Range Resources (RRC) 10-Q 22 Oct 09 2009 Q3 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
	9 Months Ended Sep. 30, 2009	Oct. 20, 2009	Jun. 30, 2008
Document And Company Information [Abstract]
Entity Registrant Name	RANGE RESOURCES CORP
Entity Central Index Key	0000315852
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false
Company Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$9,963,751,000
Entity Common Stock Shares Outstanding		157,733,941

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
Current assets:
Cash and equivalents	$859	$753
Accounts receivable, less allowance for doubtful accounts of $1,888 and $954	97,172	162,201
Unrealized derivative gain	78,410	221,430
Inventory and other	20,735	19,927
Total current assets	197,176	404,311
Unrealized derivative gain	0	5,231
Equity method investments	151,824	147,126
Oil and gas properties, successful efforts method	6,300,946	6,028,980
Accumulated depletion and depreciation	(1,429,007)	(1,186,934)
Oil and gas properties, successful efforts method, net	4,871,939	4,842,046
Transportation and field assets	164,102	142,662
Accumulated depreciation and amortization	(69,824)	(56,434)
Transportation and field assets, net	94,278	86,228
Other assets	81,165	66,937
Total assets	5,396,382	5,551,879
Current liabilities:
Accounts payable	135,881	250,640
Asset retirement obligations	2,118	2,055
Accrued liabilities	59,328	47,309
Deferred tax liability	2,462	32,984
Accrued interest	37,002	20,516
Unrealized derivative loss	9,573	10
Total current liabilities	246,364	353,514
Bank debt	398,000	693,000
Subordinated notes and other long term debt	1,383,480	1,097,668
Deferred tax liability	759,406	779,218
Unrealized derivative loss	5,301	0
Deferred compensation liability	132,517	93,247
Asset retirement obligations and other liabilities	85,985	83,890
Stockholders' Equity
Preferred stock, $1 par, 10,000,000 shares authorized, none issued and outstanding	0	0
Common stock, $0.01 par, 475,000,000 shares authorized, 157,591,936 issued at September 30, 2009 and 155,609,387 issued at December 31, 2008	1,576	1,556
Common stock held in treasury, 233,900 shares at September 30, 2009 and December 31, 2008	(8,557)	(8,557)
Additional paid-in capital	1,743,276	1,695,268
Retained earnings	629,632	685,568
Accumulated other comprehensive income	19,402	77,507
Total stockholders' equity	2,385,329	2,451,342
Total liabilities and stockholders' equity	$5,396,382	$5,551,879

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data	Sep. 30, 2009	Dec. 31, 2008
Allowance for doubtful accounts on accounts recievables	$1,888	$954
Preferred stock, par value	1	1
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	0.01	0.01
Common stock, shares authorized	475,000,000	475,000,000
Common stock, shares issued	157,591,936	155,609,387
Common stock held in treasury shares	233,900	233,900

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Revenues
Oil and gas sales	$202,122	$347,720	$597,834	$1,002,726
Transportation and gathering	2,444	1,537	4,091	3,890
Derivative fair value (loss) income	(482)	272,869	65,209	(47,582)
Other	(443)	544	(6,624)	20,777
Total revenue	203,641	622,670	660,510	979,811
Costs and expenses
Direct operating	31,111	36,532	101,480	106,710
Production and ad valorem taxes	7,600	15,210	23,421	45,106
Exploration	11,102	19,149	35,809	55,204
Abandonment and impairment of unproved properties	24,053	5,055	84,579	10,653
General and administrative	30,568	24,650	84,581	66,000
Deferred compensation plan	16,445	(37,515)	29,635	(9,365)
Interest expense	30,633	25,373	86,817	72,361
Depletion, depreciation and amortization	97,208	76,690	270,241	218,938
Total costs and expenses	248,720	165,144	716,563	565,607
(Loss) income from operations	(45,079)	457,526	(56,053)	414,204
Income tax (benefit) expense
Current	(695)	2,374	(76)	4,209
Deferred	(14,566)	170,202	(18,884)	152,551
Total income tax (benefit) expense	(15,261)	172,576	(18,960)	156,760
Net (loss) income	($29,818)	$284,950	($37,093)	$257,444
(Loss) income per common share:
Basic	-0.19	1.87	-0.24	1.71
Diluted	-0.19	1.81	-0.24	1.65
Dividends per common share	0.04	0.04	0.12	0.12
Weighted average common shares outstanding:
Basic	154,653	152,765	154,257	150,487
Diluted	154,653	157,729	154,257	155,896

