is eliminated in consolidation. Recent accounting pronouncements In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2015-11, "Simplifying the Measurement of Inventory”, which is effective in the first quarter of 2017. ASU 2015-11 requires that inventory that is recorded using the first-in, first-out method to be measured at the lower of cost or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company is currently evaluating the impact of ASU 2015-11 on its inventory valuation and results of operations. In April 2015, the FASB issued ASU No. 2015-03, “ Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU No. 2015-3”) , which will be effective for the first quarter of 2016, and will be applied retrospectively. The amendment requires the costs for issuing debt to appear on the balance sheet as a direct deduction from the carrying amount of the debt liability. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2015
Earnings Per Share
Earnings Per Share	2 . Earnings per share Basic earnings per share is calculated by dividing net income (loss) attributable to common stock by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share incorporates the treasury stock method to measure the dilutive impact of potential common stock equivalents by including the effect of outstanding vested and unvested stock options and unvested stock awards in the average number of shares of common stock outstanding during the period. Income (loss) attributable to common stock is calculated as net income (loss) less the cumulative dividends, including dividends in arrears, related to the Company’s Series A Preferred Stock at a quarterly rate of $0.5781 per share. The Series A Preferred Stock dividends for the three and six months ended June 30, 2015, which were undeclared and unpaid for both periods, totaled $931 and $1,862 , respectively. The Company declared and paid cash dividends of $931 and $1,862 for the three months and six months ended June 30, 2014, respectively. The following is the calculation of basic and diluted weighted average shares outstanding and earnings per share of common stock for the periods indicated: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net loss $ $ $ $ Preferred stock dividends (including undeclared and unpaid in 2015) Loss attributable to common stock $ $ $ $ Weighted average shares: Weighted average shares - basic Dilutive effect of stock options outstanding at the end of period — — — — Weighted average shares - fully diluted Net loss per share: Basic and diluted $ $ $ $ The following options and unvested restricted shares, which could be potentially dilutive in future periods, were not included in the computation of diluted net income per share because the effect would have been anti-dilutive for the periods indicated: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Anti-dilutive stock options and unvested stock awards

Credit Facility

Credit Facility	6 Months Ended
	Jun. 30, 2015
Credit Facility.
Credit Facility	3. Credit Facility As of June 30, 2015, the Company had a $250,000 credit agreement (the “Credit Agreement”) in place ( $50,000 borrowing base) with an outstanding balance of $47,515 . The Company has historically utilized its credit facilities to fund the development of the Catalina Unit and other non-operated projects in the Atlantic Rim, and development projects on the Pinedale Anticline in the Green River Basin of Wyoming. The Credit Agreement is collateralized by the Company’s natural gas and oil producing properties. Any balance outstanding on the credit facility is due August 29, 2017 . Under the Credit Agreement, the Company is subject to both financial and non-financial covenants. The financial covenants, as defined in the Credit Agreement, include maintaining (i) a current ratio of 1.0 to 1.0; (ii) a ratio of earnings before interest, taxes, depreciation, depletion, amortization, exploration and other non-cash items (“EBITDAX”) to interest plus dividends of greater than 1.5 to 1.0; and (iii) a funded debt, less unencumbered cash, to EBITDAX ratio of less than 4.0 to 1.0. As of June 3 0, 2015 , the Company was in violation of each of the aforementioned financial covenants. In addition, as of this date, the Company had triggered two additional events of default, as defined by the Credit Agreement: (1) the Company’s independent registered public accounting firm included in its audit opinion for the year ended December 31, 2014, a going concern explanatory paragraph and (2) the Company had not fully paid its ad valorem taxes assessed in 2014 (which were due in May 2015) for certain of its properties. As a result of these violations, the lender has the right to declare an event of default, terminate the remaining commitment and accelerate all principal and interest outstanding. Accordingly, the outstanding balance under the credit facility is shown as a current liability on the consolidated balance sheets as of June 30, 2015 and December 31, 2014. On July 31, 2015, the Company entered into a Forbearance Agreement and First Amendment to the Credit Agreement (the “Amendment”), which provides that the Company’s lenders will forbear from exercising certain rights under the Credit Agreement to (1) accelerate payments (other than the automatic acceleration that would occur under certain clauses of the credit agreement); (2) enforce security interests (other than after the occurrence of an automatic acceleration under certain clauses of the Credit Agreement); and (3) file or otherwise initiate an involuntary bankruptcy petition against the Company. The forbearance will be in effect until the earlier of September 1, 2015 or the date of the occurrence of any event of termination under the Amendment. The additional financial covenant violations which occurred at June 30, 2015 are events of termination under the Amendment, and therefore the Company’s lender could elect to exercise any of the aforementioned rights available under the Credit Agreement. The Amendment also decreased the borrowing base on the credit facility from $50,000 to $44,000 in connection with the Company’s regularly scheduled spring 2015 semi-annual redetermination by its lender, which resulted in a borrowing base deficiency of $3,515 . Under the Amendment, the lenders will also forbear from exercising certain rights under the credit facility relating to the borrowing base deficiency. Following the Pinedale asset sale (discussed further in Note 12), the Company’s borrowing base decreased to $33,500 , as reduced by the cash proceeds from the sale. The borrowing base deficiency did not change materially as a result of the repayment of proceeds. As of June 30, 2015, borrowings under the credit facility incurred interest daily based on the Company’s interest rate election of either the Base Rate or LIBOR Rate. Under the Base Rate option, interest is calculated at an annual rate equal to the highest of (a) the base rate for Dollar loans for such day, Federal Funds rate for such day, plus 0.5% , or the LIBOR for such day plus (b) a margin ranging between 0.75% and 1.75% (annualized) depending on the level of funds borrowed. Under the LIBOR Rate option, interest is calculated at an annual rate equal to LIBOR, plus a margin ranging between 1.75% and 2.75% (annualized) depending on the level of funds borrowed. In addition to the standard interest charge, the Company is subject to an additional penalty rate of 2.0% (annualized) as a result of the aforementioned events of default. The average interest rate on the facility at June 30, 2015 was 5.1% . Under the Amendment, the Company may no longer elect the LIBOR Rate option. The interest will be converted to the Base Rate after the expiration of the current interest rate elections. For the three months ended June 30 , 2015 and 2014 , the Company incurred interest ex pense on its credit facilities of $490 a nd $ 420 , respectively, and for the six months ended June 30, 2015 and 2014, $85 9 and $824 , respectively. Of the total interest incurred, the Company capitalized interest costs of $27 and $14 for the three months ended June 30, 2015 and 2014 , respectively , and $ 46 and $ 31 for the six months ended June 30, 2015 and 2014, respectively.

