Warren Resources (WRES) 10-Q 4 Nov 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 04, 2014
Document and Entity Information	'	'
Entity Registrant Name	'WARREN RESOURCES INC	'
Entity Central Index Key	'0000892986	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Entity Current Reporting Status	'Yes	'
Entity Filer Category	'Accelerated Filer	'
Entity Common Stock, Shares Outstanding	'	80,748,209
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q3	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Current Assets	'	'
Cash and cash equivalents	$1,777	$11,620
Accounts receivable-trade, net	23,354	21,874
Restricted investments in U.S. Treasury bonds-available for sale, at fair value (amortized cost of $100 in 2013 and $94 in 2012)	139	131
Derivative financial instruments	813	'
Other current assets	1,194	1,859
Total current assets	27,277	35,484
Other Assets	'	'
Oil and gas properties-at cost, based on full cost method of accounting, net of accumulated depreciation, depletion and amortization (includes unproved properties excluded from amortization of $201,313 and $18,015 as of September 30, 2014 and December 31, 2013)	737,440	335,354
Property and equipment-at cost, net	18,929	18,772
Restricted investments in U.S. Treasury bonds-available for sale, at fair value (amortized cost of $904 in 2013 and $849 in 2012)	1,247	1,183
Other assets	16,770	3,969
Derivative financial instruments	17	43
Total other assets	774,403	359,321
Total assets	801,680	394,805
Current Liabilities	'	'
Current maturities of debentures and other long-term liabilities	1,434	1,936
Accounts payable and accrued expenses	56,529	39,174
Derivative financial instruments	'	3,517
Total current liabilities	57,963	44,627
Long-Term Liabilities	'	'
Revolving Loan Credit Facility	120,748	94,500
Other long-term liabilities, less current portion	34,252	28,113
Senior notes and Debentures, less current portion	297,395	1,472
Total long-term liabilities	452,395	124,085
Commitments and Contingencies (Note F)	'	'
Stockholders' Equity	'	'
8% convertible preferred stock, par value $.0001; authorized 10,000,000 shares, issued and outstanding, 10,703 shares in 2014 and 2013 (aggregate liquidation preference $128 in 2014 and 2013)	128	128
Common stock - $.0001 par value; authorized, 200,000,000 shares; issued 80,748,209 shares in 2014 and 72,887,650 shares in 2013	8	7
Additional paid-in-capital	512,965	470,441
Accumulated deficit	-221,982	-244,673
Accumulated other comprehensive income, net of applicable income taxes of $134 in 2014 and $124 in 2013	203	190
Total stockholders' equity	291,322	226,093
Total liabilities and stockholders' equity	$801,680	$394,805

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	9 Months Ended		12 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
CONSOLIDATED BALANCE SHEETS	'	'	'
Oil and gas properties, unproved properties excluded from amortization (in dollars)	$201,313	$18,015	'
8% convertible preferred stock, par value (in dollars per share)	$0.00	'	$0.00
8% convertible preferred stock, authorized shares	10,000,000	'	'
8% convertible preferred stock, issued shares	10,703	'	10,703
8% convertible preferred stock, outstanding shares	10,703	'	10,703
8% convertible preferred stock, aggregate liquidation preference (in dollars)	128	'	128
Preferred stock dividend rate (as a percent)	8.00%	'	8.00%
Common stock, par value (in dollars per share)	$0.00	'	$0.00
Common stock, authorized shares	200,000,000	'	200,000,000
Common stock, issued shares	80,748,209	'	72,887,650
Accumulated other comprehensive income, applicable income taxes (in dollars)	$134	'	$124

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Operating revenues	'	'	'	'
Oil and gas sales	$39,175	$34,682	$105,627	$96,237
Transportation revenue	1,338	'	4,082	'
Total revenues	40,513	34,682	109,709	96,237
Operating expenses	'	'	'	'
Lease operating expenses	13,337	9,257	32,046	27,384
Depreciation, depletion and amortization	15,844	10,987	36,733	34,368
Transportation expense	558	'	1,674	'
Acquisition expense	4,080	'	4,080	'
General and administrative	2,898	3,124	10,731	11,371
Total operating expenses	36,717	23,368	85,264	73,123
Income from operations	3,796	11,314	24,445	23,114
Other income (expense)	'	'	'	'
Interest and other income	17	5,315	2,379	5,346
Interest expense	-3,783	-760	-5,182	-2,234
Gain (loss) on derivative financial instruments	3,699	-1,205	1,038	491
Total other (expense) income	-67	3,350	-1,765	3,603
Income before provision for income taxes	3,729	14,664	22,680	26,717
Deferred income tax expense (benefit)	4	6	-10	45
Net income	3,725	14,658	22,690	26,672
Less dividends and accretion on preferred shares	2	2	8	8
Net income applicable to common stockholders	$3,723	$14,656	$22,682	$26,664
Income per common share-Basic (in dollars per share)	$0.05	$0.20	$0.30	$0.37
Income per common share-Diluted (in dollars per share)	$0.05	$0.20	$0.30	$0.37
Weighted average common shares outstanding-Basic (in shares)	78,549,255	72,424,626	75,121,693	72,235,047
Weighted average common shares outstanding-Diluted (in shares)	78,874,219	72,618,733	75,314,166	72,425,850

CONSOLIDATED_STATEMENTS_OF_COM

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	'	'	'	'
Net income	$3,725	$14,658	$22,690	$26,672
Other comprehensive income	'	'	'	'
Gain (loss) on investments held for sale	-7	-8	14	-68
Comprehensive income	$3,718	$14,650	$22,704	$26,604

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:	'	'
Net income	$22,690	$26,672
Adjustments to reconcile net income to net cash provided by operating activities:	'	'
Accretion of discount on available-for-sale debt securities	-48	-45
Accretion of discount on high yield	72	'
Amortization of deferred offering costs	946	160
Depreciation, depletion and amortization	36,733	34,368
Change in fair value of derivative financial instruments	-4,305	-905
Stock option expense	1,727	1,492
Deferred tax (benefit) expense	-10	45
Change in assets and liabilities:	'	'
Increase in accounts receivable-trade	-1,681	-3,989
Increase (decrease) in other assets	656	-723
Increase in accounts payable and accruals	5,466	2,680
Decrease in other long-term liabilities	-4,088	-1,648
Net cash provided by operating activities	58,358	58,107
Cash flows from investing activities:	'	'
Purchase, exploration and development of oil and gas properties	-374,376	-50,053
Purchase of property and equipment	-1,592	-2,019
Net cash used in investing activities	-375,968	-52,072
Cash flows from financing activities:	'	'
Proceeds from line of credit and high yield offering	371,599	5,000
Payments on debt and debentures	-63,238	-10,017
Payments from the exercise of stock options	-594	597
Net cash provided by (used in) financing activities	307,767	-4,420
Net increase (decrease) in cash and cash equivalents	-9,843	1,615
Cash and cash equivalents at beginning of period	11,620	8,475
Cash and cash equivalents at end of period	1,777	10,090
Supplemental disclosure of cash flow information	'	'
Cash paid for interest	4,241	2,122
Noncash investing and financing activities	'	'
Accrued preferred stock dividend	$8	$8

ORGANIZATION

ORGANIZATION	9 Months Ended
	Sep. 30, 2014
ORGANIZATION	'
ORGANIZATION	'
	NOTE A—ORGANIZATION
	Warren Resources, Inc. (the “Company” or “Warren”), was originally formed on June 12, 1990 for the purpose of acquiring and developing oil and gas properties. The Company is incorporated under the laws of the state of Maryland. The Company’s properties are primarily located in California, Wyoming and Pennsylvania.
	The accompanying unaudited financial statements and related notes present the Company’s consolidated financial position as of September 30, 2014 and December 31, 2013, the consolidated results of operations for the three and nine months ended September 30, 2014 and 2013, the consolidated statements of comprehensive income for the three and nine months ended September 30, 2014 and 2013 and consolidated cash flows for the nine months ended September 30, 2014 and 2013. The unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2014. The accounting policies followed by the Company are set forth in Note A to the Company’s financial statements included in Form 10-K for the year ended December 31, 2013. These interim financial statements and notes thereto should be read in conjunction with the consolidated financial statements presented in the Company’s 2013 Annual Report on Form 10-K.