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Operating activities:
Net (loss) income	($37,093)	$257,444
Adjustments to reconcile net cash provided from operating activities:
Loss (gain) from equity method investments	6,548	(170)
Deferred income tax (benefit) expense	(18,884)	152,551
Depletion, depreciation and amortization	270,241	218,938
Exploration dry hole costs	342	9,337
Mark-to-market on oil and gas derivatives not designated as hedges	83,393	3,184
Abandonment and impairment of unproved properties	84,579	10,653
Unrealized derivative loss (gain)	483	(1,862)
Deferred and stock-based compensation	58,844	13,413
Amortization of deferred financing costs and other	3,742	2,137
Loss (gain) on sale of assets and other	2,660	(19,415)
Changes in working capital:
Accounts receivable	38,373	(64,468)
Inventory and other	(807)	(5,263)
Accounts payable	(67,076)	2,927
Accrued liabilities and other	18,423	20,982
Net cash provided from operating activities	443,768	600,388
Investing activities:
Additions to oil and gas properties	(425,376)	(646,403)
Additions to field service assets	(21,959)	(20,651)
Acreage purchases	(118,724)	(733,767)
Investment in equity method investment	(6,099)	(25,460)
Other assets	8,604	(25,496)
Proceeds from disposal of assets	182,230	66,693
Purchase of marketable securities held by the deferred compensation plan	(6,932)	(9,300)
Proceeds from the sales of marketable securities held by the deferred compensation plan	3,155	6,605
Net cash used in investing activities	(385,101)	(1,387,779)
Financing activities:
Borrowing on credit facilities	582,000	1,219,000
Repayment on credit facilities	(877,000)	(972,500)
Dividends paid	(18,843)	(18,404)
Debt issuance costs	(6,399)	(5,710)
Issuance of subordinated notes	285,201	250,000
Issuance of common stock	8,368	288,643
Change in cash overdrafts	(37,690)	20,785
Proceeds from the sales of common stock held by the deferred compensation plan	6,049	5,135
Purchases of common stock held by the deferred compensation plan and other treasury stock purchases	(247)	(3,311)
Net cash (used in) provided from financing activities	(58,561)	783,638
Increase (decrease) in cash and equivalents	106	(3,753)
Cash and equivalents at beginning of period	753	4,018
Cash and equivalents at end of period	$859	$265

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $)
In Thousands	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Net (loss) income	($29,818)	$284,950	($37,093)	$257,444
Other comprehensive (loss) income:
Realized loss (gain) on hedge derivative contract settlements reclassified into earnings from other comprehensive (loss) income	(34,248)	25,538	(100,070)	53,300
Change in unrealized deferred hedging gains (losses)	(1,218)	222,569	41,965	(60,157)
Total comprehensive (loss) income	($65,284)	$533,057	($95,198)	$250,587

Organization and Nature of Busi

Organization and Nature of Business
	9 Months Ended Sep. 30, 2009 USD / shares
Organization and Nature of Business [Abstract]
ORGANIZATION AND NATURE OF BUSINESS	(1)ORGANIZATION AND NATURE OF BUSINESS We are engaged in the exploration, development and acquisition of oil and gas properties primarily in the Southwestern and the Appalachian regions of the United States. We seek to increase our reserves and production primarily through drilling and complementary acquisitions. Range Resources Corporation is a Delaware corporation with our common stock listed and traded on the New York Stock Exchange under the symbol RRC.

Basis of Presentation

Basis of Presentation
	9 Months Ended Sep. 30, 2009 USD / shares
Basis of Presentation [Abstract]
BASIS OF PRESENTATION	(2)BASIS OF PRESENTATION These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our current report on Form 8-K filed on August 10, 2009 (see additional information below). These consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for fair presentation of the results for the periods presented. All adjustments are of a normal recurring nature unless disclosed otherwise. These consolidated financial statements, including selected notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission (SEC) and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. We have evaluated events or transactions that occurred subsequent to September30, 2009 through the date and time this quarterly report on Form 10-Q was filed. In second quarter 2009, we identified certain mineral leases amounting to $8.2million that expired in 2006, 2007, and 2008, which were not expensed as required. Based on Staff Accounting Bulletin No.108 (SAB 108), we determined that these amounts were immaterial to each of the periods affected and, therefore, we were not required to amend our previously filed reports. However, if these adjustments were recorded in 2009, we believe the impact could be material to this year. Therefore, on August10, 2009, we adjusted our previously reported results for 2006, 2007, and 2008 for these immaterial amounts (as required by SAB 108), by filing on Form 8-K revised consolidated financial statements for 2006, 2007 and 2008. In addition to recording additional mineral lease expirations, we made four other adjustments to prior year numbers to correct other immaterial items, which included the following adjustments: (1)tax expense of $3.5million for discrete tax items recorded in 2008 related to 2007 (2)expense for volumetric ineffectiveness related to our derivative positions of $1.7million recorded in 2008 related to 2007 (3)dry hole expense of $2.4million not recorded in 2007 and (4)deferred compensation income of $7.1million recorded in 2007 related to 2006 and prior years. The balance sheet as of December31, 2008 has been adjusted to reflect the cumulative impact of such adjustments. As a result, oil and gas properties decreased by $10.7million, deferred tax liability decreased $4.2million and retained earnings decreased by $6.5million. The effect of these adjustments on the three months and the nine months September30, 2008 was to decrease net income $374,000 in the third quarter 2008 and increase net income $5.0million for the nine months ended September30, 2008. We follow Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 932 Extractive Activities-Oil and Gas for recognizing impairment of capitalized costs related to unproved properties. These costs are capitalized and periodically evaluated (at least quarterly) as to recoverability based on changes brought about by economic factors and potenti

