In the event we make a claim under our insurance policies, we will be subject to the credit risk of
the insurers. Volatility and disruption in the financial and credit markets may adversely affect the credit
quality of our insurers and impact their ability to pay out claims.
Other Commitments and Contingencies
. We are a defendant in various lawsuits arising in the
ordinary course of our business. While the outcome of these lawsuits cannot be predicted with
certainty and could have a material adverse effect on our financial position, we do not believe that the
outcome of these legal proceedings, individually or in the aggregate, will have a material adverse effect
on our financial condition, results of operations or cash flows.
Industry Concentration
Financial instruments that potentially subject us to concentrations of credit risk consist principally
of accounts receivable with respect to our oil and gas operations and derivative instruments. During
2011, 2010 and 2009, sales to ConocoPhillips accounted for 41%, 57% and 44%, respectively, of our
total revenues. During 2011, sales to Tesoro Corporation and Valero Energy Corporation accounted for
13% and 11%, respectively, of our total revenues. The contract with Tesoro Corporation expired in
November 2011. We did not renew this contract, and upon expiration we entered into a contract with
ConocoPhillips for these volumes. During 2009, sales to Plains Marketing, L.P., or PMLP, accounted
for 22% of our total revenues. The contract with PMLP expired in November 2009, and we entered into
contracts with purchasers who previously purchased through PMLP, the most significant of which was
ConocoPhillips. During 2011, 2010 and 2009, no other purchaser accounted for more than 10% of our
total revenues. The loss of any single significant customer or contract could have a material adverse
short-term effect; however, we do not believe that the loss of any single significant customer or
contract would materially affect our business in the long-term. We believe such purchasers could be
replaced by other purchasers under contracts with similar terms and conditions. However, their role as
the purchaser of a significant portion of our oil production does have the potential to impact our overall
exposure to credit risk, either positively or negatively, in that they may be affected by changes in
economic, industry or other conditions. We do not currently require letters of credit or other collateral
from the above stated purchasers to support trade receivables. Accordingly, a material adverse change
in purchaser’s financial condition could adversely impact our ability to collect the applicable
receivables, and thereby affect our financial condition.
There are a limited number of alternative methods of transportation for our production.
Substantially all of our oil and gas production is transported by pipelines and trucks owned by third
parties. The inability or unwillingness of these parties to provide transportation services to us for a
reasonable fee could result in us having to find transportation alternatives, increased transportation
costs or involuntary curtailment of a significant portion of our oil and gas production which could have a
negative impact on future results of operations or cash flows.
Note 13 — Supplemental Cash Flow Information
Cash payments for interest and income taxes were as follows (in thousands):
Year Ended December 31,
2011
2010
2009
Cash payments for interest (net of capitalized interest) . . . . . $ 164,474 $ 98,262 $ 45,496
Cash (receipts) payments for income taxes . . . . . . . . . . . . . . $ (62,414) $ (58,920) $ 151,682
At December 31, 2011 and 2010, accrued capital expenditures included in accounts payable in the
balance sheet were $196.0 million and $150.1 million, respectively.
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