STOCK_BASED_COMPENSATION

STOCK BASED COMPENSATION	9 Months Ended
	Sep. 30, 2014
STOCK BASED COMPENSATION	'
STOCK BASED COMPENSATION	'
	NOTE B—STOCK BASED COMPENSATION
	Stock Options
	Compensation expense related to stock options and restricted stock awards recognized in operating results (general and administrative expenses) was approximately $0.7 and $0.5 million for the three months ended September 30, 2014 and September 30, 2013, respectively, and approximately $1.7 and $1.5 million for the nine months ending September 30, 2014 and September 30, 2013, respectively.
	The following assumptions were used to value stock options calculated using the Black-Scholes options pricing model:
		Nine months ended September 30,
		2014		2013
	Dividend yield	0	%	0	%
	Expected volatility	52.8	%	70.9	%
	Risk-free interest rate	1.1	%	0.5	%
	Expected life	3.5 years		3.5 years
				Weighted		Weighted
				Average		Average	Aggregate
		Number		Exercise		Remaining	Intrinsic Value
		of Options		Price		Term (in years)	(in thousands)
	Outstanding at June 30, 2014	1,711,182		$	3.63
	Granted	566,860		6.17
	Exercised	(187,716	)	2.51
	Forfeited or expired	(15,000	)	4.61
	Outstanding at September 30, 2014	2,075,326		$	4.42	4.01	$	2,337
	Exercisable at September 30, 2014	345,856		$	3.05	2.22	$	779
	The total intrinsic value of options exercised during the nine months ended September 30, 2014 and 2013 were approximately $1.8 million and $1.6 million respectively.
	As of September 30, 2014 total unrecognized stock-based compensation expense related to non-vested stock options was approximately $3.1 million, which we expect to recognize over a weighted average period of 1.6 years.
	Restricted Shares
	Restricted share activity for the nine months ended September 30, 2014 was as follows:
		Shares		Weighted
				Average
				Fair Value
	Outstanding at December 31, 2013	1,898,133		$	1.97
	Granted	225,296		4.62
	Vested	(897,639	)	2.37
	Forfeited	(25,399	)	2.89
	Outstanding at September 30, 2014	1,200,391		$	2.15
	Restricted stock awards for executive officers and employees generally vest ratably over three years. Fair value of our restricted shares is based on our closing stock price on the date of grant.  As of September 30, 2014, total unrecognized stock-based compensation expense related to non-vested restricted shares was $2.4 million, which is expected to be recognized over a weighted average period of approximately 1.2 years.

STOCKHOLDERS_EQUITY

STOCKHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2014
STOCKHOLDERS' EQUITY	'
STOCKHOLDERS' EQUITY	'
	NOTE C—STOCKHOLDERS’ EQUITY
	The preferred stock pays an 8% cumulative dividend which is treated as a deduction of additional paid in capital, due to insufficient retained earnings. The holders of the preferred stock are not entitled to vote except as defined by the agreement or as provided by applicable law.  The preferred stock may be voluntarily converted, at the election of the holder, into common stock of the Company based on a conversion rate of one share of preferred stock for 0.50 shares of common stock. The accrual of the dividend is deducted from earnings in the calculation of earnings attributable to common stockholders.
	Additionally, holders of the preferred stock can elect to require the Company to redeem their preferred stock at a redemption price equal to the liquidation value of $12.00 per share, plus accrued but unpaid dividends, if any, (“Redemption Price”).  Upon the receipt of a redemption election, the Company, at its option, shall either: (1) pay the holder cash in the amount equal to the Redemption Price or (2) issue to the holder shares of common stock in an amount equal to 125% of the redemption price and any accrued and unpaid dividends, based on the weighted average closing “bid” price of the Company’s common stock for the thirty trading days immediately preceding the date of the written redemption election by the holder up to a maximum of 1.5 shares of common stock for each one share of preferred stock redeemed. The Company has accreted the carrying value of its preferred stock to its redemption price using the effective interest method with changes recorded to additional paid in capital. The accretion of preferred stock results in a reduction of earnings applicable to common stockholders.
	Notwithstanding the forgoing, if the closing “bid” price of the Company’s publicly traded common stock as reported by the NASDAQ stock market, or any exchange on which the shares of common stock are traded, exceeds 133% of the conversion price then in effect for the convertible preferred shares for at least 10 days during any 30-day trading period, the Company has the right to redeem in whole or in part the convertible preferred stock at a redemption price of $12 per share (plus any accrued unpaid dividends) or convert the convertible preferred shares (plus any accrued unpaid dividends) into common stock at the then applicable conversion rate.

EARNINGS_PER_SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2014
EARNINGS PER SHARE	'
EARNINGS PER SHARE	'
	NOTE D—EARNINGS PER SHARE
	Basic earnings per share is computed by dividing net earnings applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is based on the assumption that stock options are converted into common shares using the treasury stock method and convertible bonds and preferred stock are converted using the if-converted method. Conversion is not assumed if the results are anti-dilutive.  Potential common shares for the nine months ended September 30, 2014 and 2013 of 38,072 and 38,072, respectively, relating to convertible bonds and preferred stock were excluded from the computation of diluted earnings per share because they are anti-dilutive. Potential common shares of 2,322,263 and 2,910,907 relating to stock options and restricted stock were excluded from the computation of diluted earnings per share for the nine months ended September 30, 2014 and 2013, respectively, because they are anti-dilutive. At September 30, 2014 the convertible bonds may be converted from the date of issuance until maturity at 100% of principal amount into common stock of the Company at a price of $50.  The preferred stock may be converted at the discretion of the holder or upon meeting certain conditions at the discretion of the Company (see Note C).
	Basic and diluted net earnings per share are computed based on the following information:
		Three Months		Three Months		Nine Months		Nine Months
		Ended		Ended		Ended		Ended
		September 30,		September 30,		September 30,		September 30,
		2014		2013		2014		2013
		(in thousands, except for per				(in thousands, except for per
		share data)				share data)
	Net earnings applicable to common shareholders	$	3,723	$	14,656	$	22,682	$	26,664
	Weighted average shares outstanding — basic	78,549,255		72,424,626		75,121,693		72,235,047
	Effect of dilutive securities — restricted stock	12,524		—		—		—
	Effect of dilutive securities — stock options	312,440		194,107		192,473		190,803
	Weighted average shares outstanding - diluted	78,874,219		72,618,733		75,314,166		72,425,850
	Basic net earnings per share	$	0.05	$	0.20	$	0.30	$	0.37
	Diluted net earnings per share	$	0.05	$	0.20	$	0.30	$	0.37