Derivative Instruments

Derivative Instruments	6 Months Ended
	Jun. 30, 2015
Derivative Instruments
Derivative Instruments	4. Derivative Instruments Commodity Contracts The Company’s primary market exposure is adverse fluctuations in the price of natural gas and, to a lesser extent, oil. The Company uses derivative instruments, primarily swaps and costless collars, to manage the price risk associated with its production, and the resulting impact on cash flow, net income and earnings per share. The Company does not use derivative instruments for speculative purposes. The extent of the Company’s risk management activities is controlled through policies and procedures that involve senior management and were approved by the Company’s board of directors (the “Board”). Senior management is responsible for proposing hedging recommendations, executing the approved hedging plan, overseeing the risk management process including methodologies used for valuation and risk measurement and presenting policy changes to the Board. The Board is responsible for approving risk management policies and for establishing the Company’s overall risk tolerance levels. The duration of the various derivative instruments depends on senior management’s view of market conditions, available contract prices and the Company’s operating strategy. In accordance with the Company’s current credit agreement, the Company has hedged at least 85% of its projected production through 2016 based on its third-party prepared reserve report at December 31, 2014. The Company accounts for its derivative instruments as mark-to-market derivative instruments. Under mark-to-market accounting, derivative instruments are recognized as either assets or liabilities at fair value on the Company’s consolidated balance sheets, and changes in fair value are recognized in the price risk management activities line on the consolidated statements of operations. Realized gains and losses resulting from the contract settlement of derivatives are also recorded in the price risk management activities line on the consolidated statements of operations. On the consolidated statements of cash flows, the cash flows from these instruments are classified as operating activities. Derivative instruments expose the Company to counterparty credit risk. The Company enters into these contracts with third parties and financial institutions that it considers to be creditworthy. In addition, the Company’s master netting agreements reduce credit risk by permitting the Company to net settle for transactions with the same counterparty. As with most derivative instruments, the Company’s derivative contracts contain provisions which may allow for another party to require security from the counterparty to ensure performance under the contract. The security may be in the form of, but not limited to, a letter of credit, security interest or a performance bond. As of June 30, 2015 , no party to any of the Company’s derivative contracts has required any form of security guarantee. The Company had the following commodity volumes under derivative contracts as of June 30, 2015 : Type of Contract Remaining Contractual Volume (Bbls) Term Price ($/Bbl) (1) Fixed price swap 07/15 -12/15 $ Total contracted oil volumes Type of Contract Remaining Contractual Volume (Mcf) Term Price ($/Mcf) (2) Three-way costless collar 07/15 -12/15 $ put (short) $ put (long) $ call (short) Total 2015 contracted volumes Fixed price swap 01/16 -12/16 $ Fixed price swap 01/16 -12/16 $ Total 2016 contracted volumes Total contracted natural gas volumes (1) New York Mercantile Exchange (“NYMEX”) Light Sweet Crude Oil (“WTI”). (2) NYMEX Henry Hub Natural Gas (“NG”). Subsequent to June 30, 2015, the Company unwound a portion of its contracted oil volumes (3,000 Bbls) for cash proceeds of $129 , which was used to pay down its outstanding borrowings on its credit facility . The table below contains a summary of all of the Company’s derivative positions reported on the consolidated balance sheet as of June 30, 2015 presented gross of any master netting arrangements: Balance Sheet Location As of June 30, 2015 As of December 31, 2014 Assets Commodity derivatives Assets from price risk management - current $ $ Assets from price risk management - long-term Total derivative assets $ $ T he before-tax effect of derivative instrum ents not designated as hedging for the three and six months ended June 30, 2015 and 2014 were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Unrealized gain (loss) on commodity contracts (1) $ $ $ $ Realized gain (loss) on commodity contracts (1) Unrealized loss on interest rate swap (2) — — Realized loss on interest rate swap (2) — — Total activity for derivatives not designated as hedging instruments $ $ $ $ (1) Included in price risk management activities on the consolidated statements of operations. Price risk management activities totaled $(212) and $(751) for the three months ended June 30 , 2015 and 2014, and $2,566 and $(3,267) for the six months ended June 30, 2015 and 2014, respectively. (2) Included in interest expense, net on the consolidated statements of operations. Refer to Note 5 for additional information regarding the valuation of the Company’s derivative instruments.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	6 Months Ended
	Jun. 30, 2015
Fair Value Measurements
Fair Value Measurements	5. Fair Value of Financial Instruments Assets and Liabilities Measured on a Recurring Basis The Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates fair value due to the short-term maturity of these instruments. The recorded value of the Company’s credit facility also approximates fair value as it bears interest at a floating rate. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). A three-level valuation hierarchy has been established to allow readers to understand the transparency of inputs in the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: · Level 1—Quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs or significant value drivers are observable. · Level 3—Unobservable inputs that reflect the Company’s own assumptions. The following tables provides a summary of assets and liabilities measured at fair value on a recurring basis: Fair Value Measurements as of June 30, 2015 Level 1 Level 2 Level 3 Total Assets Derivative instruments - Commodity forward contracts $ — $ $ — $ Total assets at fair value $ — $ $ — $ Fair Value Measurements as of December 31, 2014 Level 1 Level 2 Level 3 Total Assets Derivative instruments - Commodity forward contracts $ — $ $ — $ Total assets at fair value $ — $ $ — $ The Company did not have any transfers of assets or liabilities between Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the three and six months ended June 30 , 2015 . Derivative instruments The Company determines its estimates of the fair values of derivative instruments using a market approach based on several factors, including quoted prices in active markets, market-corroborated inputs, such as NYMEX forward-strip pricing, the credit rating of each counterparty, and the Company’s own credit rating. In consideration of counterparty credit risk, the Company assessed the possibility of whether each counterparty to the derivative would default by failing to make any contractually required payments. Additionally, when applicable the Company considers its own credit quality and financial resources and ability to meet its potential repayment obligations associated with the derivative transactions. At June 30, 2015 , the Company had various types of derivative instruments, which included swaps and costless collars. The natural gas and oil derivative markets are highly active. Although the Company’s economic hedges are valued using public indices, the instruments themselves are traded with third party counterparties and are not openly traded on an exchange. As such, the Company has classified these instruments as Level 2. Refer to Note 4 for additional information regarding the Company’s derivative instruments. Assets and liabilities measured on a non-recurring basis Proved oil and gas property costs are evaluated for impairment and reduced to fair value when there is an indication the carrying costs may not be recoverable. The fair value of impaired proved properties is determined based on quoted market prices in active markets, if available, or using Level 3 inputs and the i ncome valuation technique, which converts future estimated cash flow amounts to a single present value amount, to measure the fair value of proved properties through an application of discount rates, price forecasts and operating and development cost assumptions selected by the Company’s management. Proved properties classified as held for sale are valued using a market approach, based on an estimated selling price, less selling costs, as evidenced by the most current bid prices received from third parties, if available. If an estimated selling price is not available, the Company utilizes the income valuation technique discussed above. Using the market approach, the Company estimated the fair value of its Pinedale assets, which were classified as held for sale at June 30, 2015, to be $12,468 and as a result the Company recorded impairment expense of $21,030 for the three and six months ended June 30, 2015 related to these assets. The Company classified the fair value of its Pinedale assets as Level 2. Concentration of credit risk Financial instruments that potentially subject the Company to credit risk consist of accounts receivable and derivative financial instruments. Substantially all of the Company’s receivables are within the natural gas and oil industry, including those from a third party gas marketing company. Collectability is dependent upon the financial wherewithal of each counterparty as well as the general economic conditions of the industry. The receivables are not collateralized. The Company currently uses two counterparties for its derivative financial instruments. The Company continually reviews the credit worthiness of its counterparties, which are generally other energy companies or major financial institutions. In addition, the Company uses master netting agreements which allow the Company, in the event of default, to elect early termination of all contracts with the defaulting counterparty. If the Company chooses to elect early termination, all asset and liability positions with the defaulting counterparty would be “net settled” at the time of election. “Net settlement” refers to a process by which all transactions between counterparties are resolved into a single amount owed by one party to the other.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets	6 Months Ended
	Jun. 30, 2015
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets	6. Impairment of Long-Lived Assets The Company reviews the carrying values of its long-lived assets annually or whenever events or changes in circumstances indicate that such carrying values may not be recoverable. See Note 5 for discussion of the Company’s fair value methodology. Proved property impairment expense for the three months ended June 30 , 2015 and 2014 totaled $ 21,409 , and $ 90 , respectively, and $21,504 and $765 for the six months ended June 30 2015 and 2014, respectively. The impairment expense recorded in the second quarter of 2015, included $21,030 of expense related to its Pinedale assets as a result of the sale of these assets on July 31, 2015 (see Note 12 for discussion of the Pinedale asset sale). The impairment was determined based on the net book value for the Pinedale assets, reduced by the fair market value of the assets and the associated expected s elling costs. The remaining impairment expense recognized during the first six months of 2015 was primarily due to an increase in estimated field abandonment costs (and thus the associated asset carrying value) at the Company’s Main Fork Unit property. In 2014, the Company wrote-off a non-operated property in the Atlantic Rim, as p roduction from the wells at this property had been limited and the operator began plugging and abandoning these wells . The Company also expensed $ 99 and $315 during the three months ended June 30, 2015 and 2014, respectively, and $297 and $315 during the six months ended June 30, 2015 and 2014, respectively, related to expiring undeveloped acreage in Wyoming, as the Company determined there was no a longer a plan to develop this acreage.

