goodrich petroleum corporation - RR DONNELLEY FINANCIAL

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Year ended December 31, 2010 Compared to Year Ended December 31, 2009 Operating activities. Net cash provided by operating activities was $100.4 million, an increase of $15.1 million, or 13%, from $115.6 million in 2009. Our operating revenues increased 34% in 2010 with an 18% decrease in commodity prices and an increase in average daily production of 13% as compared to 2009. The cash flow decrease was primarily the result of receiving $24.6 million in natural gas derivative settlements in 2010 compared to having received $98.0 million for settlements of natural gas derivatives in 2009. Investing activities. Net cash used in investing activities was $200.1 million for the year ended December 31, 2010, compared to $265.6 million for 2009. While we booked capital expenditures of approximately $283.7 million in 2010, we paid out cash amounts totaling $265.0 million in 2010, with the difference being attributed to approximately $30.0 million in drilling and completion costs which were accrued at December 31, 2010, non-cash asset retirement obligation additions of $1.3 million and geophysical and geological cost of $1.2 million offset by $13.8 million in drilling and completion cost accrued at December 31, 2009 and paid in 2010. In the fourth quarter of 2010, we incurred additional drilling and completion capital expenditures in excess of that which was budgeted from (1) acceleration of completion of Haynesville Shale wells that were scheduled for 2011; (2) incremental drilling and completion costs associated with longer laterals in our Eagle Ford Shale Trend; and (3) reduced drilling cycles thereby incurring additional drilling capital expenditures as a result of drilling more wells. Net cash used in investing activities was offset by the receipt of $64.9 million of cash proceeds from the sale of fixed assets in 2010. We conducted drilling and completion operations on 46 gross wells in 2010 compared to 45 gross wells in 2009. Of the $265.0 million cash spent in 2010, approximately $227.6 million was for drilling and completion activities (of which $13.8 million related to 2009 wells), $33.7 million was for leasehold acquisition, $0.6 million for facilities and infrastructure, $2.3 million for capital workovers, and $0.8 million for furniture, fixtures and equipment. Of the $265.8 million spent in 2009, approximately $239.5 million was for drilling and completion activities (of which $28.3 million related to 2008 wells), $15.9 million was for leasehold acquisition, $4.1 million for facilities and infrastructure, $3.4 million for capital workovers, $1.9 million on geological and geophysical and $1.0 million for furniture, fixtures and equipment. Financing activities. Net cash used in financing activities was $7.7 million for 2010, a decrease of $135.3 million from net cash provided by financing activities of $127.6 million in 2009. In September 2009, we received $218.5 million from the offering of our 5% convertible senior notes due 2029. With the proceeds from the offering, we paid $8.8 million in offering cost, paid off our $75.0 million second lien term loan and paid off the $5.0 million balance on our senior credit facility. We had zero borrowings outstanding under our Senior Credit Facility as of December 31, 2010. Debt consisted of the following balances (in thousands): Principal December 31, 2011 December 31, 2010 Carrying Amount Fair Value Principal Carrying Amount Fair Value Senior Credit Facility ........................ $102,500 $102,500 $102,500 $ — $ — $ — 3.25% Convertible Senior Notes due 2026 (1) .... 429 429 429 175,000 167,086 173,478 5.0% Convertible Senior Notes due 2029 (2) ..... 218,500 188,197 201,785 218,500 179,171 212,164 8.875% Senior Notes due 2019 ................ 275,000 275,000 243,898 — — — Total debt ................................. $596,429 $566,126 $548,612 $393,500 $346,257 $385,642 (1) The debt discount was amortized using the effective interest rate method based upon an original five year term through December 1, 2011. (2) The debt discount is amortized using the effective interest rate method based upon an original five year term through October 1, 2014. 48
Interest Expense The following table summarizes the total interest expense relating to contractual interest rate, amortization of debt discount and financing costs (in thousands) and the effective interest rate on the liability component the debt excluding the Senior Credit Facility. Interest Expense 2011 2010 2009 Effective Interest Rate Interest Expense Effective Interest Rate Interest Expense Effective Interest Rate 3.25% Convertible Senior Notes due 2026 ....... $ 4,305 9.0% $14,537 9.0% $13,900 9.0% 5.0% Convertible Senior Notes due 2029 ........ 20,948 10.5% 20,031 11.2% 5,043 11.2% 8.875% Senior Notes due 2019 ................ 