LONGTERM_LIABILITIES

LONG-TERM LIABILITIES	9 Months Ended
	Sep. 30, 2014
LONG-TERM LIABILITIES	'
LONG-TERM LIABILITIES	'
	NOTE E—LONG-TERM LIABILITIES
	Long-term liabilities consisted of the following for the balance sheets dated:
		September 30,			December 31,
		2014			2013
		(in thousands)
	Line of Credit	$	120,748		$	94,500
	Convertible Debentures	1,636			1,636
	Senior Notes	300,000			—
	Discount on Senior Notes	(4,078		)	—
	Contingent Earn-Out	6,340			—
	Litigation Allowance	—			3,100
	Asset retirement obligations	29,183			26,785
		453,829			126,021
	Less current portion	1,434			1,936
	Long-term portion	$	452,395		$	124,085
	On August 11, 2014, the Company entered into a five-year $750,000,000 Third Amended and Restated Credit Agreement with Bank of Montreal, as Administrative Agent, and the other lenders party thereto (the “Amended Credit Facility”), which provides for an initial borrowing base of $225 million. The Credit Facility matures on August 11, 2019, is secured by substantially all of Warren’s oil and gas assets, and is guaranteed by the significant wholly-owned subsidiaries of the Company.
	The borrowing base is subject to semi-annual redeterminations in April and October of each year, based on the value of the Company’s proved oil and natural gas reserves in accordance with the lenders’ customary procedures and practices.  Both the Company and the lenders have the right to request one additional redetermination each year.  Credit line interest of approximately $165,000 was accrued as of September 30, 2014. As of September 30, 2014 the Company has $120.7 million outstanding on its borrowings under the Amended Credit Facility.
	The Company is subject to certain covenants under the terms of the Amended Credit Facility which include, but are not limited to, the maintenance of the following financial ratios (1) minimum current ratio of current assets (including unused borrowing base and excluding unrealized gains and losses on derivative financial instruments) of 1.0 to 1.0 and (2) a minimum consolidated EBITDAX (as defined by the Amended Credit Facility) to net interest expense of 2.5 to 1.0. The Company is in compliance with all covenants as of September 30, 2014.
	Depending on the amount outstanding and the level of borrowing base usage, the annual interest rate on each base rate loan under the Amended Credit Facility will be, at the Company’s option, either: (a) a “LIBOR Loan”, which has an interest rate equal to the sum of the applicable LIBOR period plus the applicable “LIBOR Margin” that ranges from 1.75% to 2.75%, or (b) a “Base Rate Loan”, or any other obligation other than a LIBOR Loan, which has an interest rate equal to the sum of the “Base Rate”, calculated to be the higher of: (i) the Agent’s prime rate of interest announced from time to time, or (ii) the Federal Funds rate most recently determined by the Agent plus one-half percent, plus an applicable “Base Rate Margin” that ranges from 0.75% to 1.75%. The weighted average interest rate as of September 30, 2014, was 2.41%.
	Convertible Debentures
	The convertible debentures may be converted from the date of issuance until maturity at 100% of principal amount into common stock of the Company at a conversion price of $50. Each year the holders of the convertible debentures may tender to the Company up to 10% of the aggregate debentures issued and outstanding. During the three months ended September 30, 2014, there were no debenture redemptions.
	9% Senior Notes due 2022
	On August 11, 2014, the Company issued $300.0 million of 9.000% senior notes in a private offering at a price equal to 98.617% due to mature on August 1, 2022 (the “Senior Notes”).  Interest is payable on the Senior Notes semi-annually in arrears at a rate of 9.000% per annum on each February 1 and August 1, commencing February 1, 2015.
	We may redeem, at specified redemption prices, some or all of the Senior Notes at any time on or after August 1, 2017.  We may also redeem up to 35% of the Senior Notes using the proceeds of certain equity offerings completed before August 1, 2017.  If we sell certain of our assets or experience certain kinds of changes in control, we may be required to offer to purchase the Senior Notes from the holders.  The Senior Notes will be fully, unconditionally and jointly and severally guaranteed on a senior unsecured basis by certain of our existing subsidiaries and will be fully, unconditionally and jointly and severally guaranteed on a senior unsecured basis by our future domestic subsidiaries, subject to certain exceptions.

ASSET_RETIREMENT_OBLIGATION

ASSET RETIREMENT OBLIGATION	9 Months Ended
	Sep. 30, 2014
ASSET RETIREMENT OBLIGATION	'
ASSET RETIREMENT OBLIGATION	'
	NOTE F—ASSET RETIREMENT OBLIGATION
	The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of oil and gas properties is recorded generally upon acquisition or completion of a well. The net estimated costs are discounted to present values using a risk adjusted rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the units-of-production method. The associated liability is classified in other long-term liabilities, net of current portion, in the accompanying Consolidated Balance Sheets. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense, and (4) revisions to estimated future cash flow requirements. The accretion expense is recorded as a component of depreciation, depletion and amortization. The Company has cash held in escrow with a fair market value of $3.2 million that is legally restricted for potential plugging and abandonment liability in the Wilmington field which is recorded in other assets in the Consolidated Balance Sheets. A reconciliation of the Company’s asset retirement obligations is as follows:
		September 30, 2014
		(in thousands)
	Balance at beginning of period	$	26,785
	Liabilities incurred in current period	1,558
	Liabilities settled in current period	(988		)
	Accretion expense	1,828
	Balance at end of period	$	29,183

CONTINGENCIES

CONTINGENCIES	9 Months Ended
	Sep. 30, 2014
CONTINGENCIES	'
COMMITMENTS AND CONTINGENCIES	'
	NOTE G—CONTINGENCIES
	The following information should be read in conjunction with the discussion set forth under Part I, Item 3. “Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
	In 2005, Warren recorded a provision for $1.8 million relating to a contingent liability resulting from a lawsuit originally filed in 1998 by Gotham Insurance Company (‘‘Gotham’’) in the 81st Judicial District Court of Frio County, Texas (Gotham Insurance Company v. Pedeco, Inc., et al.,) seeking a refund of approximately $1.8 million paid by Gotham and other insurers under an insurance policy issued for a well blow-out that occurred in 1997. After several appeals to the Texas Court of Appeals and the Texas Supreme Court, the case was remanded to the trial court for further proceedings. On January 22, 2010 the trial court awarded Gotham $1,823,156 and also awarded prejudgment interest at the rate of 5% per annum in the amount of $976,011. As a result of the January 2010 Summary Judgment, Warren recorded an additional provision of $1.3 million in the fourth quarter of 2009 relating to this contingent liability. On July 7, 2010, Warren E&P posted a supersedeas bond with the court and commenced to appeal the order of the trial court to the Texas Court of Appeals. On April 18, 2012, the Texas Court of Appeals reversed the judgment of the trial court and rendered its appellate decision in favor of Warren ruling that Gotham Insurance take nothing against Warren. Additionally, the Texas Court of Appeals ordered that Warren can recover all costs of the appeal from Gotham. In response, Gotham filed a petition with the Texas Supreme Court seeking a review of the ruling. On April 19, 2013, the Supreme Court granted Gotham’s petition for a review of the Court of Appeals ruling. On March 21, 2014, the Court ordered that the case be remanded to the Court of Appeals for reconsideration on the merits of Gotham’s potential contractual claims for reimbursement. On August 29, 2014, the El Paso Court of Appeals referred the case for mediation in advance of trial. On October 21, 2014, the parties concluded a final settlement agreement settling all claims arising out of the original lawsuit filed in 1998 and filed a joint motion to render judgment effectuating the settlement agreement with the El Paso Court of Appeals on October 22, 2014. Pursuant to the terms of the settlement agreement, Warren paid Gotham a total of $2 million on October 24, 2014 in full and final settlement of all such claims. We expect that the El Paso Court of Appeals will render final judgment effectuating the settlement agreement in early November 2014 and that the supersedeas bond will be released by the end of November 2014.
	We are party to a variety of legal, administrative, regulatory and government proceedings, claims and inquiries arising in the normal course of business. While the results of these proceedings, claims and inquiries cannot be predicted with certainty, management believes that the ultimate outcome of such matters will not have a material effect on the Company’s financial condition or results of operations. See “Item 1. Business — Regulation and Environmental Matters” and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and” Item 1A. Risk Factors” in our subsequent Quarterly Reports on Form 10-Q.

