goodrich petroleum corporation - RR DONNELLEY FINANCIAL

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GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED <strong>FINANCIAL</strong> STATEMENTS Investors may convert their notes at their option at any time prior to the close of business on the second business day immediately preceding the maturity date under the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter) commencing after December 31, 2009, if the last reported sale price of our common stock is greater than or equal to 135% of the conversion price of the notes (as defined in this prospectus supplement) for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter; (2) prior to October 1, 2014, during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price of $1,000 principal amount of notes for each trading day in the measurement period was less than 97% of the product of the last reported sale price of our common stock and the conversion rate on such trading day; (3) if the notes have been called for redemption; or (4) upon the occurrence of one of the specified corporate transactions described in this prospectus supplement. Investors may also convert their notes at their option at any time beginning on September 1, 2029, and ending at the close of business on the second business day immediately preceding the maturity date. The notes are convertible into shares of our common stock at a rate equal to 28.8534 shares per $1,000 principal amount of notes (equal to an “initial conversion price” of approximately $34.66 per share of common stock per share). Proceeds received from the issuance of the 2029 Notes were used, in part, to fully pay-off a second lien term loan of $75 million and for general corporate purposes. We separately account for the liability and equity components of our 5% convertible senior notes due 2029 in a manner that reflects our nonconvertible debt borrowing rate when interest is recognized in subsequent periods. Upon issuance of the notes in September 2009, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, we recorded a debt discount of $49.4 million, thereby reducing the carrying the value of $218.5 million notes on the December 31, 2009 balance sheet to $171.1 million and recorded an equity component net of tax of $32.1 million. The debt discount is amortized using the effective interest rate method based upon an original five year term through October 1, 2014. 3.25% Convertible Senior Notes Due 2026 During the year ended December 31, 2011, we repurchased $174.6 million of our 2026 Notes using a portion of the net proceeds from the issuance of our 2019 Notes. We recorded a $0.1 million gain on the early extinguishment of debt related to the repurchase for the year ended December 31, 2011. At December 31, 2011, $0.4 million of the 2026 Notes remained outstanding. Holders may present to us for redemption the remaining outstanding 2026 Notes on December 1, 2016 and December 1, 2021. Upon conversion, we have the option to deliver shares at the applicable conversion rate, redeem in cash or in certain circumstances redeem in a combination of cash and shares. The notes are convertible into shares of our common stock at a rate equal to the sum of: a) 15.1653 shares per $1,000 principal amount of notes (equal to a “base conversion price” of approximately $65.94 per share) plus b) an additional amount of shares per $1,000 of principal amount of notes equal to the incremental share factor (2.6762), multiplied by a fraction, the numerator of which is the applicable stock price less the “base conversion price” and the denominator of which is the applicable stock price 76
GOODRICH PETROLEUM CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED <strong>FINANCIAL</strong> STATEMENTS NOTE 5—Income (Loss) Per Common Share Net income (loss) applicable to common stock was used as the numerator in computing basic and diluted income (loss) per common share for the years ended December 31, 2011, 2010 and 2009. The following table sets forth information related to the computations of basic and diluted income (loss) per share. Year Ended December 31, 2011 2010 2009 (Amounts in thousands, except per share data) Basic income (loss) per share: Income (loss) applicable to common stock .................... $ (37,805) $ (268,167) $ (257,033) Weighted-average shares of common stock outstanding (1) ...... 36,124 35,921 35,866 Basic income (loss) per share .................................. $ (1.05) $ (7.47) $ (7.17) Diluted income (loss) per share: Income (loss) applicable to common stock .................... $ (37,805) $ (268,167) $ (257,033) Dividends on convertible preferred stock (2) .................. — — — Interest and amortization of loan cost on convertible senior notes, netoftax(3) ......................................... — — — Diluted income (loss) ........................................ $ (37,805) $ (268,167) $ (257,033) Weighted-average shares of common stock outstanding (1) ...... 36,124 35,921 35,866 Assumed conversion of convertible preferred stock (2) .......... — — — Assumed conversion of convertible senior notes (3) ............ — — — Stock options and restricted stock (4) ........................ — — — Weighted-average diluted shares outstanding .................. 36,124 35,921 35,866 Diluted income (loss) per share ................................. $ (1.05) $ (7.47) $ (7.17) (1) Shares of common stock outstanding under the Share Lending Agreement not included in the shares outstanding. See Note 7. — 1,624,300 1,624,300 (2) Common shares issuable upon assumed conversion of convertible preferred stock were not presented as they would have been antidilutive. 3,587,850 3,587,850 3,587,850 (3) Common shares issuable upon assumed conversion of the 2026 Notes and the 2029 Notes were not presented as they would have been anti-dilutive. 7,067,065 8,958,395 — (4) Common shares issuable on assumed conversion of restricted stock and employee stock option were not included in the computation of diluted loss per common share since their inclusion would have been anti-dilutive. 171,177 53,144 125,131 77
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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
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Our operations are subject to gover
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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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