UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 20112012

OR

Commission File No. 0-16203

DELTAPAR PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (303) 293-9133(713) 969-3293

Securities registered under Section 12(b) of the Act: None

Securities registered under to Section 12(g) of the Act: NoneCommon stock, par value $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨x    No  x¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ¨Yes  x    No¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

AsIndicate by check mark whether the registrant has filed all document and reports required to be filed by Sections 12, 13 or 15 (d) of June 30, 2011, the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  x    No  ¨

The aggregate market value of voting stockcommon equity held by non-affiliates of the registrant was approximately $95.0 million,$2,860,000, based on the closing price of the Common Stock on the NASDAQ National MarketOTC Bulletin Board of $0.50$0.10 per share.share as of June 29, 2012. As of August 17, 2012, 28,576,067March 25, 2013, 150,080,405 shares of registrant’s Common Stock, $0.01 par value, were issued and outstanding.

TABLE OF CONTENTS

The terms “Delta,” “Company,” “we,” “our,” and “us” refer to Delta Petroleum Corporation and its subsidiaries unless the context suggests otherwise.

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EXPLANATORY NOTE

Delta Petroleum Corporation is filing this Annual Report on Form 10-K for the fiscal year ended December 31, 2011 as part of its efforts to become current in its filing obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This report is being filed contemporaneously with the company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2012, and June 30, 2012, which have not been previously filed. See “Business—Bankruptcy Matters” for a description of the company’s ongoing bankruptcy process.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We are including the following discussion to inform our existing and potential security holders generally of some of the risks, trends and uncertainties that can affect us and to take advantage of the “safe harbor” protection for forward-looking statements afforded under federal securities laws. From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing and potential security holders about us. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “propose,” “potential,” “predict,” “forecast,” “believe,” “expect,” “anticipate,” “plan,” “goal” or other words that convey the uncertainty of future events or outcomes. Except for statements of historical or present facts, all other statements contained in this Annual Report on Form 10-K are forward-looking statements. The forward-looking statements may appear in a number of places

Among those risks, trends and include statements with respect to, among other things: business objectives and strategies, including our focus on the Vega Area of the Piceance Basin; operating strategies; oil and gas reserve estimates (including estimates of future net revenues associated with such reserves and the present value of such future net revenues); estimates of future production of oil and natural gas; marketing of oil and natural gas; expected future revenues and earnings, and results of operations; future capital, development and exploration expenditures (including the amount and nature thereof); anticipated compliance with and impact of laws and regulations; and expected outcomes relating to our bankruptcy proceedings.

These statements by their nature are subject to certain risks, uncertainties and assumptions and will be influenced by various factors. Should any of the assumptions underlying a forward-looking statement prove incorrect, actual results could vary materially. In some cases, information regarding certain important factors that could cause actual results to differ materially from any forward-looking statement appears together with such statement. In addition, the factors described under Critical Accounting Policies and Risk Factors, as well as other possible factors not listed, could cause actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the following:are:

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Many of these factors are beyond our ability to control or predict. These factors are not intended to represent a complete list of the general or specific factors that may affect us.

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You should read these statements carefully because they discuss our expectations about our future performance, contain projections of our future operating results or our future financial condition, or state other “forward-looking” information within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You should be aware that the occurrence of any of the events described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and elsewhere in this Annual Report on Form 10-K could substantially harm our business, results of operations and financial condition and that upon the occurrence of any of these events, the trading price of our common stock could decline, and you could lose all or part of your investment.

All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements above and other cautionary statements included in this report.Annual Report on Form 10-K. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

We caution you not to place undue reliance on these forward-looking statements. We urge you to carefully review and consider the disclosures made in this Annual Report on Form 10-K and our other reports filed with the SECSecurities and Exchange Commission that attempt to advise interested parties of the risks andrisk factors that may affect our business.

The terms “Par,” “Company,” “we,” “our,” and “us” refer to Par Petroleum Corporation (and for periods prior to the reorganization described herein, Delta Petroleum Corporation) and its consolidated subsidiaries unless the context suggests otherwise.