FAIR_VALUE_OF_FINANCIAL_INSTRU

FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2014
FAIR VALUE OF FINANCIAL INSTRUMENTS	'
FAIR VALUE OF FINANCIAL INSTRUMENTS	'
	NOTE H - FAIR VALUE OF FINANCIAL INSTRUMENTS
	The estimated fair values of financial instruments recognized in the Consolidated Balance Sheets or disclosed within these Notes to Consolidated Financial Statements have been determined using available market information, information from unrelated third party financial institutions and appropriate valuation methodologies, primarily discounted projected cash flows. However, considerable judgment is required when interpreting market information and other data to develop estimates of fair value.
	Short-term Assets and Liabilities. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.
	U.S. Treasury Bonds - Trading and Available-For-Sale Securities.  The fair values are based upon quoted market prices for those or similar investments and are reported on the Consolidated Balance Sheets at fair value.
	Collateral Security Agreement Account (included in other non-current assets). The balance sheet carrying amount approximates fair value, as it earns a market rate.
	Convertible Debentures. Fair values of fixed rate convertible debentures were calculated using interest rates in effect as of period end for similar instruments with the other terms unchanged.
	Other Long-Term Liabilities.  The carrying amount approximates fair value due to the current rates offered to the Company for long-term liabilities of the same remaining maturities.
	Line of Credit. The carrying amount approximates fair value due to the current rates offered to the Company for lines of credit.
	Derivatives. The fair values are based upon observable inputs based on market data obtained from independent sources and are considered Level 2 inputs (quoted prices for similar assets, liabilities (adjusted) and market-corroborated inputs) and are reported on the Consolidated Balance Sheets at fair value.
	9.000% Senior Notes. The fair value is based upon quoted market prices for those or similar investments and are reported on the Consolidated Balance Sheets at face value, net of discount.
	Contingent Earn-Out. The fair value is based on the present value of the amount discounted back at the cost of capital.
		September 30, 2014				December 31, 2013
		Fair		Carrying		Fair		Carrying
		value		amount		value		amount
		(in thousands)
	Financial assets
	Collateral security account	$	3,165	$	3,165	$	3,166	$	3,166
	Financial liabilities
	Fixed rate debentures	$	2,970	$	1,636	$	2,035	$	1,636
	Line of credit	120,748		120,748		94,500		94,500
	Senior Notes	292,500		295,922		—		—
	Contingent Earn-Out	6,340		6,340		—		—
	FAIR VALUE MEASUREMENTS:
	Fair value as defined by authoritative literature is 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 and establishes a three level hierarchy for measuring fair value. The literature requires fair value measurements be classified and disclosed in one of the following categories:
	Level 1:  Quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date.
	Level 2:  Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter forwards and swaps.
	Level 3:  Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability.
	The following tables present for each hierarchy level our assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis.
	September 30, 2014
		Level 1		Level 2		Level 3		Total
		(in thousands)
	Assets
	Restricted investments in US Treasury Bonds — available for sale, at fair value	$	1,386	$	—	$	—	$	1,386
	Commodity derivatives	—		830		—		830
	December 31, 2013
		Level 1		Level 2		Level 3		Total
		(in thousands)
	Assets
	Restricted investments in US Treasury Bonds — available for sale, at fair value	$	1,314	$	—	$	—	$	1,314
	Commodity derivatives	—		43		—		43
		Level 1		Level 2		Level 3		Total
		(in thousands)
	Liabilities
	Commodity derivatives	$	—	$	3,517	$	—	$	3,517

DERIVATIVE_FINANCIAL_INSTRUMEN

DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2014

DERIVATIVE FINANCIAL INSTRUMENTS

'

DERIVATIVE FINANCIAL INSTRUMENTS

'

NOTE I — DERIVATIVE FINANCIAL INSTRUMENTS

To minimize the effect of a downturn in oil and gas prices and protect our profitability and the economics of our development plans, we enter into crude oil and natural gas hedge contracts. The terms of contracts depend on various factors, including management’s view of future crude oil and natural gas prices. This price hedging program is designed to moderate the effects of a crude oil and natural gas price downturn while allowing us to participate in some commodity price increases. Management regularly monitors the crude oil and natural gas markets and our financial commitments to determine if, when, and at what level some form of crude oil and/or natural gas hedging and/or basis adjustments or other price protection is appropriate. However, we may use a variety of derivative instruments in the future to hedge. The Company has not designated these derivatives as hedges for accounting purposes.

The Company routinely enters into derivative contracts with a variety of counterparties, typically resulting in individual derivative instruments with both fair value asset and liability positions. The Company nets the fair values of derivative instruments executed with the same counterparty pursuant to ISDA master agreements, which mitigate the credit risk of the Company’s derivative instruments by providing for net settlement over the term of the contract and in the event of default or termination of the contract.

The following table summarizes the open financial derivative positions, as of September 30, 2014, related to oil and gas production. The Company will receive prices as noted in the table below and will pay a counterparty market price based on the NYMEX (for natural gas production) or both BRENT and NYMEX (for oil production) index price, settled monthly.

Product

Type

Contract Period

Volume

Price per

Mcf or Bbl

BRENT Oil

Swap

10/01/14 - 12/31/14

800 Bbl/d

$

102.12

NYMEX Oil

Swap

10/01/14 - 12/31/14

300 Bbl/d

$

101.67

NYMEX Gas

Swap

10/01/14 - 12/31/14

7,000 MMBtu/d

$

3.79

NYMEX Gas

Swap

10/01/14 - 12/31/14

2,000 MMBtu/d

$

4.18

NYMEX Gas

Swap

10/01/14 - 12/31/14

3,000 MMBtu/d

$

4.27

NYMEX Gas

Swap

01/01/15 - 12/31/15

3,000 MMBtu/d

$

4.18

NYMEX Gas

Swap

10/01/14 - 12/31/14

6,000 MMBtu/d

$

0.20

*

*This represents a differential spread between NYMEX and CIG pricing.

The tables below summarize the amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments under authoritative guidance.

Derivatives not designated as

For the Three Months

For the Nine Months

Hedging Instrument under

Ended September 30,

Ended September 30,

authoritative guidance

2014

2013

2014

2013

(in thousands)

Realized cash settlements on hedges

$

11

$

(181

)

$

(3,267

)

$

(857

)

Unrealized gain (loss) on hedges

3,688

(1,024

)

4,305

1,348

Total

$

3,699

$

(1,205

)

$

1,038

$

491

The table below reflects the line item in our Consolidated Balance Sheet where the fair value of our net derivatives, are included.

September 30, 2014

Derivative Assets

(in thousands)

Balance Sheet

Fair Value

Location

Commodity—Natural Gas

Non-current

$

17

Commodity—Natural Gas

Current

17

Commodity—Oil

Current

796

Total derivatives not designated as hedging instruments

$

830

December 31, 2013

Derivative Assets

(in thousands)

Balance Sheet

Fair Value

Location

Commodity—Natural Gas

Non-current

$

43

Total derivatives not designated as hedging instruments

$

43

December 31, 2013

Derivative Liabilities

(in thousands)

Balance Sheet

Fair Value

Location

Commodity—Oil

current

$

(2,709

)

Commodity—Natural Gas

current

(808

)

Total derivatives not designated as hedging instruments

$

(3,517

)

Derivatives Credit Risk

The Company does not require collateral or other security from counterparties to support derivative instruments. However, the agreements with those counterparties typically contain netting provisions such that if a default occurs, the non-defaulting party can offset the amount payable to the defaulting party under the derivative contract with the amount due from the defaulting party. As a result of the netting provisions the Company’s maximum amount of loss due to credit risk is limited to the net amounts due to and from the counterparties under the derivative contracts.

As of September 30, 2014, the counterparties to the Company’s commodity derivative contracts consisted of two financial institutions which are also lenders under the Company’s Senior Credit Agreement and share in the collateral supporting the Agreement. The Company is not generally required to post additional collateral under derivative agreements.

The Company’s derivative agreements contain provisions that require cross defaults and acceleration of those instruments to any material debt. If the Company were to default on any of its material debt agreements, it would be a violation of these provisions, and the counterparties to the derivative instruments could request immediate payment on derivative instruments that are in a net liability position at that time

INCOME_TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2014
INCOME TAXES	'
INCOME TAXES	'
	NOTE J — INCOME TAXES
	The Company’s effective tax rate differs from the federal statutory tax rate due to changes in the valuation allowance on the Company’s net deferred tax asset.