New Accounting Standards

New Accounting Standards
	9 Months Ended Sep. 30, 2009 USD / shares
New Accounting Standards [Abstract]
NEW ACCOUNTING STANDARDS	(3)NEW ACCOUNTING STANDARDS In February2008, the FASB issued Accounting Standards Codification (ASC) 820 10 (formerly Financial Staff Position SFAS No.157-2), which delayed the effective date of ASC 820 - 10 (formerly SFAS No.157) for all non-financial assets and non-financial liabilities except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). This deferral primarily applied to our asset retirement obligation, which uses fair value measures at the date incurred to determine our liability and any property impairments that may occur. We adopted the provisions of this standard effective January1, 2009 and the adoption did not have a material effect on our consolidated results of operations or financial position. In June2008, the FASB issued ASC 260 10 (formerly Staff Position No.EITF 03-6-1), Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities, which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and, therefore, need to be included in the earnings allocation in computing earnings per share under the two class method. We adopted the provisions of this standard on January1, 2009 with no impact on our reported earnings per share. In March2008, the FASB issued ASC 815- 10 (formerly SFAS No.161), which amends and expands disclosure requirements with the intent to provide users of financial statements with an enhanced understanding of: (i)how and why any entity uses derivative instruments; (ii)how derivative instruments and related hedged items are accounted for; and (iii)how derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. The provisions of this standard were adopted on January1, 2009. See Note 11 for additional disclosures about our derivative instruments and hedging activities. In December2007, the FASB issued ASC 805-10 (formerly SFAS No.141(R)), Business Combinations, which retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase method of accounting. It changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. The provisions of this standard will apply prospectively to business combinations occurring in our fiscal year beginning January1, 2009 and the adoption did not have an impact on our financial position or results of operations. In April2009, the FASB issued additional application guidance and enhancements to disclosures regarding fair value measurements. ASC 825-10 (formerly FASB Staff Position No.FAS 107-1 and APB 28-1), Interim Disclosures about Fair Value of Financial Instruments, enhances consistency in financial reporting by increasing the frequency of fair value disclosures. ASC 8

Dispositions

Dispositions
	9 Months Ended Sep. 30, 2009 USD / shares
Dispositions [Abstract]
DISPOSITIONS	(4)DISPOSITIONS In second quarter 2009, we sold certain oil properties located in West Texas for proceeds of $182.0million. The proceeds from the sale of these properties were credited to oil and gas properties, with no gain or loss recognized, as the disposition did not materially impact the depletion rate of the remaining properties in the amortization base. In first quarter 2008, we sold East Texas properties for proceeds of $64.4million and recorded a gain of $20.1million.

Income Taxes

Income Taxes
	9 Months Ended Sep. 30, 2009 USD / shares
Income Taxes [Abstract]
INCOME TAXES	(5)INCOME TAXES Income tax expense (benefit)was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Income tax (benefit)expense $ (15,261 ) $ 172,576 $ (18,960 ) $ 156,760 Effective tax rate 33.9 % 37.7 % 33.8 % 37.8 % We compute our quarterly taxes under the effective tax rate method based on applying an anticipated annual effective rate to our year-to-date income (loss), except for discrete items. Income taxes for discrete items are computed and recorded in the period that the specific transaction occurs. For the three months ended September30, 2009, our overall effective tax rate on pre-tax loss from operations was different than the statutory rate of 35% due primarily to state income taxes, valuation allowances and other permanent differences. For the three months ended September30, 2008, our overall effective tax rate on pre-tax income from operations was different than the statutory rate of 35% due primarily to state income taxes and valuation allowance. For the nine months ended September30, 2009, our overall effective tax rate on loss from operations was different than the statutory rate of 35% due primarily to state income taxes, valuation allowance and other permanent differences. For the nine months September30, 2008, our overall effective tax rate on income from operations was different than the statutory rate due primarily to state income taxes.