Compensation Plans

Compensation Plans	6 Months Ended
	Jun. 30, 2015
Compensation Plans
Compensation Plans	7. Compensation Plans The Company recognized stock-based compensation expense totaling $147 and $286 for the three and six months ended Ju ne 30, 2015, respectively, and $178 and $383 for the three and six months ended June 30, 2014, respectively. Compensation expense related to stock options is calculated using the Black-Scholes valuation model. Expected volatilities are based on the historical volatility of the Company’s common stock over a period consistent with that of the expected terms of the options. The expected terms of the options are estimated based on factors such as vesting periods, contractual expiration dates, historical trends in the Company’s common stock price and historical exercise behavior. The risk-free rates for periods within the contractual life of the options are based on the yields of U.S. Treasury instruments with terms comparable to the estimated option terms. A summary of stock option activity under the Company’s various stock option plans as of June 30, 2015 and changes during the six months ended June 30, 2015 is presented below: Weighted- Average Exercise Shares Price Options: Outstanding at January 1, 2015 $ Cancelled/expired $ Outstanding at June 30, 2015 $ Exercisable at June 30, 2015 $ The Company measures the fair value of stock awards based upon the fair market value of its common stock on the date of grant and recognizes the resulting compensation expense ratably over the associated service period, which is generally the vesting term of the stock awards. The Company recognizes the compensation expenses, net of an estimated forfeiture rate, for only those shares expected to vest. The Company typically estimates forfeiture rates based on historical experience, while also considering the duration of the vesting term of the award. Nonvested stock awards as of June 30, 2015 and changes during the six months ended June 30, 2015 were as follows: Weighted- Average Grant Date Shares Fair Value Outstanding at January 1, 2015 $ Granted $ Vested $ Forfeited/returned $ Nonvested at June 30, 2015 $ In March 2014, the Company’s board of directors granted long-term incentive shares to its chief executive officer (“CEO”) in conjunction with his appointment as an officer. The Compensation Committee of the Board approved two restricted stock awards, under which the Company granted the CEO an aggregate of 528,634 shares of restricted stock, which are included in the table above. One -third of the shares awarded will vest at the end of three years if the CEO is continuously employed by the Company during such period, and the remaining two -thirds of the shares awarded will vest at the end of three years if the CEO is continuously employed by the Company during such period and certain performance goals related to reserve growth and the Company’s common stock price are achieved, as defined for purposes of the awards. The Company used a simplified binomial model to estimate the fair value of the performance and market based component of the award. If the CEO ultimately achieves the service requirements and full performance objectives determined by the agreement, the associated total stock-based compensation expense would be approximately $881 , based on the grant date fair value. The Company’s stock-bas ed compensation for the three and six months ended June 30, 2015 includes approximately $57 and $114 , respectively, and $58 and $64 for the three and six months ended June 30, 2014, respectively, related to these plans.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2015
Income Taxes
Income Taxes	8. Income Taxes The Company is required to record income tax expense for financial reporting purposes and apply an estimated effective tax rate for calculating income tax provisions for interim periods. The Company has not recorded any income tax expense/(benefit) for the three and six months ended June 30, 2015 as a result of the Company recording a valuation allowance on its net deferred tax assets due to the uncertainty of the realization of these assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the use of such net operating losses are allowed. Among other items, management considers the scheduled reversal of deferred tax liabilities, tax planning strategies asset dispositions and projected future taxable income. Some, or all, of this valuation allowance may be reversed in future periods against any potential future income. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2015 , the Company made no provision for interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and various states. There are currently no federal or state income tax examinations of the Company underway for these jurisdictions. Furthermore, the Company is no longer subject to U.S. federal income tax examinations by the Internal Revenue Service for tax years before 2011 and for state and local tax authorities for tax years before 2010.