RECENTLY_ISSUED_ACCOUNTING_STA

RECENTLY ISSUED ACCOUNTING STANDARDS	9 Months Ended
	Sep. 30, 2014
RECENTLY ISSUED ACCOUNTING STANDARDS	'
RECENTLY ISSUED ACCOUNTING STANDARDS	'
	NOTE K — RECENTLY ISSUED ACCOUNTING STANDARDS
	In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”).  The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards.  ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016.  The Company is currently evaluating the impact of adopting ASU 2014-09, but the standard is not expected to have a significant effect on its consolidated financial statements.
	In August 2014, the FABS issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15.

ACQUISITIONS

ACQUISITIONS	9 Months Ended
	Sep. 30, 2014
ACQUISITIONS	'
ACQUISITIONS.	'
	NOTE L — ACQUISITIONS
	Marcellus Assets
	On August 11, 2014, we acquired essentially all of the Marcellus Assets (the ‘‘Marcellus Assets’’) of Citrus Energy Corporation (‘‘Citrus’’) and two other working interest owners in exchange for approximately 6.7 million shares of our common stock valued at $41.4 million and cash consideration of $312.5 million, subject to certain post-closing adjustments and certain closing conditions (the ‘‘Citrus Acquisition’’). The Citrus Acquisition will provide us a new area of operations in the Marcellus Shale in Pennsylvania. The Acquisition of Marcellus Assets was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) No. 805, Business Combinations (ASC 805) which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. The purchase price of the Marcellus Asset (in thousands):
		2014
	Cash Consideration	$	312,500
	Fair Value of Warren Equity Common Shares	41,400
	Closing Adjustments	(7,828		)
	Fair Value of Earn-Out Provision	6,340
	Fair Value of Farm-Out Provision	3,410
	Total purchase price	$	355,822
	In connection with the Citrus Acquisition, a contingent consideration payment was included as part of the purchase and sale agreement with a maximum payout of $8.5 million, based upon proved reserves and price differential factors. The fair value of this consideration is based on a 90% probability of achieving the full payout amount discounted to present value.
	The Company plans to complete its assessment of the fair values of the assets acquired and liabilities assumed by December 31, 2014. The following table presents the initial purchase price allocation of the Marcellus Asset as of September 30, 2014, based on the fair values of assets acquired and liabilities assumed (in thousands):
		2014
	Proved oil and gas properties	$	171,070
	Unproved oil and gas properties	184,752
	Total purchase price	$	355,822
	Pro Forma Impact of Acquisitions (Unaudited)
	The following unaudited pro forma combined results of operations are provided for the three and nine months ended September 30, 2014 and 2013 as though the Acquisition of the Marcellus Assets had occurred prior to those dates.  The pro forma combined results of operations for the three and nine months ended September 30, 2014 and 2013 have been prepared by adjusting the historical results of the Company to include the historical results of the Marcellus Assets. These supplemental pro forma results of operations are provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined company for the period presented or that may be achieved by the combined company in the future. The pro forma results of operations do not include any cost savings or other synergies that resulted, or may result, from the Marcellus Acquisition.  Future results may vary significantly from the results reflected in this unaudited pro forma financial information because of future events and transactions, as well as other factors.
	The Company’s historical financial information was adjusted to give effect to the pro forma events that were directly attributable to the Marcellus Acquisition that were factually supportable. Adjustments and assumptions made for this pro forma calculation are consistent with those used in the Company’s pro forma information, as more fully described in Item 9.01. Financial Statements and Exhibits—Exhibit 99.5, “Unaudited Pro Forma Condensed Combined Financial Information” to the Company’s Form 8-K filed on August 12, 2014.
		For the Three Months					For the Nine Months
		Ended September 30,					Ended September 30,
	(in thousands)	2014			2013		2014		2013
	Revenues	$	50,424		$	46,263	$	171,504	$	134,409
	Income from Operations	11,625			15,951		58,241		40,452
	Net income	$	9,744		$	17,486	$	51,057	$	38,581
	Diluted net income per share	$	0.12		$	0.22	$	0.67	$	0.49

CAPITALIZED_INTEREST

CAPITALIZED INTEREST	9 Months Ended
	Sep. 30, 2014
CAPITALIZED INTEREST	'
CAPITALIZED INTEREST	'
	NOTE M —CAPITALIZED INTEREST
	The company capitalizes interest on qualifying assets, which include investments in undeveloped oil and natural gas properties and exploration and development projects for which depletion expense is not currently recognized, and for which exploration or development activities are in progress. The capitalized interest is determined by multiplying the Company’s interest rate on specific borrowing costs, adjusted to include of amortization of bond discount and issuance costs, related to the Senior Notes used to purchase the Marcellus asset, by the qualifying costs incurred that are excluded from the full cost pool. However, the amount of capitalized interest cannot exceed the amount of gross interest expense incurred in any given period. The capitalized interest amounts are recorded as additions to unevaluated oil and natural gas properties on the unaudited condensed consolidated balance sheets. As the costs excluded are transferred to the full cost pool, the associated capitalized interest is also transferred to the full cost pool.  Interest of $1.7 million was capitalized during the three months ended September 30, 2014, relating to the Senior Notes.

STOCK_BASED_COMPENSATION_Table

STOCK BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2014
STOCK BASED COMPENSATION	'
Schedule of assumptions used to value stock options calculated using the Black-Scholes options pricing model	'
	The following assumptions were used to value stock options calculated using the Black-Scholes options pricing model:
		Nine months ended September 30,
		2014		2013
	Dividend yield	0	%	0	%
	Expected volatility	52.8	%	70.9	%
	Risk-free interest rate	1.1	%	0.5	%
	Expected life	3.5 years		3.5 years
Schedule of options issued to employees and changes during the years	'
				Weighted		Weighted
				Average		Average	Aggregate
		Number		Exercise		Remaining	Intrinsic Value
		of Options		Price		Term (in years)	(in thousands)
	Outstanding at June 30, 2014	1,711,182		$	3.63
	Granted	566,860		6.17
	Exercised	(187,716	)	2.51
	Forfeited or expired	(15,000	)	4.61
	Outstanding at September 30, 2014	2,075,326		$	4.42	4.01	$	2,337
	Exercisable at September 30, 2014	345,856		$	3.05	2.22	$	779
Schedule of restricted share activity	'
	Restricted share activity for the nine months ended September 30, 2014 was as follows:
		Shares		Weighted
				Average
				Fair Value
	Outstanding at December 31, 2013	1,898,133		$	1.97
	Granted	225,296		4.62
	Vested	(897,639	)	2.37
	Forfeited	(25,399	)	2.89
	Outstanding at September 30, 2014	1,200,391		$	2.15

EARNINGS_PER_SHARE_Tables

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2014
EARNINGS PER SHARE	'
Schedule of computation of basic and diluted net earnings per share	'
		Three Months		Three Months		Nine Months		Nine Months
		Ended		Ended		Ended		Ended
		September 30,		September 30,		September 30,		September 30,
		2014		2013		2014		2013
		(in thousands, except for per				(in thousands, except for per
		share data)				share data)
	Net earnings applicable to common shareholders	$	3,723	$	14,656	$	22,682	$	26,664
	Weighted average shares outstanding — basic	78,549,255		72,424,626		75,121,693		72,235,047
	Effect of dilutive securities — restricted stock	12,524		—		—		—
	Effect of dilutive securities — stock options	312,440		194,107		192,473		190,803
	Weighted average shares outstanding - diluted	78,874,219		72,618,733		75,314,166		72,425,850
	Basic net earnings per share	$	0.05	$	0.20	$	0.30	$	0.37
	Diluted net earnings per share	$	0.05	$	0.20	$	0.30	$	0.37