Earnings

Earnings (Loss) Per Common Share
	9 Months Ended Sep. 30, 2009 USD / shares
Earnings (Loss) Per Common Share [Abstract]
EARNINGS (LOSS) PER COMMON SHARE	(6)EARNINGS (LOSS)PER COMMON SHARE Basic income (loss)per share is based on weighted average number of common shares outstanding. Diluted income (loss) per share includes restricted stock, the exercise of stock options, stock appreciation rights (or SARs), provided the effect is not anti-dilutive. The following table sets forth the computation of basic and diluted earnings (loss)per common share (in thousands except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Numerator: Net (loss)income $ (29,818 ) $ 284,950 $ (37,093 ) $ 257,444 Denominator: Weighted average common shares outstanding basic 154,653 152,765 154,257 150,487 Effect of dilutive securities: Employee stock options, SARs and stock held in the deferred compensation plan 4,964 5,409 Weighted average common shares diluted 154,653 157,729 154,257 155,896 Loss per common share: Basic net (loss)income $ (0.19 ) $ 1.87 $ (0.24 ) $ 1.71 Diluted net (loss)income $ (0.19 ) $ 1.81 $ (0.24 ) $ 1.65 The weighted average common shares basic amount excludes 2.7million shares at September 30, 2009 and 2.3million shares at September30, 2008, of restricted stock that is held in our deferred compensation plan (although all restricted stock is issued and outstanding upon grant). Due to our net loss from operations for the three months and the nine months ended September30, 2009, we excluded 7.6million of outstanding stock options/SARs and 2.7million of restricted stock held in our deferred compensation plans from the computations of diluted net loss per share because the effect would have been anti-dilutive. Stock appreciation rights for 1.1million shares for the three months ended September30, 2008 and 187,000 shares for the nine months ended September30, 2008 were outstanding but not included in the computations of diluted net income per share because the grant prices of the SARs were greater than the average market price of the common shares and would be anti-dilutive to the computations.

Suspended Exploratory Well Cost

Suspended Exploratory Well Costs
	9 Months Ended Sep. 30, 2009 USD / shares
Suspended Exploratory Well Costs [Abstract]
SUSPENDED EXPLORATORY WELL COSTS	(7)SUSPENDED EXPLORATORY WELL COSTS The following table reflects the changes in capitalized exploratory well costs for the nine months ended September30, 2009 and the year ended December31, 2008 (in thousands): September 30, December 31, 2009 2008 Beginning balance at January 1 $ 47,623 $ 15,053 Additions to capitalized exploratory well costs pending the determination of proved reserves 35,377 43,968 Reclassifications to wells, facilities and equipment based on determination of proved reserves (12,234 ) (3,847 ) Capitalized exploratory well costs charged to expense (7,551 ) Balance at end of period 70,766 47,623 Less exploratory well costs that have been capitalized for a period of one year or less (44,470 ) (41,681 ) Capitalized exploratory well costs that have been capitalized for a period greater than one year $ 26,296 $ 5,942 Number of projects that have exploratory well costs that have been capitalized for a period greater than one year 13 3 The $70.8million of capitalized exploratory well costs at September30, 2009 was incurred in 2009 ($21.3million), in 2008 ($43.5million) and in 2007 ($6.0million). Of the thirteen projects that have exploratory costs capitalized for more than one year, twelve projects are Marcellus Shale wells, which are waiting on the completions of pipelines.