Equity

Equity	6 Months Ended
	Jun. 30, 2015
Text Block [Abstract]
Equity	9. Equity Preferred stock In 2007, the stockholders of the Company approved an amendment to the Company’s Articles of Incorporation to provide for the issuance of 10,000,000 shares of preferred stock, and the Company subsequently completed a public offering of 1,610,000 shares of 9.25% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”) at a price of $25.00 per share. Holders of the Series A Preferred Stock are entitled to receive, when and as declared by the Company’s Board of Directors, dividends at a rate of 9.25% per annum ( $2.3125 per annum per share)(the “Dividend Rate”). The Series A Preferred Stock does not have any stated maturity date and will not be subject to any sinking fund or mandatory redemption provisions except, under certain circumstances, upon a change of ownership or control. The Company may redeem the Series A Preferred Stock for cash at its option, in whole or from time to time in part, at a redemption price of $25.00 per share, plus accrued and unpaid dividends (whether or not earned or declared) to the redemption date. The shares of Series A Preferred Stock are classified outside of permanent equity on the consolidated balance sheets due to the change of control redemption provision applicable to such shares. Following a change of ownership or control of the Company by a person or entity in which the common stock of the Company is no longer traded on a national exchange, the Company will be required to redeem the Series A Preferred Stock within 90 days after the date on which the change of ownership or control occurred for cash. In the event of liquidation, the holders of the Series A Preferred Stock will have the right to receive $25.00 per share, plus all accrued and unpaid dividends, before any payments are made to the holders of the Company’s common stock . If the Company fails to pay cash dividends on the Series A Preferred Stock in full for any six quarterly dividend periods, whether consecutive or non-consecutive (a “Dividend Default”), then: (i) The dividend rate increases to the penalty rate of 12% per annum, commencing on the first day after the dividend payment date on which a Dividend Default occurs and for each subsequent dividend payment date thereafter until the second consecutive dividend payment date following such time as the Company has paid all accumulated accrued and unpaid dividends on the Series A Preferred Shares in full in cash, at which time the dividend rate will revert to the standard rate of 9.25% per annum. (ii) On the next dividend payment date following the dividend payment date on which a Dividend Default occurs, and continuing until the second consecutive dividend payment date following such time as the Company has paid all accumulated accrued and unpaid dividends on the Series A Preferred Shares in full in cash, the Company must pay all dividends on the Series A Preferred Shares, including all accumulated accrued and unpaid dividends, on each dividend payment date either in cash or, if not paid in cash by issuing to the holders thereof (A) if its common shares are then subject to a National Market Listing, as defined, fully-tradable, registered common shares with a value equal to the amount of dividends being paid, calculated based on the then current market value of the common shares, plus cash in lieu of any fractional common share; or (B) if the common shares are not then subject to a value equal to the amount of dividends being paid, calculated based on the stated $25.00 liquidation preference of the Series A Preferred Shares, plus cash in lieu of any fractional Series A Preferred Share (and dividends on any such Series A Preferred Shares upon issuance shall accrue at the penalty rate of 12% per annum and accumulate until such time as the dividend rate shall revert to the stated rate of 9.25% per annum). In 2015, the Board elected to suspend the Series A Preferred Stock dividend payment for the quarter ended March 31 and to suspend the dividend indefinitely beginning with the quarter ended June 30, 2015. As of June 30, 2015, the total arrearage on the Company’s Series A Preferred Stock was $1,862 , or $1.1562 per share. Holders of the Series A Preferred Stock generally have limited voting rights. However, if a Dividend Default occurs, or if the Company fails to maintain a National Market Listing for the Series A Preferred Stock, the holders of the Series A Preferred Stock, voting separately as a class, will have the right to elect two directors to serve on the Board in addition to those directors then serving on the Board until such time as the National Market Listing is obtained or the dividend arrearage is eliminated.

Acquisition of Atlantic Rim Ass

Acquisition of Atlantic Rim Assets	6 Months Ended
	Jun. 30, 2015
Acquisition of Atlantic Rim Assets
Acquisition of Atlantic Rim Assets	10. Acquisition of Atlantic Rim Assets On June 16, 2015, the Company entered into Purchase and Sale Agreement s (the “PSAs”) with Warren Resour ces, Inc. and its subsidiaries ( collectively, the “ Seller”), pursuant to which the Company will acquire (1) all of the Seller’s shallow depth interests in its coalbed methane ("CBM") assets located in the Atlantic Rim area of the Washakie Basin in Carbon County, Wyoming, where the Company currently operates the Catalina Unit and has working interests in the Spyglass Hill Unit; (2) the Seller’s midstream assets located in the Spyglass Hill Unit currently utilized to transport CBM gas produced by certain of the assets being sold; and (3) 30% of the Seller’s interests in the operated deep rights in the Atlantic Rim. The total purchase price for the assets is $47,000 , subject to customary post-closing adjustments, of which $42,000 is payable in cash at closing with the remainder payable on the first anniversary of closing pursuant to a second lien promissory note secured by the midstream assets. Under the PSAs the transaction effective date is April 1, 2015. The transaction is subject to, among other things, the Company obtaining significant financing for the transaction. The Company’s ability to obtain such financing is uncertain. The PSAs are non-exclusive and may be terminated by the Seller in the event that it sells the relevant assets to another party prior to the closing date under the PSAs. However, the Company has a preferential purchase right under the unit operating agreements for these properties, which would allow the Company to match the purchase price of another prospective buyer. In addition, each of the PSAs also may be terminated by the Company or the Seller if the transactions contemplated thereby have not been consummated on or before September 1, 2015, or if the closing conditions of the other party have not been satisfied and cannot be cured or by mutual written consent. If the transaction were to be completed, the Company’s interest in the Catalina Unit would increase from approximately 86% to 98% and the Company’s interest in the Spyglass Hill Unit would increase from an average of 2 2 % to 96% . The Company would begin operating the Spyglass Hill Unit (which is currently operated by the Seller) upon closing of the transaction and receiving the necessary approval to do so from the Bureau of Land Management.