LONGTERM_LIABILITIES_Tables

LONG-TERM LIABILITIES (Tables)	9 Months Ended
	Sep. 30, 2014
LONG-TERM LIABILITIES	'
Schedule of long-term liabilities	'
		September 30,			December 31,
		2014			2013
		(in thousands)
	Line of Credit	$	120,748		$	94,500
	Convertible Debentures	1,636			1,636
	Senior Notes	300,000			—
	Discount on Senior Notes	(4,078		)	—
	Contingent Earn-Out	6,340			—
	Litigation Allowance	—			3,100
	Asset retirement obligations	29,183			26,785
		453,829			126,021
	Less current portion	1,434			1,936
	Long-term portion	$	452,395		$	124,085

ASSET_RETIREMENT_OBLIGATION_Ta

ASSET RETIREMENT OBLIGATION (Tables)	9 Months Ended
	Sep. 30, 2014
ASSET RETIREMENT OBLIGATION	'
Schedule of reconciliation of the Company's asset retirement obligations	'
		September 30, 2014
		(in thousands)
	Balance at beginning of period	$	26,785
	Liabilities incurred in current period	1,558
	Liabilities settled in current period	(988		)
	Accretion expense	1,828
	Balance at end of period	$	29,183

FAIR_VALUE_OF_FINANCIAL_INSTRU1

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2014
FAIR VALUE OF FINANCIAL INSTRUMENTS	'
Schedule of carrying amount and estimated fair value of financial instruments	'
		September 30, 2014				December 31, 2013
		Fair		Carrying		Fair		Carrying
		value		amount		value		amount
		(in thousands)
	Financial assets
	Collateral security account	$	3,165	$	3,165	$	3,166	$	3,166
	Financial liabilities
	Fixed rate debentures	$	2,970	$	1,636	$	2,035	$	1,636
	Line of credit	120,748		120,748		94,500		94,500
	Senior Notes	292,500		295,922		—		—
	Contingent Earn-Out	6,340		6,340		—		—
Schedule of assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis	'
	September 30, 2014
		Level 1		Level 2		Level 3		Total
		(in thousands)
	Assets
	Restricted investments in US Treasury Bonds — available for sale, at fair value	$	1,386	$	—	$	—	$	1,386
	Commodity derivatives	—		830		—		830
	December 31, 2013
		Level 1		Level 2		Level 3		Total
		(in thousands)
	Assets
	Restricted investments in US Treasury Bonds — available for sale, at fair value	$	1,314	$	—	$	—	$	1,314
	Commodity derivatives	—		43		—		43
		Level 1		Level 2		Level 3		Total
		(in thousands)
	Liabilities
	Commodity derivatives	$	—	$	3,517	$	—	$	3,517

DERIVATIVE_FINANCIAL_INSTRUMEN1

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2014

DERIVATIVE FINANCIAL INSTRUMENTS

'

Summary of open financial derivative positions related to oil and gas production

'

The following table summarizes the open financial derivative positions, as of September 30, 2014, related to oil and gas production. The Company will receive prices as noted in the table below and will pay a counterparty market price based on the NYMEX (for natural gas production) or both BRENT and NYMEX (for oil production) index price, settled monthly.

Product

Type

Contract Period

Volume

Price per

Mcf or Bbl

BRENT Oil

Swap

10/01/14 - 12/31/14

800 Bbl/d

$

102.12

NYMEX Oil

Swap

10/01/14 - 12/31/14

300 Bbl/d

$

101.67

NYMEX Gas

Swap

10/01/14 - 12/31/14

7,000 MMBtu/d

$

3.79

NYMEX Gas

Swap

10/01/14 - 12/31/14

2,000 MMBtu/d

$

4.18

NYMEX Gas

Swap

10/01/14 - 12/31/14

3,000 MMBtu/d

$

4.27

NYMEX Gas

Swap

01/01/15 - 12/31/15

3,000 MMBtu/d

$

4.18

NYMEX Gas

Swap

10/01/14 - 12/31/14

6,000 MMBtu/d

$

0.20

*

*This represents a differential spread between NYMEX and CIG pricing.

Summary of amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments

'

Derivatives not designated as

For the Three Months

For the Nine Months

Hedging Instrument under

Ended September 30,

Ended September 30,

authoritative guidance

2014

2013

2014

2013

(in thousands)

Realized cash settlements on hedges

$

11

$

(181

)

$

(3,267

)

$

(857

)

Unrealized gain (loss) on hedges

3,688

(1,024

)

4,305

1,348

Total

$

3,699

$

(1,205

)

$

1,038

$

491

Schedule of fair value and balance sheet location of net derivatives

'

September 30, 2014

Derivative Assets

(in thousands)

Balance Sheet

Fair Value

Location

Commodity—Natural Gas

Non-current

$

17

Commodity—Natural Gas

Current

17

Commodity—Oil

Current

796

Total derivatives not designated as hedging instruments

$

830

December 31, 2013

Derivative Assets

(in thousands)

Balance Sheet

Fair Value

Location

Commodity—Natural Gas

Non-current

$

43

Total derivatives not designated as hedging instruments

$

43

December 31, 2013

Derivative Liabilities

(in thousands)

Balance Sheet

Fair Value

Location

Commodity—Oil

current

$

(2,709

)

Commodity—Natural Gas

current

(808

)

Total derivatives not designated as hedging instruments

$

(3,517

)

ACQUISITIONS_Tables

ACQUISITIONS (Tables)	9 Months Ended
	Sep. 30, 2014
ACQUISITIONS	'
Summary of purchase price of the Marcellus Asset	'
		2014
	Cash Consideration	$	312,500
	Fair Value of Warren Equity Common Shares	41,400
	Closing Adjustments	(7,828		)
	Fair Value of Earn-Out Provision	6,340
	Fair Value of Farm-Out Provision	3,410
	Total purchase price	$	355,822
Final purchase price allocation of the Marcellus Asset based on the fair values of assets acquired and liabilities assumed	'
		2014
	Proved oil and gas properties	$	171,070
	Unproved oil and gas properties	184,752
	Total purchase price	$	355,822
Unaudited Pro Forma Condensed Combined Financial Information	'
		For the Three Months					For the Nine Months
		Ended September 30,					Ended September 30,
	(in thousands)	2014			2013		2014		2013
	Revenues	$	50,424		$	46,263	$	171,504	$	134,409
	Income from Operations	11,625			15,951		58,241		40,452
	Net income	$	9,744		$	17,486	$	51,057	$	38,581
	Diluted net income per share	$	0.12		$	0.22	$	0.67	$	0.49

