goodrich petroleum corporation - RR DONNELLEY FINANCIAL

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of Goodrich Petroleum Corporation We have audited the accompanying consolidated balance sheets of Goodrich Petroleum Corporation and subsidiary as of December 31, 2011 and 2010, and the related consolidated statements of operations, cash flows, and stockholders’ equity for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Goodrich Petroleum Corporation and subsidiary at December 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Goodrich Petroleum Corporation’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2012 expressed an unqualified opinion thereon. Houston, Texas February 24, 2012 /s/ Ernst & Young LLP 60
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (In Thousands) December 31, 2011 2010 ASSETS CU<strong>RR</strong>ENT ASSETS: Cash and cash equivalents ............................................. $ 3,347 $ 17,788 Restricted cash ...................................................... — 4,232 Accounts receivable, trade and other, net of allowance ....................... 7,594 9,231 Income taxes receivable ............................................... 340 4,335 Accrued oil and natural gas revenue ...................................... 20,420 14,920 Fair value of oil and natural gas derivatives ................................ 56,486 24,467 Inventory ........................................................... 8,627 7,831 Prepaid expenses and other ............................................. 4,315 3,045 Total current assets ............................................... 101,129 85,849 PROPERTY AND EQUIPMENT: Oil and natural gas properties (successful efforts method) ..................... 1,542,406 1,217,891 Furniture, fixtures and equipment ........................................ 5,654 4,962 1,548,060 1,222,853 Less: Accumulated depletion, depreciation and amortization .................. (824,894) (685,110) Net property and equipment ........................................ 723,166 537,743 Fair value of oil and natural gas derivatives .................................... — 15,732 Deferred tax assets ....................................................... 19,720 19,695 Deferred financing cost and other ............................................ 18,088 5,558 TOTAL ASSETS ................................................ $ 862,103 $ 664,577 LIABILITIES AND STOCKHOLDERS’ EQUITY CU<strong>RR</strong>ENT LIABILITIES: Accounts payable .................................................... $ 46,095 $ 47,106 Accrued liabilities .................................................... 43,874 47,105 Accrued abandonment costs ............................................ 5,176 4,392 Deferred tax liabilities current .......................................... 19,720 19,695 Current portion of debt ................................................ — 167,086 Total current liabilities ............................................ 114,865 285,384 LONG-TERM DEBT ..................................................... 566,126 179,171 Accrued abandonment costs ................................................ 12,249 11,683 Fair value of oil and natural gas derivatives .................................... 17,420 4,367 Transportation obligation .................................................. 7,743 — Total liabilities .................................................. 718,403 480,605 Commitments and contingencies (See Note 9) STOCKHOLDERS’ EQUITY: Preferred stock: 10,000,000 shares authorized: Series B convertible preferred stock, $1.00 par value, issued and outstanding 2,250,000 ........................................................ 2,250 2,250 Common stock: $0.20 par value, 100,000,000 shares authorized, issued and outstanding 36,378,508 and 37,685,378 shares, respectively ................. 7,276 7,212 Treasury stock (44,826 and 12,377 shares, respectively) ...................... (689) (196) Additional paid in capital .............................................. 641,790 643,828 Retained earnings (accumulated deficit) ................................... (506,927) (469,122) Total stockholders’ equity .......................................... 143,700 183,972 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY .............. $ 862,103 $ 664,577 See accompanying notes to consolidated financial statements. 61
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 62 and 63: Item 7A. Quantitative and Qualitati
Page 64 and 65: MANAGEMENT’S ANNUAL REPORT ON INT
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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