goodrich petroleum corporation - RR DONNELLEY FINANCIAL

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED <strong>FINANCIAL</strong> STATEMENTS The following schedule reflects the various assumptions included in the Black-Scholes model as it relates to the valuation of our options of the options modified in 2010: 2010 Risk-free interest rate (1) .......................................................... 2.55% Expected volatility (2) ............................................................ 64% Expected dividend yield (3) ........................................................ 0% Expected term (4) (in years) ....................................................... 6 (1) Risk-free interest rate—is based on a zero-coupon U.S. government instrument over the expected term. (2) Expected volatility—is based on the weighted average historical volatility of our common stock. (3) Expected dividend yield—we do not pay dividends on our common stock. (4) Expected term—we use the midpoint of the vesting period and the life of the grant to estimate employee option exercise timing. As of December 31, 2011, total unrecognized compensation cost related to options is as follows: Unrecognized compensation costs (thousands) Weighted Average years to recognition (years) December 31, 2011 ............................................. $ 398 1.12 Restricted Stock In 2003, we began granting a series of restricted stock awards. Restricted stock awarded under the 2006 Plan typically has a vesting period of three years. During the vesting period, ownership of the shares cannot be transferred and the shares are subject to forfeiture if employment ends before the end of the vesting period. Certain restricted stock awards provide for accelerated vesting. Restricted shares are not considered to be currently issued and outstanding until the restrictions lapse and/or they vest. Restricted stock activity and values under our plan for the years ended December 31, 2011, 2010 and 2009 were as follows: Number of Shares Granted Value of Shares Granted Fair Value of Stock Vested (thousands) (thousands) 2011 .............................................. 561,714 $7,921 $7,289 2010 .............................................. 471,845 7,432 6,137 2009 .............................................. 343,749 7,675 4,925 Restricted stock activity under our plan for the year ended December 31, 2011, and changes during the year then ended were as follows: Number of Shares Weighted Average Grant-Date Fair Value Total Value (thousands) Unvested at January 1, 2011 ............................ 747,830 $19.09 $14,278 Vested ............................................. (348,892) 20.89 (7,289) Granted ............................................. 561,714 14.10 7,921 Forfeited ............................................ (28,843) 18.67 (538) Unvested at December 31, 2011 ......................... 931,809 $15.42 $14,372 72
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED <strong>FINANCIAL</strong> STATEMENTS As of December 31, 2011, total unrecognized compensation cost related to restricted stock is as follows: Unrecognized compensation costs (thousands) Weighted Average years to recognition (years) December 31, 2011 ............................................ $ 13,855 2.36 NOTE 3—Asset Retirement Obligations The reconciliation of the beginning and ending asset retirement obligation for the periods ending December 31, 2011 and 2010 is as follows (in thousands): December 31, 2011 2010 Beginning balance ................................................. $16,075 $18,290 Liabilities incurred ................................................ 566 76 Revisions in estimated liabilities ...................................... 1,525 1,187 Liabilities settled .................................................. (1,904) (175) Accretion expense ................................................. 1,286 1,507 Dispositions ...................................................... (123) (4,810) Ending balance ................................................... $17,425 $16,075 Current liability ................................................... $ 5,176 $ 4,392 Long term liability ................................................. $12,249 $11,683 During 2011, we determined that estimated cost to retire a non-productive facility had increased by $1.1 million relative to the 2010 estimate. Additionally, we increased our estimated liability by $0.4 million as the expected productive lives of certain wells had decreased relative to the 2010 estimate, while the plug and abandon costs remained relatively flat with only slight increases. As a result, we revised our previously estimated asset retirement obligation by a discounted $1.5 million. NOTE 4—Debt 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 $385,642 (1) The debt discount was amortized using the effective interest rate method based upon an original five year term through December 1, 2011. (2) The debt discount is amortized using the effective interest rate method based upon an original five year term through October 1, 2014. 73
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Performance 1 Letter to Shareholder
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Capital Expenditures ($MM) LETTER T
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Operating Cash Flow ($MM) drawn und
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GOODRICH PETROLEUM CORPORATION ANNU
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GLOSSARY OF CERTAIN OIL AND NATURAL
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Working interest is the operating i
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Eagle Ford Shale Trend As of Decemb
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The following table presents our re
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Productive wells consist of produci
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Net Production, Unit Prices and Cos
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Environmental and Occupational Heal
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operate, have adopted, and other st
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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 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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