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PART I

Item 1. Business

General

We are an independent natural gas and oil company based in Houston, Texas. Our primary asset is a 33.34% non-operated equity interest in Piceance Energy, LLC (“Piceance Energy”), as described in more detail below. We are the successor entity to Delta Petroleum Corporation (“we,” “us,” “our,” “Delta,”Delta” or “Predecessor”) following its emergence from bankruptcy. On emergence, Delta changed its name to Par Petroleum Corporation (“Par” or “Successor”). In addition to our interest in Piceance Energy, we own non-operated working interests in offshore California, Colorado and New Mexico. Our total estimated proved reserves as of December 31, 2012, which includes our share of the “Company”estimated proved reserves of Piceance Energy, were 167.9 Bcfe, consisting of 123.1 Bcf of natural gas, 6.3 MMBbls of NGLs and 1.1 MMBbls of oil. The pre-tax present value, discounted at 10%, of the estimated future net revenues based on average prices during 2012 (“PV-10”) is an independentof our estimated proved reserves at December 31, 2012 was approximately $80.0 million. At December 31, 2012, our standardized measure of discounted cash flows, which includes the estimated impact of future income taxes, totaled approximately $80.0 million (See “— Natural Gas and Oil Operations — Reconciliation of PV-10 to Standardized Measure” for a reconciliation of PV-10 to our standardized measure of discounted cash flow).

On December 31, 2012, we acquired Texadian Energy, Inc. (formerly known as SEACOR Energy Inc. (“Texadian”)) for approximately $14.0 million plus estimated working capital at closing. Texadian operates a crude oil sourcing, marketing, transportation and gas company engaged primarilydistribution business with significant logistics capability in historical pipeline shipping status, a rail car fleet, and tow and barge chartering. As a result of this acquisition, our business for 2013 and future years will also include commodities marketing and logistics relating to the exploration for, and the acquisition, development, production,purchase, storage, transportation and sale of natural gasenergy and crude oil. Our core area of operations is the Rocky Mountain Region, where the majority of our proved reserves and production are located.related products.

Delta was incorporated in Colorado in 1984. On November 07, 2005, Delta reincorporated in Delaware. Our principal executive offices areoffice is located at 370 17th Street,1301 McKinney, Suite 4300, Denver, Colorado 80202. Our2025, Houston, Texas 77010, and our telephone number is (303) 293-9133. We also maintain a website at http://www.deltapetro.com, which contains information about us. Our website is not part of this Form 10-K.(713) 969-3293.

Bankruptcy Mattersand Plan of Reorganization

Bankruptcy FilingBackground and Plan Approval

On December 16, 2011, Delta Petroleum Corporation (“Delta”) and its subsidiaries Amber Resources Company of Colorado, (“Amber”), DPCA, LLC, Delta Exploration Company, Inc., Delta Pipeline, LLC, DLC, Inc., CEC, Inc. and Castle Texas Production Limited Partnership filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On January 6, 2012, Castle Exploration Company, Inc., a subsidiary of DPCADelta Pipeline, LLC, also filed a voluntary petition under Chapter 11 in the Bankruptcy Court. We refer to Delta and its subsidiaries included in the bankruptcy petitions are collectively referred to as the “Debtors.”

For the duration of our Chapter 11 proceedings, our operations, including our ability to develop and execute a business plan, are subject to the risks and uncertainties associated with the bankruptcy process as described below under “Risk Factors.” As such, and because our structure, the number of our outstanding shares, shareholders, majority shareholders, assets, liabilities, officers and/or directors will likely be significantly different following the outcome of the bankruptcy proceedings, the description of business operations, planned operations and properties included in this report may not accurately reflect our operations, properties and business plans following the bankruptcy process.

Contribution Agreement

On December 27, 2011, the Debtors filed a motion requesting an order to approve matters relating to a proposed sale of the company’sDelta’s assets, including bidding procedures, establishment of a sale auction date and establishment of a sale hearing date. On January 11, 2012, the Bankruptcy Court issued an order approving these matters. On March 20, 2012, Delta announced that it was seeking court approval to amend the bidding procedures for its upcoming auction to allow bids relating to potential plans of reorganization as well as asset sales. On March 22, 2012, the Bankruptcy Court approved the revised procedures.