Indebtedness

Indebtedness
	9 Months Ended Sep. 30, 2009 USD / shares
Indebtedness [Abstract]
INDEBTEDNESS	(8)INDEBTEDNESS We had the following debt outstanding as of the dates shown below (in thousands) (bank debt interest rate at September30, 2009 is shown parenthetically). No interest expense was capitalized during the three months or the nine months ended September30, 2009 and 2008. September 30, December 31, 2009 2008 Bank debt (2.2%) $ 398,000 $ 693,000 Subordinated debt: 7.375% Senior Subordinated Notes due 2013, net of discount 198,262 197,968 6.375% Senior Subordinated Notes due 2015 150,000 150,000 7.5% Senior Subordinated Notes due 2016, net of discount 249,626 249,595 7.5% Senior Subordinated Notes due 2017 250,000 250,000 7.25% Senior Subordinated Notes due 2018 250,000 250,000 8.0% Senior Subordinated Notes due 2019, net of discount 285,592 Other 105 Total debt $ 1,781,480 $ 1,790,668 Bank Debt In October2006, we entered into an amended and restated revolving bank facility, which we refer to as our bank debt or our bank credit facility, which is secured by substantially all of our assets. The bank credit facility provides for an initial commitment equal to the lesser of the facility amount or the borrowing base. On September30, 2009, the borrowing base was $1.5billion and our facility amount was $1.25billion. The bank credit facility provides for a borrowing base subject to redeterminations semi-annually and for event-driven unscheduled redeterminations. As part of our semi-annual bank review completed September30, 2009, our borrowing base was reaffirmed at $1.5billion and our facility amount was also reaffirmed at $1.25billion. Our current bank group is comprised of twenty-six commercial banks each holding between 2.4% and 5.0% of the total facility. Of those twenty-six banks, thirteen are domestic banks and thirteen are foreign banks or wholly owned subsidiaries of foreign banks. The facility amount may be increased up to the borrowing base amount with twenty days notice, subject to payment of a mutually acceptable commitment fee to those banks agreeing to participate in the facility amount increase. At September30, 2009, the outstanding balance under the bank credit facility was $398.0million and there was $852.0million of borrowing capacity available under the facility amount. The loan matures October25, 2012. Borrowing under the bank credit facility can either be the Alternate Base Rate (as defined) plus a spread ranging from 0.875% to 1.625% or LIBOR borrowings at the adjusted LIBO Rate (as defined) plus a spread ranging from 1.75% to 2.5%. The applicable spread is dependent upon borrowings relative to the borrowing base. We may elect, from time to time, to convert all or any part of our LIBOR loans to base rate loans or to convert all or any part of the base rate loans to LIBOR loans. The weighted average interest rate on the bank credit facility was 2.2% for the three months ended September30, 2009 compared to 4.3% for the three months ended September30, 2008. The weighted average interest rate on the bank c

Asset Retirement Obligations

Asset Retirement Obligations
	9 Months Ended Sep. 30, 2009 USD / shares
Asset Retirement Obligation [Abstract]
ASSET RETIREMENT OBLIGATIONS	(9)ASSET RETIREMENT OBLIGATIONS Our asset retirement obligation primarily represents the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the end of their productive lives. Significant inputs used in determining such obligations include estimates of plugging and abandonment costs, estimated future inflation rates and well life. A reconciliation of our liability for plugging, abandonment and remediation costs for the nine months ended September30, 2009 is as follows (in thousands): Nine Months Ended September 30, 2009 Beginning of period $ 83,457 Liabilities incurred 1,364 Liabilities settled (533 ) Liabilities sold (7,287 ) Accretion expense 4,431 Change in estimate 2,551 End of period $ 83,983 Accretion expense is recognized as a component of depreciation, depletion and amortization on our consolidated statement of operations.

Capital Stock

Capital Stock
	9 Months Ended Sep. 30, 2009 USD / shares
Capital Stock [Abstract]
CAPITAL STOCK	(10)CAPITAL STOCK We have authorized capital stock of 485million shares, which includes 475million shares of common stock and 10million shares of preferred stock. The following is a summary of changes in the number of common shares outstanding since the beginning of 2008: Year Nine Months Ended Ended September 30, December 31, 2009 2008 Beginning balance 155,375,487 149,511,997 Public offering 4,435,300 Stock options/SARs exercised 1,032,671 1,339,536 Restricted stock grants 475,306 167,054 Treasury shares (78,400 ) Issued for acreage purchases 474,572 Ending balance 157,358,036 155,375,487 Treasury Stock The Board of Directors has approved up to $10.0million of repurchases of common stock based on market conditions and opportunities. During 2008, we repurchased 78,400 shares of common stock at an average price of $41.11 for a total of $3.2million. We have $6.8million remaining under this authorization.