Contingencies

Contingencies	6 Months Ended
	Jun. 30, 2015
Commitments and Contingencies
Contingencies	11. Contingencies Legal proceedings From time to time, the Company is involved in various legal proceedings, which are subject to the uncertainties inherent in any litigation, including the matters below. The Company is defending itself vigorously in all such matters, and while the ultimate outcome and impact of any proceeding cannot be predicted with certainty, management believes that the resolution of any proceeding will not have a material adverse effect on the Company’s financial condition or results of operations. Gas-to-liquids project In May 2014, the Company entered into a letter agreement (“Letter Agreement”) to jointly initiate the development, construction and operations of a gas-to-liquids ("GTL") plant to be located in Wyoming. Under the terms of the Letter Agreement, the Company advanced total of $1,362 , of which $202 was advanced during the first q uarter of 2015. These funds were advanced on behalf of Wyoming GTL, LLC and its affiliate (collectively "WYGTL") to partially fund the feasibility studies and completion of the initial engineering and development plans for the GTL plant. In return, WYGTL assigned all development and engineering plans, contracts, rights, technical relationships, among other rights (collectively, the "Rights") to the Company. The Letter Agreement expired effective January 31, 2015, as the Company was unable to agree on terms for a definitive agreement with WYGTL, as contemplated by the Letter Agreement. In accordance with the provisions of the Letter Agreement, the Company requested WYGTL to repay to the Company the total amount advanced, or $1,362 . The Company filed a lawsuit in the State of Colorado on March 24, 2015, against WYGTL for breach of the Letter Agreement terms, seeking recovery of the total amount advanced under the Letter Agreement. On April 14, 2015, WYGTL filed a lawsuit against the Company in the U.S. District Court for Colorado, an action entitled Alan Eugene Humphrey and Wyoming GTL, LLC v. Escalera Resources Co., alleging the Company breached its contract with WYGTL, among other claims. The Company does not believe the case has merit and is defending the case vigorously. The Company subsequently filed counterclaims against WYGTL on May 5, 2015 in United States District Court seeking recovery of the total advances, and dismissed its original action filed in the State of Colorado. As the future collection of this receivable from WYGTL is uncertain, the Company has recorded a provision to fully reserve for the amount advanced for this project. The provision recorded during the first quarter of 2015 totaled $202 , which fully provided for the advances made during the period. Former employee lawsuits On January 29, 2015, two former employees each filed claims against the Company in the District Court of Harris, Texas, which generally assert breach of contract in connection with their termination from the Company (actions known as William A. Sidwell, III v. Escalera Resources Co. and Gregory Whiting v. Escalera Resources Co.). In April 2015, the Company filed certain counterclaims, including breach of fiduciary duty and business disparagement, against the former employees. A trial has been set for May 2016 in one of these suits. The Company does not believe the plaintiffs’ cases have merit and intends to vigorously defend the cases and pursue its counterclaims.

Divestitures

Divestitures	6 Months Ended
	Jun. 30, 2015
Divestitures
Divestitures	12. Divestitures On July 31, 2015, the Company completed the sale of its interests in the Mesa Units located on the Pinedale Anticline in southwestern Wyoming. The sale was primarily contemplated to satisfy a requirement of the First Amendment to its credit facility to reduce the outstanding borrowings of the Company. T he assets were sold for $12,000 , less closing adjustments, of which cash proceeds of $10,500 were repaid to its lenders following the closing of the transaction. The effective date of the sale was April 1, 2015. The results of operations for the three and six months ended June 30, 2015 reflect revenues and expenses related to these properties as the sale occurred subsequent to June 30, 2015. Assets are classified as held for sale when the Company commits to a plan to sell the assets and t here is reasonable certainty that such a sale will take place within one year. Upon classification as held for sale, long-lived assets are no longer depreciated or depleted, and a measurement for impairment is performed to identify and expense any excess of carrying value over fair value less estimated costs to sell. See note 6 for further discussion of impairment related to the Pinedale assets for the three and six months ended June 30, 2015. Below is summary of the major classes of assets and liabilities classified as held for sale as of June 30, 2015: June 30, 2015 (unaudited) ASSETS Accounts receivable, net $ Other current assets Oil and gas properties and equipment, successful efforts method: Developed properties (net of impairments) Less accumulated depreciation, depletion, and amortization Total property and equipment, net Total assets held for sale LIABILITIES Accounts payable and accrued expenses $ Accrued production taxes Asset retirement obligation Total liabilities held for sale $