STOCK_BASED_COMPENSATION_Detai

STOCK BASED COMPENSATION (Details) (USD $)	3 Months Ended		9 Months Ended		0 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014
					Stock options	Stock options	Stock options	Stock options	Restricted Shares
Stockholders' equity	'	'	'	'	'	'	'	'	'
Compensation expense related to stock options and restricted stock awards	$700,000	$500,000	$1,700,000	$1,500,000	'	'	'	'	'
Weighted-average assumptions used to value stock options	'	'	'	'	'	'	'	'	'
Dividend yield (as a percent)	'	'	'	'	'	'	0.00%	0.00%	'
Weighted average volatility (as a percent)	'	'	'	'	'	'	52.80%	70.90%	'
Risk-free interest rate (as a percent)	'	'	'	'	'	'	1.10%	0.50%	'
Expected life	'	'	'	'	'	'	'3 years 6 months	'3 years 6 months	'
Number of Options	'	'	'	'	'	'	'	'	'
Outstanding at the beginning of the period (in shares)	'	'	'	'	2,075,326	1,711,182	'	'	'
Granted (in shares)	'	'	'	'	'	566,860	'	'	'
Exercised (in shares)	'	'	'	'	'	-187,716	'	'	'
Forfeited or expired (in shares)	'	'	'	'	'	-15,000	'	'	'
Outstanding at the end of the period (in shares)	'	'	'	'	'	2,075,326	2,075,326	'	'
Exercisable at the end of the period (in shares)	'	'	'	'	'	345,856	345,856	'	'
Weighted Average Exercise Price	'	'	'	'	'	'	'	'	'
Outstanding at the beginning of the period (in dollars per share)	'	'	'	'	$4.42	$3.63	'	'	'
Granted (in dollars per share)	'	'	'	'	'	$6.17	'	'	'
Exercise price (in dollars per share)	'	'	'	'	'	$2.51	'	'	'
Forfeited or expired (in dollars per share)	'	'	'	'	'	$4.61	'	'	'
Outstanding at the end of the period (in dollars per share)	'	'	'	'	'	$4.42	$4.42	'	'
Exercisable at the end of the period (in dollars per share)	'	'	'	'	'	$3.05	$3.05	'	'
Weighted Average Remaining Term (in years)	'	'	'	'	'	'	'	'	'
Outstanding at the end of the period	'	'	'	'	'4 years 4 days	'	'	'	'
Exercisable at the end of the period	'	'	'	'	'2 years 2 months 19 days	'	'	'	'
Aggregate Intrinsic Value	'	'	'	'	'	'	'	'	'
Outstanding at the end of the period	'	'	'	'	'	2,337,000	2,337,000	'	'
Exercisable at the end of the period	'	'	'	'	'	779,000	779,000	'	'
Additional disclosures	'	'	'	'	'	'	'	'	'
Total intrinsic value of options exercised	'	'	'	'	'	'	1,800,000	1,600,000	'
Total unrecognized stock-based compensation expense	'	'	'	'	'	3,100,000	3,100,000	'	'
Shares	'	'	'	'	'	'	'	'	'
Outstanding at the beginning of the period (in shares)	'	'	'	'	'	'	'	'	1,898,133
Granted (in shares)	'	'	'	'	'	'	'	'	225,296
Vested (in shares)	'	'	'	'	'	'	'	'	-897,639
Forfeited (in shares)	'	'	'	'	'	'	'	'	-25,399
Outstanding at the end of the period (in shares)	'	'	'	'	'	'	'	'	1,200,391
Weighted Average Fair Value	'	'	'	'	'	'	'	'	'
Outstanding at the beginning of the period (in dollars per share)	'	'	'	'	'	'	'	'	$1.97
Granted (in dollars per share)	'	'	'	'	'	'	'	'	$4.62
Vested (in dollars per share)	'	'	'	'	'	'	'	'	$2.37
Forfeited (in dollars per share)	'	'	'	'	'	'	'	'	$2.89
Outstanding at the end of the period (in dollars per share)	'	'	'	'	'	'	'	'	$2.15
Vesting period	'	'	'	'	'	'	'	'	'3 years
Total unrecognized stock-based compensation expense	'	'	'	'	'	'	'	'	$2,400,000
Weighted average period over which unrecognized compensation cost is expected to be recognized	'	'	'	'	'	'	'1 year 7 months 6 days	'	'1 year 2 months 12 days

STOCKHOLDERS_EQUITY_Details

STOCKHOLDERS' EQUITY (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
STOCKHOLDERS' EQUITY	'	'
Cumulative dividend on preferred stock (as a percent)	8.00%	8.00%
Number of common shares into which one share of preferred stock is to be converted	0.5	'
Redemption price (in dollars per share)	$12	'
Shares to be issued as percentage of redemption price and any accrued and unpaid dividends	125.00%	'
Number of trading days considered for calculating the weighted average closing bid price at which preferred stock will be redeemed	'30 days	'
Maximum number of shares of common stock that the company, at its option, can issue for each one share of preferred stock redeemed	1.5	'
Percentage of conversion price that the entity's common stock must exceed to give the entity the right to redeem	133.00%	'
Minimum number of days within 30-day trading period in which the closing price of the entity's common stock must exceed the conversion price	'10 days	'
Number of trading days during which the closing bid price of the entity's common stock must exceed the conversion price	'30 days	'

EARNINGS_PER_SHARE_Details

EARNINGS PER SHARE (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic and diluted net earnings per share	'	'	'	'
Net earnings applicable to common shareholders	$3,723	$14,656	$22,682	$26,664
Weighted average shares outstanding - basic	78,549,255	72,424,626	75,121,693	72,235,047
Effect of dilutive securities - restricted stock	12,524	'	'	'
Effect of dilutive securities - stock options	312,440	194,107	192,473	190,803
Weighted average shares outstanding - diluted	78,874,219	72,618,733	75,314,166	72,425,850
Basic net earnings per share (in dollars per share)	$0.05	$0.20	$0.30	$0.37
Diluted net earnings per share (in dollars per share)	$0.05	$0.20	$0.30	$0.37
Convertible bonds and preferred stock	'	'	'	'
Earnings per share	'	'	'	'
Anti-dilutive securities (in shares)	'	'	38,072	38,072
Stock options and restricted stock	'	'	'	'
Earnings per share	'	'	'	'
Anti-dilutive securities (in shares)	'	'	2,322,263	2,910,907
Secured Convertible Debentures	'	'	'	'
Earnings per share	'	'	'	'
Percentage of principal amount at which debentures may be converted from the date of issuance until maturity into common stock	'	'	100.00%	'
Conversion price (in dollars per share)	$50	'	$50	'

LONGTERM_LIABILITIES_Details

LONG-TERM LIABILITIES (Details) (USD $)

9 Months Ended

0 Months Ended

9 Months Ended

9 Months Ended

9 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

Sep. 30, 2014

Sep. 30, 2013

Dec. 31, 2013

Aug. 11, 2014

Sep. 30, 2014

Aug. 11, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Aug. 11, 2014

Aug. 11, 2014

Sep. 30, 2014

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Line of Credit

Secured Convertible Debentures

Secured Convertible Debentures

Senior Notes.

Senior Notes.

Senior Notes.

item

Base Rate

Prime rate

Federal Funds rate

LIBOR

Minimum

Minimum

Minimum

Maximum

Maximum

Maximum

Maximum

Federal Funds rate

LIBOR

Federal Funds rate

LIBOR

LONG-TERM LIABILITIES

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Line of Credit

$120,748,000

'

$94,500,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Convertible Debentures

1,636,000

'

1,636,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Senior Notes

300,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Discount on Senior Notes

-4,078,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Contingent Earn-Out

6,340,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Asset retirement obligations assumed

29,183,000

'

26,785,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Litigation allowance

'

'

3,100,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Total long-term liabilities

453,829,000

'

126,021,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Less current portion

1,434,000

'

1,936,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Long-term portion

452,395,000

'

124,085,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Long-term liabilities

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Term of credit facility

'

'

'

'5 years

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Maximum borrowing capacity under prior agreement

'

'

'

'

'

750,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Initial borrowing base

'

'

'

'

'

225,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Number of additional redetermination rights in each year

'

'

'

'

1

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Credit line interest accrued, approximate

'

'

'

'

165,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Borrowing base increased

371,599,000

5,000,000

'

'

120,700,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Current ratio

'

'

'

'

'

'

'

'

'

'

1

'

'

'

'

'

'

'

'

'

Annualized consolidated EBITDAX to net interest expense ratio

'

'

'

'

'

'

'

'

'

'

2.5

'

'

'

'

'

'

'

'

'

Variable rate basis

'

'

'

'

'

'

'Base Rate

'Prime Rate

'Federal Funds

'LIBOR

'

'

'

'

'

'

'

'

'

'

Margin (as a percent)

'

'

'

'

'

'

'

'

'

'

'

'

1.75%

'

2.75%

'

'

'

'

'

Additional margin (as a percent)

'

'

'

'

'

'

'

'

'

'

'

0.75%

'

1.75%

'

'

'

'

'

'

Weighted average interest rate (as a percent)

'

'

'

'

2.41%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Percentage of principal amount at which debentures may be converted from the date of issuance until maturity into common stock

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

100.00%

'

'

'

'

Conversion price (in dollars per share)

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$50

'

'

'

'

Percentage of convertible debentures issued and outstanding that the holders may tender each year

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

10.00%

'

'

'

Amount of debenture redemptions

0

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Senior notes, face amount

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$300,000,000

'

Percentage on initial purchase price

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

98.62%

'

'

Percentage of redemption price

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

35.00%

Interest rate (as a percent)