20,910 8.9% — — — — Senior Credit Facility On May 5, 2009, we entered into a Second Amended and Restated Credit Agreement (including all amendments, the “Senior Credit Facility”) that replaced our previous facility. On February 25, 2011, we entered into a Fourth Amendment to the Senior Credit Facility. The primary conditions for the effectiveness of the Fourth Amendment were (i) the closing of the issuance and sale of our 2019 Notes, and (ii) the placement of not less than $175 million of net proceeds from the sale of the 2019 Notes in an escrow account with the lenders to be used for the redemption or earlier repurchase of all our outstanding 3.25% Convertible Senior Notes due 2026 (the “2026 Notes”), both of which occurred on March 2, 2011. Total lender commitments under the Senior Credit Facility are $600 million subject to borrowing base limitations as of December 31, 2011 of $275 million. The Senior Credit Facility matures on July 1, 2014 (subject to automatic extension to February 25, 2016, if, prior to maturity, we prepay or escrow certain proceeds sufficient to prepay our $218.5 million 5% Convertible Senior Notes due 2029 (the “2029 Notes”). Revolving borrowings under the Senior Credit Facility are limited to, and subject to, periodic redeterminations of the borrowing base. Interest on revolving borrowings under the Senior Credit Facility accrues at a rate calculated, at our option, at the bank base rate plus 1.00% to 1.75%, or LIBOR plus 2.00% to 2.75%, depending on borrowing base utilization. Pursuant to the terms of the Senior Credit Facility, borrowing base redeterminations occur on a semi-annual basis on April 1 and October 1. As of December 31, 2011, we had $102.5 million outstanding under the Senior Credit Facility. Substantially all our assets are pledged as collateral to secure the Senior Credit Facility. Availability under the Senior Credit Facility as of December 31, 2011 was $172.5 million. The terms of the Senior Credit Facility require us to maintain certain covenants. Capitalized terms used here, but not defined, have the meanings assigned to them in the Senior Credit Facility. In October 2011, we entered into a Sixth Amendment to the Senior Credit Facility which amended the EBITDAX annualized calculation and increased the borrowing base to $275 million. The primary financial covenants include: • Current Ratio of 1.0/1.0; • Interest Coverage Ratio of EBITDAX of not less than 2.5/1.0 for the trailing four quarters or when measured for the third and fourth quarters of 2011 and the first quarter of 2012, shall be based on annualized interim EBITDAX amounts rather than trailing four quarters. The interest for such period to apply solely to the cash portion of interest expense; and • Total Debt no greater than 4.0 times EBITDAX for the trailing four quarters. Total Debt used in such ratio to be reduced by the amount of any restricted cash held in an escrow account established for the benefit of the lenders and dedicated to the redemption or prepayment of the 2026 Notes, the 2029 Notes or the 2019 Notes; provided that such ratios, when measured for the third and fourth quarters of 2011 and the first quarter of 2012, shall be based on annualized interim EBITDAX amounts rather than trailing four quarters. 49
Page 2 and 3:
Performance 1 Letter to Shareholder
Page 4 and 5: Capital Expenditures ($MM) LETTER T
Page 6 and 7: Operating Cash Flow ($MM) drawn und
Page 8 and 9: GOODRICH PETROLEUM CORPORATION ANNU
Page 10 and 11: GLOSSARY OF CERTAIN OIL AND NATURAL
Page 12 and 13: Working interest is the operating i
Page 14 and 15: Eagle Ford Shale Trend As of Decemb
Page 16 and 17: The following table presents our re
Page 18 and 19: Productive wells consist of produci
Page 20 and 21: Net Production, Unit Prices and Cos
Page 22 and 23: Environmental and Occupational Heal
Page 24 and 25: operate, have adopted, and other st
Page 26 and 27: Section 27A of the Securities Act o
Page 28 and 29: Our operations are subject to gover
Page 30 and 31: equirements for GHG emissions from
Page 32 and 33: Changes in commodity prices signifi
Page 34 and 35: Additionally, as management’s vie
Page 36 and 37: • explosions; • uncontrollable
Page 38 and 39: PART II Item 5. Market for Registra
Page 40 and 41: Item 6. Selected Financial Data The
Page 42 and 43: locations. Our Haynesville Shale ac
Page 44 and 45: our Cotton Valley Taylor Sand wells
Page 46 and 47: Operating expenses in 2010 include
Page 48 and 49: Exploration expenses for 2010 incre
Page 50 and 51: additional oil and natural gas leas
Page 52 and 53: We have in place a $600 million Sen
Page 56 and 57: As defined in the credit agreement
Page 58 and 59: offering costs of $2.7 million). Ea
Page 60 and 61: government regulation before the ti
Page 62 and 63: Item 7A. Quantitative and Qualitati
Page 64 and 65: MANAGEMENT’S ANNUAL REPORT ON INT
Page 66 and 67: REPORT OF INDEPENDENT REGISTERED PU
Page 68 and 69: GOODRICH PETROLEUM CORPORATION AND
Page 98 and 99: PART III Item 10. Directors and Exe
Page 100 and 101: Gene Washington is the former Direc
Page 102 and 103: 4.7 Form of 5.00% Convertible Senio
Page 104 and 105:
12.1* Ratio of Earnings to Fixed Ch
Page 106 and 107:
Signature Title /s/ /s/ /s/ ARTHUR
Page 108:
Corporate Headquarters 801 Louisian
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goodrich petroleum corporation - RR DONNELLEY FINANCIAL

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