Ceiling Test Write-Down and Deferred Tax Asset Valuation AllowanceForest recorded a non-cash ceiling test write-down of $349 million in the second quarter of 2012 pursuant to the ceiling test limitation prescribed by the Securities and Exchange Commission for companies using the full cost method of accounting. The write-down was primarily a result of a significant decline in natural gas prices used in the ceiling test calculation to $3.15 per Mcf in the second quarter of 2012 from $3.73 per Mcf in the first quarter of 2012. Based on current commodity prices, Forest expects further decreases in the natural gas and NGL prices used in the ceiling test calculation which will likely result in a ceiling test write-down in the third quarter of 2012. As a result of this quarter’s ceiling test write-down and the anticipated ceiling test write-down next quarter, Forest recorded a valuation allowance of $290 million against its deferred tax assets.
|Three Months Ended June 30,|
|Exploration and development||$||197,574||$||192,525|
|Land and leasehold acquisitions||8,937||51,801|
|ARO, capitalized interest, and capitalized equitycompensation||4,863||5,378|
|Total capital expenditures||$||211,374||$||249,704|