Following the auction, which was held between April 24 – 25, 2012, the Debtors obtained approval from the Bankruptcy Court to proceed with Laramie Energy II, LLC (“Laramie”) as the sponsor of a plan of reorganization (the “Plan”). In connection with the Plan, Delta entered into a non-binding term sheet describing a transaction by which Laramie and Delta intendintended to form a new joint venture called Piceance Energy LLC (“Piceance Energy”). On June 4, 2012, Delta entered into a Contribution Agreement (the “Contribution Agreement”) with Piceance Energy and Laramie to effect the transactions contemplated by the term sheet. Under

On June 4, 2012, the Debtors filed a disclosure statement relating to the Plan. The Plan was confirmed on August 16, 2012 and was declared effective on August 31, 2012 (the “Emergence Date”). On the Emergence Date, Delta consummated the transaction contemplated by the Contribution Agreement and each of Delta and Laramie will contributecontributed to Piceance Energy their respective assets in Mesa and Garfield Counties, Colorado. Following the contribution,Piceance Basin. Piceance Energy will beis owned 66.66% by Laramie and 33.34% by Delta. We sometimes refer to

On the Emergence Date, Delta as it will exist following the closing of the transaction as “Reorganized Delta.” At the closing, Piceance Energy will enter into a new credit agreement, borrow $100 million under that agreement, and distribute $75 million to Reorganized Delta and $25 million to Laramie. Reorganized Delta will use its distribution to pay bankruptcy expenses and other administrative expense claims, secured debt, and priority claims. The distribution from Piceance Energy to Reorganized Delta and Laramie will be subject to adjustment to give effect to the transaction effective date of July 31, 2012. Reorganized Delta will also enter into a delayed draw term loan credit facility of up to $30 million. The closing transactions are described further in “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Contribution Agreement and Related Credit Agreements.”

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Following the closing, Reorganized Delta will retain its interest in the Point Arguello unit offshore California and, other miscellaneous assets and certain tax attributes, including significant net operating losses. The common stock of Reorganized Delta will be owned by Delta’s creditors, and Delta’s current shareholders will not receive any consideration under the Plan. Delta may also retain its interest in Amber depending on how claims against Amber’s bankruptcy estate are reconciled.

Contemporaneously with the closing, we will enter into a Limited Liability Company Agreement with Laramie that will govern the operations of Piceance Energy. Under that agreement, Laramie will act as the manager of Piceance Energy, will control the day-to-day operations of Piceance Energy and will appoint a majority of the members of its board of managers. Reorganized Delta will have veto rights over certain matters and the right to appoint the remaining members of Piceance Energy’s board of managers. In addition, Laramie and Piceance Energy will enter into a Management Services Agreement pursuant to which Laramie will agree to provide certain services to Piceance Energy for a fee of $650,000 per month.

Also contemporaneously with the closing, we will amend and restate our Certificate of Incorporation and our Bylaws. Under the amended and restated documents, our name will be changed to “Par Petroleum Corporation.” In addition, theits certificate of incorporation and bylaws. The amended and restated Certificatecertificate of Incorporation will containincorporation contains restrictions that will limitrender void certain transfers of the ability of holdersCompany’s stock that involve a holder of five percent or more of our newly issued common stock as of the closing to acquire or dispose of shares in certain circumstances, limit the ability of other persons to become five percent holders and render void certain transfers of our stock that violate these restrictions.its shares. The purpose of these provisionsthis provision is to preserve certain of our tax attributes, including net operating loss carryforwards that we believe may have value. Under the amended and restated bylaws, ourthe Company’s board of directors will have eitherhas five or six members, each of whom will bewas appointed by current creditors of oursour stockholders pursuant to a Stockholders’ Agreement they will enterentered into at closing.on the Emergence Date.

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Piceance Energy

Contemporaneously with the consummation of the Contribution Agreement, Par Piceance Energy Equity LLC, a wholly owned subsidiary of the Company (“Par Piceance Energy Equity”), entered into a Limited Liability Company Agreement with Laramie that governs the operations of Piceance Energy (the “LLC Agreement”). The business of Piceance Energy is to own the natural gas and oil, surface real estate, and related assets formerly owned by Laramie and the Company in Garfield and Mesa Counties, Colorado, or other assets subsequently acquired by Piceance Energy, and to operate such assets. Pursuant to the LLC Agreement, Piceance is managed by Laramie, which controls its day-to-day operations, subject to the supervision of a six-person board, four (4) of which were appointed by Laramie and two (2) of which were appointed by Par Piceance Energy Equity. Certain major decisions require the unanimous consent of the board. The LLC Agreement provides that the sole manager, which is initially Laramie, may make a written capital call such that each member shall make additional capital contributions up to an aggregate combined total capital contribution of $60 million, if approved by a majority of the board. If any member does not fund their share of the capital call, their interest may be reduced or diluted to the extent of the shortfall. The LLC Agreement also contains certain restrictions on transfers by the members of their units. One such restriction provides that in the event one member elects to sell or transfer a majority of its units, the other member may elect to participate in such sale. The LLC Agreement also provides that under certain circumstances, a member desiring to transfer all, but not less than all, of its units may require the other member to participate in such transfer.

