"In addition to significant cost reductions, we also negotiated and entered into a private limited partnership with Harbinger Group, Inc. which provided us with $573 million to reduce our debt as well as a 25.5% ongoing interest and a vehicle to conduct conventional asset acquisitions in the future.
"We intend to pursue producing property acquisitions during 2013 across core and new areas, and also plan to engage partners to provide financial support for undrilled locations and drilling costs associated with future acquisitions. We are convinced that the economics of producing property acquisitions are presently superior to drill bit economics.
"We are encouraged that natural gas prices have increased since the 2nd quarter 2012 and are optimistic about the future of the natural gas industry in general and our prospects for the future. We begin 2013 with significant liquidity, a much better price than the average realized in 2012 and an acquisition strategy which should produce stronger results.
"We appreciate the tremendous efforts of our employees and contractors during the difficult year just completed, we are grateful for the support of our Directors and Shareholders, and we look forward to implementing our strategy during 2013 and beyond to improve our results.”Net income Our reported net income (loss) shown below, a GAAP measure, includes certain items not typically included by securities analysts in their published estimates of financial results. The following table provides a reconciliation of our net income (loss) to the non-GAAP measure of adjusted net income:
|Three Months Ended||Years Ended|
|December 31, 2012||December 31, 2011||December 31, 2012||December 31, 2011|
|(in thousands, except per share amounts)||Amount||Per share||Amount||Per share||Amount||Per share||Amount||Per share|
|Net income (loss), GAAP||$||(269,029||)||$||(166,652||)||$||(1,393,285||)||$||22,596|
|Non-cash mark-to-market (gains) losses on derivative financial instruments, before taxes||(8,394||)||(36,425||)||135,945||(84,313||)|
|Non-cash write down of oil and natural gas properties, before taxes||324,040||233,239||1,346,749||233,239|
|Adjustments included in equity income||5,405||—||27,088||—|
|Non-recurring other operating items||8,200||118||17,928||27,660|
|Deferred finance cost amortization acceleration||—||1,689||3,000||1,689|
|Income taxes on above adjustments (1)||(131,700||)||(79,448||)||(612,284||)||(71,310||)|
|Adjustment to deferred tax asset valuation allowance (2)||107,612||66,661||557,314||(9,036||)|
|Total adjustments, net of taxes||305,163||185,834||1,475,740||97,929|
|Adjusted net income||$||36,134||$||19,182||$||82,455||$||120,525|
|Net income (loss), GAAP (3)||$||(269,029||)||$||(1.25||)||$||(166,652||)||$||(0.78||)||$||(1,393,285||)||$||(6.50||)||$||22,596||$||0.11|
|Adjustments shown above (3)||305,163||1.42||185,834||0.87||1,475,740||6.88||97,929||0.46|
|Dilution attributable to stock options (4)||—||—||—||—||—||—||—||(0.01||)|
|Adjusted net income||$||36,134||$||0.17||$||19,182||$||0.09||$||82,455||$||0.38||$||120,525||$||0.56|
|Common stock and equivalents used for earnings per share (EPS):|
|Weighted average common shares outstanding||214,672||214,137||214,321||213,908|
|Dilutive stock options||816||1,479||—||2,797|
|Shares used to compute diluted EPS for adjusted net income||215,488||215,616||214,321||216,705|
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