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2015
Summary of Significant Accounting Policies
Basis of Presentation	Basis of presentation The accompanying unaudited interim consolidated financial statements and related notes were prepared by Escalera Resources Co. (“Escalera Resources” or the “Company”), in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and were prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in the annual audited consolidated financial statements have been condensed or omitted as allowed by such rules and regulations. These consolidated financial statements include all of the adjustments, which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations. All such adjustments are of a normal recurring nature only. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2014, and are supplemented in the notes to this Quarterly Report on Form 10-Q. The unaudited interim consolidated financial statements presented herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on April 15, 2015
Going Concern	Going Concern The market price for natural gas and oil decreased significantly during the second half of 2014 with continued weakness into 2015. The decrease in the market prices for the Company’s production directly reduces its operating cash flow and indirectly impacts its other sources of potential liquidity. Lower market prices for the Company’s production led to a decrease in the Company’s borrowing base during its spring 2015 borrowing base redetermination, resulting in a borrowing base deficiency of $3,515 , as discussed in Note 3. Although the Company’s lender has agreed to forbear from exercising certain rights and remedies relating to the Company’s obligation to repay this deficiency through September 1, 2015, there is uncertainty as to the Company’s ultimate ability to repay the deficiency from its cash flow or through obtaining alternative debt financing. Additionally, the Company has reported net operating losses for the past three years and for the three and six months ended June 30, 2015, which may impact the Company’s access to additional capital. Collectively, the negative impacts to the Company’s liquidity resulting from unfavorable industry conditions and increased uncertainty regarding its ability to repay its borrowing base deficiency or comply with the covenants contained in its credit agreement raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company’s long-term debt is reflected as a current liability on the consolidated balance sheets (as discussed in Note 3). The classification as a current obligation is based on the uncertainty regarding the Company’s ability to comply with certain covenants contained in its credit agreements during the next 12 months. The Company began implementing plans designated to improve its liquidity, including the elimination of capital projects for 2015 unless economic conditions improve; reducing operating and general and administrative costs; and continuing its efforts to sell certain non-core assets. In July 2015, the Company closed a transaction to sell its interests in oil and gas properties on the Pinedale Anticline for approximately $12.0 million (as discussed in Note 12). Even if the Company is successful at reducing its costs and increasing its liquidity through asset sales, the Company may not have sufficient liquidity to satisfy its debt service obligations, meet other financial obligations, and comply with covenants contained in the Company’s credit agreement . The Company has engaged advisors to assist with the evaluation of its options to obtain alternative debit financing, improve its liquidity position and evaluate strategic alternatives. The strategic alternatives may include, but are not limited to, seeking a merger partner, restructuring, amendment or refinancing of our outstanding debt through a private restructuring or reorganization under Chapter 11 of the Bankruptcy Code , or a combination of such alternatives . However, there can be no assurances that the Company will be able to successfully restructure its indebtedness, improve its liquidity position, complete any strategic transactions or comply with debt covenant requirements for the remainder of 2015 or beyond.
Principles of Consolidation	Principles of consolidation The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Petrosearch Energy Corporation and Eastern Washakie Midstream LLC (“EWM”). The Company has an agreement with EWM under which the Company pays a fee to EWM to gather, compress and transport gas produced at the Catalina Unit, in the eastern Washakie Basin of Wyoming. This fee is eliminated in consolidation.
Recent Accounting Pronouncements	Recent accounting pronouncements In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2015-11, "Simplifying the Measurement of Inventory”, which is effective in the first quarter of 2017. ASU 2015-11 requires that inventory that is recorded using the first-in, first-out method to be measured at the lower of cost or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company is currently evaluating the impact of ASU 2015-11 on its inventory valuation and results of operations. In April 2015, the FASB issued ASU No. 2015-03, “ Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU No. 2015-3”) , which will be effective for the first quarter of 2016, and will be applied retrospectively. The amendment requires the costs for issuing debt to appear on the balance sheet as a direct deduction from the carrying amount of the debt liability. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Per Share
Calculation of Basic and Diluted Weighted Average Shares Outstanding and Earnings Per Share of Common Stock	For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net loss $ $ $ $ Preferred stock dividends (including undeclared and unpaid in 2015) Loss attributable to common stock $ $ $ $ Weighted average shares: Weighted average shares - basic Dilutive effect of stock options outstanding at the end of period — — — — Weighted average shares - fully diluted Net loss per share: Basic and diluted $ $ $ $
Effect of Anti-Dilutive Shares	For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Anti-dilutive stock options and unvested stock awards

Derivative Instruments (Tables)

Derivative Instruments (Tables)	6 Months Ended
	Jun. 30, 2015
Derivative Instruments
Commodity Volumes Under Derivative Contracts	Type of Contract Remaining Contractual Volume (Bbls) Term Price ($/Bbl) (1) Fixed price swap 07/15 -12/15 $ Total contracted oil volumes Type of Contract Remaining Contractual Volume (Mcf) Term Price ($/Mcf) (2) Three-way costless collar 07/15 -12/15 $ put (short) $ put (long) $ call (short) Total 2015 contracted volumes Fixed price swap 01/16 -12/16 $ Fixed price swap 01/16 -12/16 $ Total 2016 contracted volumes Total contracted natural gas volumes (1) New York Mercantile Exchange (“NYMEX”) Light Sweet Crude Oil (“WTI”). NYMEX Henry Hub Natural Gas (“NG”).
Summary of Derivatives on Consolidated Balance Sheet	Balance Sheet Location As of June 30, 2015 As of December 31, 2014 Assets Commodity derivatives Assets from price risk management - current $ $ Assets from price risk management - long-term Total derivative assets $ $
Before-tax Effect of Derivative Instruments Not Designated as Hedging Instruments on Consolidated Statements of Operations	For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Unrealized gain (loss) on commodity contracts (1) $ $ $ $ Realized gain (loss) on commodity contracts (1) Unrealized loss on interest rate swap (2) — — Realized loss on interest rate swap (2) — — Total activity for derivatives not designated as hedging instruments $ $ $ $ (1) Included in price risk management activities on the consolidated statements of operations. Price risk management activities totaled $(212) and $(751) for the three months ended June 30 , 2015 and 2014, and $2,566 and $(3,267) for the six months ended June 30, 2015 and 2014, respectively. Included in interest expense, net on the consolidated statements of operations.

Fair Value of Financial Instr21

Fair Value of Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2015
Fair Value Measurements
Summary of Fair Values of Assets and Liabilities on a Recurring Basis	Fair Value Measurements as of June 30, 2015 Level 1 Level 2 Level 3 Total Assets Derivative instruments - Commodity forward contracts $ — $ $ — $ Total assets at fair value $ — $ $ — $ Fair Value Measurements as of December 31, 2014 Level 1 Level 2 Level 3 Total Assets Derivative instruments - Commodity forward contracts $ — $ $ — $ Total assets at fair value $ — $ $ — $

Compensation Plans (Tables)

Compensation Plans (Tables)	6 Months Ended
	Jun. 30, 2015
Compensation Plans
Summary of option activity	Weighted- Average Exercise Shares Price Options: Outstanding at January 1, 2015 $ Cancelled/expired $ Outstanding at June 30, 2015 $ Exercisable at June 30, 2015 $
Summary of Nonvested Stock Awards	Weighted- Average Grant Date Shares Fair Value Outstanding at January 1, 2015 $ Granted $ Vested $ Forfeited/returned $ Nonvested at June 30, 2015 $

Divestitures (Tables)

Divestitures (Tables)	6 Months Ended
	Jun. 30, 2015
Divestitures
Summary of assets and liabilities held for sale	June 30, 2015 (unaudited) ASSETS Accounts receivable, net $ Other current assets Oil and gas properties and equipment, successful efforts method: Developed properties (net of impairments) Less accumulated depreciation, depletion, and amortization Total property and equipment, net Total assets held for sale LIABILITIES Accounts payable and accrued expenses $ Accrued production taxes Asset retirement obligation Total liabilities held for sale $

Summary of Significant Accoun24

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Jul. 31, 2015	Jun. 30, 2015	Jun. 30, 2015
Period of operating loss		3 years	3 years
Subsequent Event | Credit Facilities
Borrowing base deficiency	$ 3,515
Subsequent Event | Held-for-sale | Pinedale
Proceeds from the divestiture	$ 12,000