In addition, Laramie and Piceance Energy entered into a Management Services Agreement pursuant to which Laramie agreed to provide certain services to Piceance Energy for a fee of $650,000 per month.

General Recovery Trust and Wapiti Trust

On the Emergence Date, two trusts were formed, the Wapiti Recovery Trust (the “Wapiti Trust”) and the Delta Petroleum General Recovery Trust (the “General Trust,” and together with the Wapiti Trust, the “Recovery Trusts”). The Recovery Trusts were formed to pursue certain litigation against third-parties, including preference actions, fraudulent transfer and conveyance actions, rights of setoff and other claims, or causes of action under the U.S. Bankruptcy Code, and other claims and potential claims that the Debtors hold against third parties. The Recovery Trusts were funded with $1.0 million each pursuant to the Plan.

On September 19, 2012, the Wapiti Trust settled all causes of action against Wapiti Oil & Gas Energy, LLC (“Wapiti Oil & Gas”). Wapiti Oil & Gas made a one-time cash payment in the amount of $1.5 million to the Wapiti Trust, as consideration for the release of claims against it. These proceeds were then distributed to us, along with funds remaining from the initial funding of the Wapiti Trust of approximately $1.0 million. Further distributions are not anticipated from the Wapiti Trust and the Wapiti Trust is anticipated to be liquidated during 2013.

The Contribution Agreement includes customary representations, warranties, covenantsGeneral Trust is pursuing all bankruptcy causes of action not otherwise vested in the Wapiti Trust, claim objections and indemnitiesresolutions, and all other responsibilities for winding-up the bankruptcy. The General Trust is overseen by a three person General Trust Oversight Board and our Chief Executive Officer is the trustee. Costs, expenses and obligations incurred by the parties as well as customary closing conditionsGeneral Trust are charged against assets in the General Trust. To conduct its operations and termination rights. Subject to satisfaction of the closing conditions, the transaction is expected to occur on or before August 31, 2012.

On June 4, 2012, the Debtors filed a disclosure statement andfulfill its responsibilities under the Plan and holders of Delta’s notes, representing approximately 79.7%the trust agreements, the recovery trustee may request additional funding from us. Any litigation pending at the time we emerged from Chapter 11 was transferred to the General Trust for resolution and settlement in accordance with the Plan and the order confirming the Plan. We are the beneficiary for each of the total amount of claims of the noteholders (collectively, the Supporting Noteholders”), the Debtors and Laramie agreed in form and substanceRecovery Trusts, subject to the terms of a Plan Support Agreement. Thethe respective trust agreements and the Plan. Since the Emergence Date, the General Trust has filed various claims and causes of action against third parties before the Bankruptcy Court, approvedwhich actions are ongoing. Upon liquidation of the disclosure statement on July 6, 2012. The Debtors solicited creditors eligiblevarious claims and causes of action held by the General Trust, the proceeds, less certain administrative reserves and expenses, will be transferred to vote onus. It is unknown at this time what proceeds, if any, we will realize from the Plan,General Trust’s litigation efforts.

Through March 19, 2013, the Recovery Trusts have released approximately $5.2 million to us, which is available for our general use, due to a negotiated reduction in certain fees and received sufficient votes to confirmclaims associated with the Plan. bankruptcy, as well as a favorable variance in actual expenses versus budgeted expenses.

Shares Reserved for Unsecured Claims

The Plan as amended, was confirmed on August 16, 2012.

The foregoing description of the Contribution Agreement, the Limited Liability Company Agreement, the Management Services Agreement, the amended and restated Certificate of Incorporation and Bylaws, and the Stockholders’ Agreement is qualified in its entirety by the full text of the forms of those documents, which are attached as exhibits to this report. The finalized documents may differ from the attached forms, but we do not anticipate any material changes.

Under the Plan, Delta’s priority non-tax claims and secured claims will be unimpaired in accordance with section 1124(1) of the Bankruptcy Code. Eachprovides that certain allowed general unsecured claimclaims be paid with shares of our common stock. On the Emergence Date, 106 claims totaling approximately $73.7 million had been filed in the bankruptcy. Between the Emergence Date and noteholderDecember 31, 2012, the Recovery Trustee settled 25 claims will receive its pro-rata sharewith an aggregate face amount of new common stock$6.6 million for approximately $258,905 in cash and 202,753 shares of Par Petroleumstock. Subsequent to year end and up to March 25, 2013, the Recovery Trustee settled an additional 25 claims with an aggregate face amount of $12.3 million for approximately $676,092 in full satisfactioncash and 1,469,575 shares of its claims.stock.