Derivative Activities

Derivative Activities
	9 Months Ended Sep. 30, 2009 USD / shares
Derivative Activities [Abstract]
DERIVATIVE ACTIVITIES	(11)DERIVATIVE ACTIVITIES We use commoditybased derivative contracts to manage exposures to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. These contracts consist of collars and fixed price swaps. We do not utilize complex derivatives such as swaptions, knockouts or extendable swaps. At September30, 2009, we had open swap contracts covering 7.1 Bcf of gas at prices averaging $8.16 per mcf. We also had collars covering 78.9 Bcf of gas at weighted average floor and cap prices of $5.96 to $7.70 per mcf and 0.6million barrels of oil at weighted average floor and cap prices of $63.43 to $76.01 per barrel. Their fair value, represented by the estimated amount that would be realized upon termination, based on a comparison of the contract prices and a reference price, generally New York Mercantile Exchange (NYMEX), on September30, 2009, was a net unrealized pre-tax gain of $80.5million. These contracts expire monthly through December2010. The following table sets forth our derivative volumes and average hedge prices as of September 30, 2009: Average Period Contract Type Volume Hedged Hedge Price Natural Gas 2009 Swaps 76,739 Mmbtu/day $8.16 2009 Collars 184,837 Mmbtu/day $7.64-$8.53 2010 Collars 169,671 Mmbtu/day $5.50-$7.47 Crude Oil 2009 Collars 6,000 bbl/day $63.43-$76.01 As required by the Derivatives and Hedging Topic of the Codification, every derivative instrument is recorded on the balance sheet as either an asset or a liability measured at its fair value. Fair value is generally determined based on the difference between the fixed contract price and the underlying estimated market price at the determination date. Changes in the fair value of effective cash flow hedges are recorded as a component of Accumulated other comprehensive income (loss), (AOCI) on our consolidated balance sheet which is later transferred to earnings when the underlying physical transaction occurs. Amounts included in AOCI at September30, 2009 and December31, 2008 relate solely to our derivative activities. If the derivative does not qualify as a hedge or is not designated as a hedge, changes in fair value of the derivative are recognized in earnings. As of September30, 2009, an unrealized pre-tax derivative gain of $30.8million was recorded in AOCI. This gain is expected to be reclassified into earnings as a $38.3million gain in 2009 and as a $7.5million loss in 2010. The actual reclassification to earnings will be based on market prices at the contract settlement date. For those derivative instruments that qualify for hedge accounting, settled transaction gains and losses are determined monthly, and are included as increases or decreases to oil and gas sales in the period the hedged production is sold. Oil and gas sales include $54.4million of gains in the three months ended September30, 2009 compared to losses of $41.2million in the three months ended September30, 2008 related to settled hedging transactions. For the nine months ended September30, 2009,

Fair Value Measurements

Fair Value Measurements
	9 Months Ended Sep. 30, 2009 USD / shares
Fair Value Measurements [Abstract]
FAIR VALUE MEASUREMENTS	(12)FAIR VALUE MEASUREMENTS We use a market approach for our fair value measurements and endeavor to use the best information available. Accordingly, valuation techniques that maximize the use of observable impacts are favored. The following presents the fair value hierarchy table for assets and liabilities measured at fair value, on a recurring basis (in thousands): Fair Value Measurements at September 30, 2009 Using: Quoted Prices in Active Markets for Significant Other Significant Total Carrying Identical Observable Unobservable Value as of Assets Inputs Inputs September 30, (Level 1) (Level 2) (Level 3) 2009 Trading securities held in the deferred compensation plans $ 44,428 $ $ $ 44,428 Derivatives swaps 24,698 24,698 collars 55,755 55,755 basis swaps (16,917 ) (16,917 ) These items are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy. Our trading securities in Level 1 are exchange-traded and measured at fair value with a market approach using September30, 2009 market values. Derivatives in Level 2 are measured at fair value with a market approach using third-party pricing services, which have been corroborated with data from active markets or broker quotes. Our trading securities held in the deferred compensation plan are accounted for using the mark-to-market accounting method and are included in the balance sheet category called other assets. We elected to adopt the fair value option to simplify our accounting for the investments in our deferred compensation plan. Interest, dividends, and mark-to-market gains/losses are included in the statement of operations category called Deferred compensation plan expense. For the three months ended September30, 2009, interest and dividends were $45,000 and mark-to-market was a gain of $5.7million. For the three months ended September30, 2008, interest and dividends were $52,000 and the mark-to-market was a loss of $6.3million. For the nine months ended September30, 2009, interest and dividends were $138,000 and mark-to-market was a gain of $9.1million. For the nine months ended September30, 2008, interest and dividends were $319,000 and the mark-to-market was a loss of $11.5million. The following table presents the carrying amounts and the fair values of our financial instruments as of September30, 2009 and December31, 2008 (in thousands): September 30, 2009 December 31, 2008 Fair Fair Carrying Value Value Carrying Value Value Assets: Commodity swaps and collars $ 78,410 $ 78,410 $ 226,661 $ 226,661 Marketable securities

