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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Data
The following table sets forth certain information regarding the production volumes, natural gas and oil
sales, average sales prices received, other operating income and expenses for the periods indicated:
Years Ended December 31,
2010 2009 2008
Net Production:
Natural gas (bcf) ............................................... 924.9 834.8 775.4
Oil (mmbbl) (a) .................................................. 18.4 11.8 11.2
Natural gas equivalent (bcfe) .....................................
Natural Gas and Oil Sales ($ in millions):
1,035.2 905.5 842.7
Natural gas sales .............................................. $ 3,169 $ 2,635 $ 6,003
Natural gas derivatives – realized gains (losses) ..................... 1,982 2,313 267
Natural gas derivatives – unrealized gains (losses) ................... 425 (492) 521
Total natural gas sales ........................................ 5,576 4,456 6,791
Oil sales (a) .................................................... 1,079 656 1,066
Oil derivatives – realized gains (losses) ............................ 74 33 (275)
Oil derivatives – unrealized gains (losses) .......................... (1,082) (96) 276
Total oil sales ............................................... 71 593 1,067
Total natural gas and oil sales ................................ $ 5,647 $ 5,049 $ 7,858
Average Sales Price (excluding gains (losses) on derivatives):
Natural gas ($ per mcf) .......................................... $ 3.43 $ 3.16 $ 7.74
Oil ($ per bbl) ................................................. $ 58.67 $ 55.60 $ 95.04
Natural gas equivalent ($ per mcfe) ...............................
Average Sales Price (excluding unrealized gains (losses) on
derivatives):
$ 4.10 $ 3.63 $ 8.39
Natural gas ($ per mcf) .......................................... $ 5.57 $ 5.93 $ 8.09
Oil ($ per bbl) ................................................. $ 62.71 $ 58.38 $ 70.48
Natural gas equivalent ($ per mcfe) ...............................
Other Operating Income
$ 6.09 $ 6.22 $ 8.38
(b) ($ in millions):
Marketing, gathering and compression net margin ................... $ 127 $ 147 $ 93
Service operations net margin ....................................
Other Operating Income
$ 32 $ 8 $ 30
(b) ($ per mcfe):
Marketing, gathering and compression net margin ................... $ 0.12 $ 0.16 $ 0.11
Service operations net margin ....................................
Expenses ($ per mcfe):
$ 0.03 $ 0.01 $ 0.04
Production expenses ........................................... $ 0.86 $ 0.97 $ 1.05
Production taxes ............................................... $ 0.15 $ 0.12 $ 0.34
General and administrative expenses .............................. $ 0.44 $ 0.38 $ 0.45
Natural gas and oil depreciation, depletion and amortization ........... $ 1.35 $ 1.51 $ 2.34
Depreciation and amortization of other assets ....................... $ 0.21 $ 0.27 $ 0.21
Interest expense (c) ..............................................
Interest Expense ($ in millions):
$ 0.08 $ 0.22 $ 0.22
Interest expense (c) .............................................. $ 99 $ 227 $ 192
Interest rate derivatives – realized (gains) losses .................... (14) (23) (6)
Interest rate derivatives – unrealized (gains) losses .................. (66) (91) 85
Total interest expense ........................................ $ 19 $ 113 $ 271
Net Wells Drilled ................................................ 1,149 1,003 1,733
Net Producing Wells as of the End of Period ....................... 22,617 22,919 22,813
(a) Includes NGLs.
(b) Includes revenue and operating costs and excludes depreciation and amortization of other assets.
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