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As of March 25, 2013, it is estimated that a total of 56 claims totaling $54.8 million remain to be resolved by the Recovery Trustee. The largest remaining proof of claim was filed by the US Government for approximately $22.4 million relating to ongoing litigation concerning a plugging and abandonment obligation in Pacific Outer Continental Shelf Lease OCS-P 0320, comprising part of the Sword Unit in the Santa Barbara Channel, California. Par believes the probability of issuing stock to satisfy the full claim amount is remote, as the obligations upon which such proof of claim is asserted are joint and several among all working interest owners, and the Predecessor Company owned a 2.41934% working interest in the unit. In addition, litigation and/or settlement efforts are ongoing with Macquarie Capital (USA) Inc., Swann and Buzzard Creek Royalty Trust, as well as other claim holders.

The settlement of claims is subject to ongoing litigation and we are unable to predict with certainty how many shares of our common stock will be required to satisfy all claims. Pursuant to the Plan, allowed claims are settled at a ratio of 544 shares per $1,000 of claim. At December 31, 2012, we have a reserve of approximately $8.7 million representing the estimated value of claims remaining to be settled which are deemed probable and estimable at year end. A summary of claims is as follows:

Laramie Propertiesand Piceance Energy

Laramie is a Denver-based company primarily focused on finding and developing natural gas reserves from unconventional gas reservoirs within the Rocky Mountain Region.region. Its predecessor company, Laramie Energy, LLC (“Laramie I”), sold all of its oilnatural gas and gasoil assets in May 2007 to Plains Exploration & Production Company, Inc. Laramie was formed in June 2007 by Laramie I executives and former employees and by affiliates of the private equity investors in Laramie I. Laramie is backed by equity capital commitments funded by Laramie’s management team, EnCap Investments, Avista Capital, and DLJ Merchant Banking Partners (an affiliate of Credit Suisse Securities).

All of the assets Laramie and Delta are contributingcontributed to Piceance Energy are located within Garfield and Mesa Counties, Colorado and are within a 10-mile radius in the Piceance Basin geologic province.formation. All of Laramie’sthe natural gas and Delta’s oil and gas reserves contributed to Piceance Energy produce from the same geologic formations, the Mesaverde and Mancos Formations, and some of the contributed acreage is contiguous. Laramie and its predecessor company have drilled over 300 natural gas wells with over a 99% success rate in the Piceance Basin.

The foregoing description of the Laramie Properties was provided by Laramie.

As of April 30,December 31, 2012, the provenestimated proved reserves that Laramie is contributing toof Piceance Energy consist ofare the following (unaudited):

Other Recent Events

Divestiture of Subsidiary

On October 31, 2011, we sold our stock in DHS, our 49.8% subsidiary, to DHS’s lender, Lehman Commercial Paper, Inc., for $500,000. We recognized a gain of approximately $5.1 million in connection with the divestiture of DHS during the three months ending December 31, 2011.

Sale of Non-Core Assets

On June 28, 2011, we closed a sale of various assets located primarily in Texas and Wyoming to Wapiti Oil & Gas, L.L.C. (the “2011 Wapiti Transaction”) for gross cash proceeds of approximately $43.2 million. A portion of the proceeds from the 2011 Wapiti Transaction was used to reduce amounts outstanding under the credit facility of the Company then in place, and a portion was used to fund capital development activities in the Piceance Basin.

Operations

During the year ended December 31, 2011, we were primarily engaged in the acquisition, exploration, development, and production of oil and natural gas properties.

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Natural Gas and Oil Operations

Natural Gas and GasOil Reserves

The following table presents reservethe estimated proved reserves that we own directly and production information regarding our primary oil and natural gas areas of operationindirectly through Piceance Energy as of December 31, 2011:2012:

The NOLs will expire in various amounts, if not used, between 2027 and are subject2032. The Internal Revenue Service (the “IRS”) has not audited any of our tax returns for any of the years during the carryforward period including those returns for the years in which the losses giving rise to the risks and uncertainties associated with Chapter 11 proceedings. Based onNOLs were reported. We cannot assure you that we would prevail if the Plan confirmed byIRS were to challenge the Bankruptcy Court, our current shareholders will not receive any consideration upon the conclusionavailability of the Chapter 11 proceedings.

