goodrich petroleum corporation - RR DONNELLEY FINANCIAL

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company’s primary market risks are attributable to fluctuations in commodity prices and interest rates. These fluctuations can affect revenues and cash flow from operating, investing and financing activities. The Company’s risk-management policies provide for the use of derivative instruments to manage these risks. The types of derivative instruments utilized by the Company include futures, swaps, options and fixed-price physicaldelivery contracts. The volume of commodity derivative instruments utilized by the Company may vary from year to year and is governed by risk-management policies with levels of authority delegated by the Board of Directors. Both exchange and over-the-counter traded commodity derivative instruments may be subject to margin deposit requirements, and the Company may be required from time to time to deposit cash or provide letters of credit with exchange brokers or its counterparties in order to satisfy these margin requirements. For information regarding the Company’s accounting policies and additional information related to the Company’s derivative and financial instruments, see Note 1—“Summary of Significant Accounting Policies”, Note 8—“Derivative Instruments” and Note 4—“Debt and Interest Expense” in the Notes to Consolidated Financial Statements in Part II Item 8 of this Annual Report on Form 10-K. Commodity Price Risk The Company’s most significant market risk relates to fluctuations in natural gas and crude oil prices. Management expects the prices of these commodities to remain volatile and unpredictable. As these prices decline or rise significantly, revenues and cash flow will also decline or rise significantly. In addition, a non-cash write-down of the Company’s oil and natural gas properties may be required if future commodity prices experience a sustained and significant decline. Below is a sensitivity analysis of the Company’s commodityprice-related derivative instruments. The Company had derivative instruments in place to reduce the price risk associated with production in 2012 of approximately 60 MMBtus per day of natural gas and 2 MBbls per day of crude oil as of December 31, 2011. At December 31, 2011, the Company had a net asset derivative position of $39.1 million related to these derivative instruments. Utilizing actual derivative contractual volumes, a 10% increase in underlying commodity prices would have reduced the fair value of these instruments by approximately $6.8 million, while a 10% decrease in underlying commodity prices would have increased the fair value of these instruments by approximately $22.8 million. However, a gain or loss would be substantially offset by a decrease or increase, respectively, in the actual sales value of production covered by the derivative instruments. Interest Rate Risk As of December 31, 2011, we had $102.5 million outstanding variable-rate debt and $493.9 million of principal fixed-rate debt. To the extent we incur borrowings under our Senior Credit Facility, our exposure to variable interest rates will increase. In the past, we have entered into interest rate swaps to help reduce our exposure to interest rate risk, and we may seek to do so in the future if we deem appropriate. As of December 31, 2011, we have no interest rate swaps. 56
Item 8. Financial Statements and Supplementary Data GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY INDEX TO CONSOLIDATED <strong>FINANCIAL</strong> STATEMENTS Page Management’s Annual Report on Internal Controls over Financial Reporting ......................... 58 Report of Independent Registered Public Accounting Firm—Internal Controls over Financial Reporting . . . 59 Report of Independent Registered Public Accounting Firm—Consolidated Financial Statements for the years ended December 31, 2011 , 2010 and 2009 ............................................. 60 Consolidated Balance Sheets as of December 31, 2011 and 2010 ................................... 61 Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 .......... 62 Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009 .......... 63 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2011, 2010 and 2009. ................................................................................ 64 Notes to the Consolidated Financial Statements ................................................ 65 57
Page 2 and 3:
Performance 1 Letter to Shareholder
Page 4 and 5:
Capital Expenditures ($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 54 and 55: Year ended December 31, 2010 Compar
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 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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