Earnings Per Share (EPS) (Detai

Earnings Per Share (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net loss	$ (26,001)	$ (3,083)	$ (29,159)	$ (7,468)
Preferred stock dividends (including undeclared and unpaid in 2015)	(931)	(931)	(1,862)	(1,862)
Loss attributable to common stock	$ (26,932)	$ (4,014)	$ (31,021)	$ (9,330)
Weighted average shares outstanding:
Basic	14,279,450	14,081,582	14,275,676	12,907,091
Weighted average shares - fully diluted	14,279,450	14,081,582	14,275,676	12,907,091
Net loss per share:
Basic and diluted	$ (1.89)	$ (0.29)	$ (2.17)	$ (0.72)
Series A Cumulative Preferred Stock
Preferred stock dividends declared, per share			$ 0.5781
Unpaid dividend	$ 931		$ 1,862
Preferred stock dividends		$ 931		$ 1,862

Earnings Per Share (AntiDilutiv

Earnings Per Share (AntiDilutive) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Effect of anti-dilutive shares
Anti-dilutive stock options and unvested stock awards	91,506	77,952	87,642	60,076

Credit Facility (Details)

Credit Facility (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)item	Jun. 30, 2014USD ($)	Jul. 31, 2015USD ($)
Credit Facility
Interest expense	$ 548	$ 455	$ 996	$ 805
Interest capitalized			46	31
Credit Facilities
Credit Facility
Company revolving line of credit	250,000		250,000
Amount available for borrowing	50,000		50,000
Credit facility outstanding amount	$ 47,515		$ 47,515
Current ratio of the company			1
Ratio of EBITDAX			1.5
Funded debt to EBITDAX ratio			4
Number of default events | item			2
Penalty interest rate (as a percent)			2.00%
Average interest rate (as a percent)	5.10%		5.10%
Interest expense	$ 490	420	$ 859	824
Interest capitalized	$ 27	$ 14	$ 46	$ 31
Federal Funds Rate | Credit Facilities
Credit Facility
Margin on base interest rate (as a percent)			0.50%
Minimum | Base Rate LIBOR | Credit Facilities
Credit Facility
Margin on base interest rate (as a percent)			0.75%
Minimum | LIBOR | Credit Facilities
Credit Facility
Margin on base interest rate (as a percent)			1.75%
Maximum | Base Rate LIBOR | Credit Facilities
Credit Facility
Margin on base interest rate (as a percent)			1.75%
Maximum | LIBOR | Credit Facilities
Credit Facility
Margin on base interest rate (as a percent)			2.75%
Subsequent Event | Credit Facilities
Credit Facility
Amount available for borrowing					$ 44,000
Borrowing base deficiency					3,515
Subsequent Event | Credit Facilities | Forecast
Credit Facility
Borrowing base deficiency					$ 33,500

Derivative Instruments (Volume)

Derivative Instruments (Volume) (Details) - Jun. 30, 2015 $ in Thousands	USD ($)$ / bbl$ / McfMcfbbl
Derivative
Percentage of projected production hedged	85.00%
NYMEX Light Sweet Crude Oil | Energy derivative contract
Derivative
Remaining Contractual Volume | bbl	10,200
Volume sold | bbl	3,000
Cash received on derivative sale | $	$ 129
NYMEX Light Sweet Crude Oil | Fixed Price Swap-91.44 | Energy derivative contract
Derivative
Remaining Contractual Volume | bbl	10,200
Contract price | $ / bbl	91.44
Gas | Energy derivative contract
Derivative
Remaining Contractual Volume | Mcf	8,790,000
Gas | Fixed Price Swap | Energy derivative contract
Derivative
Remaining Contractual Volume | Mcf	5,490,000
Gas | Fixed Price Swap-4.07 | Energy derivative contract
Derivative
Remaining Contractual Volume | Mcf	1,830,000
Contract price	4.07
Gas | Fixed Price Swap-4.15 | Energy derivative contract
Derivative
Remaining Contractual Volume | Mcf	3,660,000
Contract price	4.15
Gas | Three way Costless Collar | Energy derivative contract
Derivative
Remaining Contractual Volume | Mcf	3,300,000
Gas | Short | Put | Energy derivative contract
Derivative
Contract price	3.25
Gas | Short | Call | Energy derivative contract
Derivative
Contract price	4.08
Gas | Long | Put | Energy derivative contract
Derivative
Contract price	3.85

Derivative Instruments (Balance

Derivative Instruments (BalanceSheet) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets
Total gross derivative assets	$ 7,171	$ 6,988
Energy derivative contract | Assets from price risk management - current
Assets
Gross derivative position, assets	4,734	3,546
Energy derivative contract | Assets from price risk management - long term
Assets
Gross derivative position, assets	$ 2,437	$ 3,442

Derivative Instruments (Income)

Derivative Instruments (Income) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Before-tax effect of derivative instruments not designated as hedging instruments on the consolidated statements of operations
Total activity for derivatives not designated as hedging instruments		$ (212)	$ (859)	$ 2,566	$ (3,405)
Price risk management activities		(212)	(751)	2,566	(3,267)
Energy derivative contract
Before-tax effect of derivative instruments not designated as hedging instruments on the consolidated statements of operations
Price risk management activities		(212)	(751)	2,566	(3,267)
Energy derivative contract | Not Designated as Hedging Instrument
Before-tax effect of derivative instruments not designated as hedging instruments on the consolidated statements of operations
Unrealized gain (loss) on commodity contracts	[1]	(1,393)	(218)	183	(1,792)
Realized gain (loss) on commodity contracts	[1]	$ 1,181	(533)	$ 2,383	(1,475)
Interest Rate Swap | Not Designated as Hedging Instrument
Before-tax effect of derivative instruments not designated as hedging instruments on the consolidated statements of operations
Unrealized loss on interest rate swap	[2]		(40)		(3)
Realized loss on interest rate swap	[2]		$ (68)		$ (135)
[1]	Included in price risk management activities on the consolidated statements of operations. Price risk management activities totaled $(212) and $(751) for the three months ended June 30, 2015 and
[2]	Included in interest expense, net on the consolidated statements of operations.