Employee Benefit and Equity Pla

Employee Benefit and Equity Plans
	9 Months Ended Sep. 30, 2009 USD / shares
Employee Benefit and Equity Plans [Abstract]
EMPLOYEE BENEFIT AND EQUITY PLANS	(13)EMPLOYEE BENEFIT AND EQUITY PLANS We have two active equity-based stock plans. Under these plans, incentive and nonqualified options, SARs and annual cash incentive awards may be issued to directors and employees pursuant to decisions of the Compensation Committee, which is made up of non-employee, independent directors from the Board of Directors. All awards granted have been issued at prevailing market prices at the time of the grant. Since the middle of 2005, only SARs have been granted under the plans to limit the dilutive impact of our equity plans. Information with respect to stock option and SARs activities is summarized below: Weighted Average Exercise Shares Price Outstanding on December31, 2008 7,248,666 $ 26.15 Granted 1,705,429 36.85 Exercised (1,287,291 ) 13.44 Expired/forfeited (61,548 ) 40.08 Outstanding on September30, 2009 7,605,256 $ 30.58 The following table shows information with respect to outstanding stock options and SARs at September30, 2009: Outstanding Exercisable Weighted- Weighted- Weighted- Average Average Average Remaining Exercise Exercise Range of Exercise Prices Shares Contractual Life Price Shares Price $1.29$9.99 933,036 2.18 $ 3.39 933,036 $ 3.39 10.0019.99 1,390,634 0.65 16.79 1,390,634 16.79 20.0029.99 1,150,961 1.48 24.30 1,140,261 24.28 30.0039.99 2,424,333 3.34 34.14 767,380 34.42 40.0049.99 619,437 4.59 41.73 55,485 41.69 50.0059.99 713,440 3.39 58.49 214,387 58.57 60.0069.99 26,677 3.63 65.40 8,529 65.33 70.0075.00 346,738 3.64 75.00 122,563 75.00 Total 7,605,256 2.54 $ 30.58 4,632,275 $ 22.72 The weighted average fair value of an option/SAR to purchase one share of common stock granted during 2009 was $15.41. The fair value of each stock option/SAR granted during 2009 was estimated as of the date of grant using the Black-Scholes-Merton option-pricing model based on the following average assumptions: risk-free interest rate of 1.5%; dividend yield of 0.4%; expected volatility of 59%; and an expected life of 3.5years. As of September30, 2009, the aggregate intrinsic value (the difference in value between exercise and market price) of the awards outstanding was $158.6million. The aggregate intrinsic value and weighted average remaining contractual life of stock option awards currently exercisable was $128.7million and 1.7years. As of September30, 2009, the number of fully vested awards and awards expected to vest was 7.5million. The weighted average exercise price and weighted average remaining contractual life of these awards was $30.35 and 2.5years and the aggregate intrinsic value was

Supplemental Cash Flow Informat

Supplemental Cash Flow Information
	9 Months Ended Sep. 30, 2009 USD / shares
Supplemental Cash Flow Information [Abstract]
SUPPLEMENTAL CASH FLOW INFORMATION	(14)SUPPLEMENTAL CASH FLOW INFORMATION Nine Months Ended September 30, 2009 2008 (in thousands) Non-cash investing and financing activities included: Asset retirement costs (removed)capitalized, net $ (3,373 ) $ (7,389 ) Unproved property purchased with stock $ 20,548 $ Net cash provided from operating activities included: Interest paid $ 66,556 $ 59,590 Income taxes paid (refunded) $ (493 ) $ 4,554

Commitments and Contingencies

Commitments and Contingencies
	9 Months Ended Sep. 30, 2009 USD / shares
Commitments and Contingencies [Abstract]
COMMITMENTS AND CONTINGENCIES	(15)COMMITMENTS AND CONTINGENCIES Transportation Contracts We have entered firm transportation contracts with various pipelines. Under these contracts, we are obligated to transport minimum daily gas volumes, as calculated on a monthly basis, or pay for any deficiencies at a specified reservation fee rate. In most cases, our production committed to these pipelines is expected to exceed the minimum daily volumes provided in the contracts. As of September30, 2009, future minimum transportation fees under our gas transportation commitments are as follows (in thousands): 2009 remaining $ 8,891 2010 34,663 2011 34,180 2012 31,220 2013 30,349 2014 27,070 Thereafter 207,240 $ 373,613 Litigation We are involved in various legal actions and claims arising in the ordinary course of our business. While the outcome of these lawsuits cannot be predicted with certainty, we do not expect these matters to have a material adverse effect on our financial position, cash flows or results of operations.

