The following table provides a reconciliation of adjusted net income to net (loss) income for the three and nine months ended September 30, 2012 and 2011 (in thousands, except per-share amounts).
| Three Months Ended
| Nine Months Ended
|Net (loss) income||$||(2,355||)||$||7,073||$||7,221||$||16,526|
|Adjustments for certain items:|
|Unrealized loss (gain) on commodity derivatives||4,185||(1,739||)||(2,582||)||(3,821||)|
Gain on sale of oil and gas properties
|Related income tax effect||(1,423||)||591||878||1,466|
|Adjusted net income||$||407||$||5,925||$||5,517||$||13,680|
|Adjusted net income per diluted share||$||0.01||$||0.21||$||0.16||$||0.48|
We define EBITDAX as net (loss) income, plus (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation expense, (4) unrealized loss (gain) on commodity derivatives, (5) gain on sale of oil and gas properties, (6) interest expense, and (7) income taxes. EBITDAX is not a measure of net income or cash flow as determined by GAAP. The amounts included in the calculation of EBITDAX were computed in accordance with GAAP. EBITDAX is presented herein and reconciled to the GAAP measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund development and exploration activities. This measure is provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP (including the notes), included in our SEC filings and posted on our website.