Fair Value of Financial Instr31

Fair Value of Financial Instruments (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)item	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)item	Jun. 30, 2014USD ($)	Dec. 31, 2014USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impairment expense	$ 21,508	$ 405	$ 21,801	$ 1,080
Number of counterparties for derivative financial instruments | item	2		2
Pinedale | Held-for-sale
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impairment expense			$ 21,030
Fair Value, Measurements, Recurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	$ 7,171		7,171		$ 6,988
Fair Value, Measurements, Recurring | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	7,171		7,171		6,988
Fair Value, Measurements, Nonrecurring | Level 3 | Pinedale | Held-for-sale
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets held for sale, fair value	12,468		12,468
Impairment expense			21,030
Commodity Forward Contracts | Fair Value, Measurements, Recurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative instruments	7,171		7,171		6,988
Commodity Forward Contracts | Fair Value, Measurements, Recurring | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative instruments	$ 7,171		$ 7,171		$ 6,988

Impairment of Long-Lived Asse32

Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of proved properties	$ 21,409	$ 90	$ 21,504	$ 765
Impairment expense	21,508	405	21,801	1,080
Impairment of unproved properties	$ 99	$ 315	297	$ 315
Held-for-sale | Pinedale
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment expense			$ 21,030

Compensation Plans (Options) (D

Compensation Plans (Options) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Stock-based compensation expense	$ 147	$ 178	$ 286	$ 383
Stock Options
Options, Number of shares
Outstanding, beginning balance (in shares)			369,543
Cancelled/expired (in shares)			(115,933)
Outstanding, ending balance (in shares)	253,610		253,610
Exercisable, ending balance (in shares)	76,287		76,287
Options, Weighted-Average Exercise Price
Outstanding, beginning balance (in dollars per share)			$ 2.36
Cancelled/expired (in dolars per share)			2.99
Outstanding, ending balance (in dollars per share)	$ 1.97		1.97
Exercisable, ending balance (in dollars per share)	$ 4.42		$ 4.42

Compensation Plans (ResStock) (

Compensation Plans (ResStock) (Details) - 6 months ended Jun. 30, 2015 - Equity Award - $ / shares	Total
Nonvested stock awards, shares
Outstanding, beginning balance (in shares)	814,121
Granted (in shares)	10,385
Vested (in shares)	(71,722)
Forfeited/returned (in shares)	(64,472)
Nonvested, ending balance (in shares)	688,312
Nonvested stock awards, per shares
Outstanding, beginning balance (in dollars per share)	$ 2.30
Granted (in dollars per share)	0.52
Vested (in dollars per share)	2.59
Forfeited/returned (in dollars per share)	2.65
Nonvested, ending balance (in dollars per share)	$ 2.21

Compensation Plans (LT Incent)

Compensation Plans (LT Incent) (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2014USD ($)itemshares	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)shares	Jun. 30, 2014USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted (in shares) | shares				10,385
Stock-based compensation expense		$ 147	$ 178	$ 286	$ 383
Restricted Stock | Long Term Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of plans | item	2
Granted (in shares) | shares	528,634
Stock-based compensation expense on grant date fair value	$ 881
Stock-based compensation expense		$ 57	$ 58	$ 114	$ 64
Restricted Stock | Long Term Incentive Plan | Continuous Employment
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting rights (as a percent)	33.00%
Award vesting period	3 years
Restricted Stock | Long Term Incentive Plan | Increase in Company's Adjusted Net Asset Value
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting rights (as a percent)	67.00%
Award vesting period	3 years

Income Taxes (Details)

Income Taxes (Details) $ in Thousands	Jun. 30, 2015USD ($)
Uncertain tax positions
Provision for interest and penalties related to uncertain tax positions	$ 0

Equity (Details)

Equity (Details) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015USD ($)$ / sharesshares	Jun. 30, 2015USD ($)item$ / sharesshares	Dec. 31, 2014shares
Equity
Preferred stock, shares authorized	10,000,000	10,000,000	10,000,000
Preferred stock, shares issued	1,610,000	1,610,000	1,610,000
Series A Cumulative Preferred Stock
Equity
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	1,610,000	1,610,000
Price of Series A Preferred Stock | $ / shares	$ 25	$ 25
Percentage of Series A Cumulative Preferred Stock		9.25%
Preferred Stock, dividend rate | $ / shares		$ 2.3125
Redemption period		90 days
Number of quarters used to determine whether dividend penalty rate is used | item		6
Preferred stock dividend penalty rate		12.00%
Unpaid dividend | $	$ 931	$ 1,862
Total unpaid dividend (in dollars per share) | $ / shares		$ 1.1562
Number of directors allowed under default | item		2

Acquistion of Atlantic Rim Asse

Acquistion of Atlantic Rim Assets (Details) - USD ($) $ in Thousands	Jun. 16, 2015	Jun. 30, 2015	Jun. 30, 2014
Acquistion of Atlantic Rim Working Interest
Payment upon close		$ 3,805	$ 2,050
Atlantic Rim
Acquistion of Atlantic Rim Working Interest
Working interest acquired (as a percent)	30.00%
Total fair value of assets acquired	$ 47,000
Payment upon close	$ 42,000
Catalina
Acquistion of Atlantic Rim Working Interest
Working interest (as a percent)	86.00%
Catalina | Atlantic Rim
Acquistion of Atlantic Rim Working Interest
Working interest (as a percent)	98.00%
Spyglass Hill
Acquistion of Atlantic Rim Working Interest
Working interest (as a percent)	22.00%
Spyglass Hill | Atlantic Rim
Acquistion of Atlantic Rim Working Interest
Working interest (as a percent)	96.00%

Contingencies (Details)

Contingencies (Details) $ in Thousands	Jan. 29, 2015item	Mar. 31, 2015USD ($)	Jun. 30, 2015USD ($)
Loss Contingencies [Line Items]
Reserve expense for advance			$ 202
Breach of Contract
Loss Contingencies [Line Items]
Number of former employees | item	2
Wyoming GTL, LLC | Breach of Contract
Loss Contingencies [Line Items]
Total advance to affiliates			1,362
Advance to affiliates		$ 202
Total reserve			$ 1,362
Reserve expense for advance		$ 202

Divestitures (Details)

Divestitures (Details) - USD ($) $ in Thousands	Jul. 31, 2015	Jun. 30, 2014	Jun. 30, 2015
Divestitures
Repayments on credit facility		$ 1,500
Held-for-sale | Pinedale
Assets
Accounts receivable, net			$ 709
Other current assets			167
Oil and gas properties and equipment, successful efforts method
Developed properties			48,101
Less accumulated depreciation, depletion and amortization			(35,633)
Total property and equipment, net			12,468
Total assets held for sale			13,344
Liabilities
Accounts payable and accrued expenses			923
Accrued production taxes			414
Asset retirement obligation			717
Total liabilities held for sale			$ 2,054
Subsequent Event | Held-for-sale | Pinedale
Divestitures
Proceeds from the divestiture	$ 12,000
Repayments on credit facility	$ 10,500