Capitalized Costs and Accumulat

Capitalized Costs and Accumulated Depreciation, Depletion and Amortization
	9 Months Ended Sep. 30, 2009 USD / shares
Capitalized Costs and Accumulated Depreciation, Depletion and Amortization [Abstract]
CAPITALIZED COSTS AND ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION(a)	(16)CAPITALIZED COSTS AND ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION(a) September 30, December 31, 2009 2008 (in thousands) Oil and gas properties: Properties subject to depletion $ 5,534,009 $ 5,271,021 Unproved properties 766,937 757,959 Total 6,300,946 6,028,980 Accumulated depreciation, depletion and amortization (1,429,007 ) (1,186,934 ) Net capitalized costs $ 4,871,939 $ 4,842,046 (a) Includes capitalized asset retirement costs and associated accumulated amortization.

Costs Incurred For Property Acq

Costs Incurred For Property Acquisitions, Exploration and Development
	9 Months Ended Sep. 30, 2009 USD / shares
Costs Incurred For Property Acquisitions, Exploration and Development [Abstract]
COSTS INCURRED FOR PROPERTY ACQUISITIONS, EXPLORATION AND DEVELOPMENT(a)	(17)COSTS INCURRED FOR PROPERTY ACQUISITIONS, EXPLORATION AND DEVELOPMENT(a) Nine Months Year Ended Ended September 30, December 31, 2009 2008 (in thousands) Acquisitions: Unproved leasehold $ $ 99,446 Proved oil and gas properties 445 251,471 Asset retirement obligations 251 Acreage purchases(b) 123,421 494,341 Development 376,254 729,268 Exploration: Drilling 41,063 133,116 Expense 32,878 63,560 Stock-based compensation expense 2,933 4,130 Gas gathering facilities 19,959 47,056 Subtotal 596,953 1,822,639 Asset retirement obligations (3,373 ) 4,647 Total costs incurred $ 593,580 $ 1,827,286 (a) Includes costs incurred whether capitalized or expensed. (b) The nine months ended September30, 2009 includes 474,572 shares of stock issued to purchase $20.5million of Marcellus acreage.

Office Closing

Office Closing
	9 Months Ended Sep. 30, 2009 USD / shares
Office Closing [Abstract]
Office Closing	(18)OFFICE CLOSING We have announced the closing of our Gulf Coast Area administrative and operations office in Houston, Texas. The properties will be operated out of our Southwest Area office in Fort Worth effective November1, 2009. As of September30, 2009, we have accrued $840,000 of severance costs. At the time of closure, employee severance costs, and lease termination costs are not expected to be material. Expenses related to lease termination and severance costs are included in general and administrative expenses in our consolidated statement of operations.

Accounting Standards Not Yet Ad

Accounting Standards Not Yet Adopted
	9 Months Ended Sep. 30, 2009 USD / shares
Accounting Standards Not Yet Adopted [Abstract]
ACCOUNTING STANDARDS NOT YET ADOPTED	(19)ACCOUNTING STANDARDS NOT YET ADOPTED In December2008, the SEC announced that it had approved revisions to its oil and gas reporting disclosures. The new disclosure requirements include provisions that: Introduce a new definition of oil and gas producing activities. This new definition allows companies to include in their reserve base volumes from unconventional resources. Such unconventional resources include bitumen extracted from oil sands and oil and gas extracted from coal beds and shale formations. Require companies to report oil and gas reserves using an unweighted average price using the prior 12-month period, based on the closing prices on the first day of each month, rather than year-end prices. The SEC indicated they will continue to communicate with the FASB staff to align FASBs accounting standards with these rules. The FASB currently requires a single-day, year-end price for accounting purposes. Permit companies to disclose their probable and possible reserves on a voluntary basis. In the past, proved reserves were the only reserves allowed in the disclosures. Require companies to provide additional disclosure regarding the aging of proved undeveloped reserves. Permit the use of reliable technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserves volumes. Replace the existing certainty test for areas beyond one offsetting drilling unit from a productive well with a reasonable certainty test. Require additional disclosures regarding the qualifications of the chief technical person who oversees the companys overall reserve estimation process. Additionally, disclosures regarding internal controls over reserve estimation, as well as a report addressing the independence and qualifications of its reserves preparer or auditor will be mandatory. We will begin complying with the disclosure requirements in our annual report on Form 10-K for the year ending December31, 2009. The new rules may not be applied to disclosures in quarterly reports prior to the first annual report in which the revised disclosures are required. We are currently in the process of evaluating the new requirements.