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

9.00%

'

ASSET_RETIREMENT_OBLIGATION_De

ASSET RETIREMENT OBLIGATION (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
ASSET RETIREMENT OBLIGATION	'
Fair market value of cash held in escrow that is legally restricted for potential plugging and abandonment liability	$3,200,000
Reconciliation of asset retirement obligations	'
Balance at beginning of period	26,785,000
Liabilities incurred in current period	1,558,000
Liabilities settled in current period	-988,000
Accretion expense	1,828,000
Balance at end of period	$29,183,000

CONTINGENCIES_Details

CONTINGENCIES (Details) (Gotham Insurance Company v. Pedeco, Inc., et al.,, USD $)	1 Months Ended	3 Months Ended	12 Months Ended		0 Months Ended
	Jan. 31, 2010	Dec. 31, 2009	Dec. 31, 2005	Dec. 31, 1998	Oct. 24, 2014
					Subsequent Event [Member]
Contingencies	'	'	'	'	'
Provision recorded relating to a contingent liability as a result of lawsuit	'	$1,300,000	$1,800,000	'	'
Amount of refund sought by Gotham and other insurers for amount paid under an insurance policy	'	'	'	1,800,000	'
Summary Judgment restitution	1,823,156	'	'	'	'
Rate of prejudgment interest awarded (as a percent)	5.00%	'	'	'	'
Amount of prejudgment interest awarded	976,011	'	'	'	'
Full and final settlement amount paid	'	'	'	'	$2,000,000

FAIR_VALUE_OF_FINANCIAL_INSTRU2

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Fair value	'	'
Financial assets	'	'
Collateral security account	$3,165	$3,166
Financial liabilities	'	'
Fixed rate debentures	2,970	2,035
Line of credit	120,748	94,500
Senior Notes	292,500	'
Contingent Earn-Out	6,340	'
Carrying amount	'	'
Financial assets	'	'
Collateral security account	3,165	3,166
Financial liabilities	'	'
Fixed rate debentures	1,636	1,636
Line of credit	120,748	94,500
Senior Notes	295,922	'
Contingent Earn-Out	$6,340	'

FAIR_VALUE_OF_FINANCIAL_INSTRU3

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (Recurring, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Level 1	'	'
Assets	'	'
Restricted investments in US Treasury Bonds - available for sale, at fair value	$1,386	$1,314
Level 2	'	'
Assets	'	'
Commodity derivatives	830	43
Liabilities	'	'
Commodity derivatives	'	3,517
Fair value	'	'
Assets	'	'
Restricted investments in US Treasury Bonds - available for sale, at fair value	1,386	1,314
Commodity derivatives	830	43
Liabilities	'	'
Commodity derivatives	'	$3,517

DERIVATIVE_FINANCIAL_INSTRUMEN2

DERIVATIVE FINANCIAL INSTRUMENTS (Details) (Commodity derivatives)	Sep. 30, 2014
Natural Gas | Swap | 10/01/14 - 12/31/14, period three	'
Derivative financial instruments	'
Volume in BBl or MMBtu per day	7,000
Price per Mcf or Bbl	3.79
Natural Gas | Swap | 10/01/14 - 12/31/14, period four	'
Derivative financial instruments	'
Volume in BBl or MMBtu per day	2,000
Price per Mcf or Bbl	4.18
Natural Gas | Swap | 10/01/14 - 12/31/14, period five	'
Derivative financial instruments	'
Volume in BBl or MMBtu per day	3,000
Price per Mcf or Bbl	4.27
Natural Gas | Swap | 10/01/14 - 12/31/14, period six	'
Derivative financial instruments	'
Volume in BBl or MMBtu per day	6,000
Price per Mcf or Bbl	0.2
Natural Gas | Swap | 01/01/15 - 12/31/15	'
Derivative financial instruments	'
Volume in BBl or MMBtu per day	3,000
Price per Mcf or Bbl	4.18
Oil | BRENT Swap | 10/01/14 - 12/31/14	'
Derivative financial instruments	'
Volume in BBl or MMBtu per day	800
Price per Mcf or Bbl	102.12
Oil | Swap | 10/01/14 - 12/31/14, period two	'
Derivative financial instruments	'
Volume in BBl or MMBtu per day	300
Price per Mcf or Bbl	101.67

DERIVATIVE_FINANCIAL_INSTRUMEN3

DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments	'	'	'	'
Total	$3,699	($1,205)	$1,038	$491
Commodity derivatives | Not designated as hedging instruments	'	'	'	'
Amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments	'	'	'	'
Realized cash settlements on hedges	11	-181	-3,267	-857
Unrealized non-cash gain (loss) on hedges	3,688	-1,024	4,305	1,348
Total	$3,699	($1,205)	$1,038	$491

DERIVATIVE_FINANCIAL_INSTRUMEN4

DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	item
Fair value of net derivatives	'	'
Derivative Assets, Non-current	$17	$43
Derivative Assets, current	813	'
Derivative Liabilities, current	'	-3,517
Derivative's Credit risk	'	'
Number of counterparties to the commodity derivative contracts	2	'
Commodity derivatives | Not designated as hedging instruments	'	'
Fair value of net derivatives	'	'
Derivative Assets	830	43
Derivative Liabilities	'	-3,517
Commodity derivatives | Not designated as hedging instruments | Natural Gas	'	'
Fair value of net derivatives	'	'
Derivative Assets, Non-current	17	43
Derivative Assets, current	17	'
Derivative Liabilities, current	'	-808
Commodity derivatives | Not designated as hedging instruments | Oil	'	'
Fair value of net derivatives	'	'
Derivative Assets, current	796	'
Derivative Liabilities, current	'	($2,709)

ACQUISITIONS_Details

ACQUISITIONS (Details) (Marcellus Assets Member, USD $)	0 Months Ended	3 Months Ended		9 Months Ended
Share data in Millions, except Per Share data, unless otherwise specified	Aug. 11, 2014	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Aug. 11, 2014
	item
Acquisitions	'	'	'	'	'	'
Number of other working interest owners	2	'	'	'	'	'
Number of shares exchanged	6.7	'	'	'	'	'
Cash consideration	$312,500,000	'	'	$312,500,000	'	'
Fair Value of Common Shares	'	41,400,000	'	41,400,000	'	41,400,000
Purchase price	'	'	'	'	'	'
Cash consideration	312,500,000	'	'	312,500,000	'	'
Fair Value of Common Shares	'	41,400,000	'	41,400,000	'	41,400,000
Closing Adjustments	'	'	'	-7,828,000	'	'
Fair Value of Earn-Out Provision	'	'	'	6,340,000	'	'
Fair Value of Farm-Out Provision	'	'	'	3,410,000	'	'
Total purchase price	'	'	'	355,822,000	'	'
Probability percentage of achieving the full payout	'	'	'	'	'	90.00%
Fair values of the assets acquired and liabilities assumed	'	'	'	'	'	'
Proved oil and gas properties	'	171,070,000	'	171,070,000	'	'
Unproved oil and gas properties	'	184,752,000	'	184,752,000	'	'
Total purchase price	'	355,822,000	'	355,822,000	'	'
Unaudited Pro Forma Condensed Combined Financial Information	'	'	'	'	'	'
Revenues	'	50,424,000	46,263,000	171,504,000	134,409,000	'
Income from Operations	'	11,625,000	15,951,000	58,241,000	40,452,000	'
Net income	'	9,744,000	17,486,000	51,057,000	38,581,000	'
Diluted net income per share	'	$0.12	$0.22	$0.67	$0.49	'
Maximum	'	'	'	'	'	'
Purchase price	'	'	'	'	'	'
Maximum payout included as part of the purchase and sale agreement	$8,500,000	'	'	'	'	$8,500,000

CAPTILIZED_INTEREST_Details

CAPTILIZED INTEREST (Details) (Senior Notes., USD $)	3 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2014
Senior Notes.	'
Interest Costs Capitalized	$1.70