ForNOLs. If the duration ofIRS were successful in challenging our Chapter 11 proceedings, our operations, including our ability to execute our business plan, are subject to the risks and uncertainties associated with bankruptcy. Risks and uncertainties associated with our Chapter 11 proceedings include the following:

These risks and uncertainties could affect our business and operations in various ways. For example, negative events associated with our Chapter 11 proceedings could adversely affect our revenues and our relationships with our customers, vendors and employees, which in turn could adversely affect our operations and financial condition. Also, transactions outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with our Chapter 11 proceedings, the ultimate impact of events that occur during these proceedings will have on our business, financial condition and results of operations cannot be accurately predicted or quantified.

The parties’ obligations to close the Contribution Agreement transaction are subject to a number of conditions and those conditions may not be satisfied. If the transaction does not close, the Debtors will be required to seek an alternative restructuring of their obligations. There can be no assurance that the terms of any such alternative restructuring would be similar to or as favorable to the Debtors’ stakeholders as the terms proposed in the Plan. In addition, pursuant to the terms of the Contribution Agreement, Laramie could choose to breach its obligations under the Contribution Agreement, and would only be liable to the Debtors for a reverse break-up fee of $5,000,000, andNOLs would not be requiredavailable to close the transaction contemplated by the Contribution Agreement.

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The Plan, if consummated, will result in the cancellation of the shares held byoffset our current shareholders. Even if the Plan is not consummated, it is likely that our bankruptcy proceedings will result in the cancellation of those shares without consideration.

In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.

If the Bankruptcy Court finds that it would be in the best interest of creditors and/or the Debtors, the Bankruptcy Court may convert our Chapter 11 bankruptcy case to a case under Chapter 7 of the Bankruptcy Code. In such event, a Chapter 7 trustee would be appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the priorities established by the Bankruptcy Code. The Debtors believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to the Debtors’ creditors than those provided for in the Plan because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a disorderly fashion over a short period of time rather than reorganizing the Debtors’ businesses as a going concern; (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee;future consolidated income and (iii) additional expenses and claims, some of which would be entitled to priority, which would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of the operations.

The Contribution Agreement may not achieve its intended results and may result in Piceance Energy assuming unanticipated liabilities and properties of lower value than originally contemplated.

We have conducted environmental and title due diligence regarding the assets Laramie will contribute to Piceance Energy pursuant to the Contribution Agreement, but our diligence efforts may not discover all problems that may exist with respect to those assets. Environmental, title and other problems could reduce the value of the properties contributed to Piceance Energy, and, depending on the circumstances, we could have limited or no recourse to Laramie with respect to those problems. Piceance Energy would assume substantially all of the liabilities associated with the acquired Laramie assets, and Piceance Energy would be entitled to indemnification in connection with those liabilities in only limited circumstances and in limited amounts. We cannot assure that such potential remedies will be adequate for any liabilities incurred by Piceance Energy, and such liabilities could be significant. In addition, certain of the assets to be contributed to Piceance Energy are subject to consents to assign and preference rights. If Delta and Laramie cannot obtain all applicable consents or waivers, Piceance Energy may not be able to acquire certain properties as originally contemplated. Also, it is uncertain whether Delta’s and Laramie’s contributed properties and assets canpay taxes that may be integrated in an efficient and effective manner.due.

If the Plan transactionsWe are consummated, Reorganized Delta will be dependent on the results of Piceance Energy.

Following the consummation of the Plan, Reorganized Delta’sOur principal asset will be itsis our 33.34% ownership interest in Piceance Energy. Reorganized Delta’sOur operating income will therefore depend heavily on the profitability of Piceance Energy and on the ability of Piceance Energy to make distributions to its owners, which will be severely limitedis currently prohibited by the terms of the Piceance Energy Credit Facility. See “ManagementFacility (as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a description of the Operations – Piceance Energy—Piceance Energy Credit Facility. In addition, Piceance Energy will face similar risk factors to those that face other natural gas exploration and production companies, including us, as described herein. All disclosures in this report regarding operational risks facing us will also be risk factors faced by Piceance Energy.Facility”). In addition, Laramie will controlcontrols most decisions affecting Piceance Energy’s operations; Reorganized Delta willoperations and we only have veto rights over decisions of Piceance Energy in only a limited number of areas. Finally, Piceance Energy will payalso pays to Laramie a monthly fee of $650,000 to operate and manage its assets. This will further limit Piceance Energy’s ability to make distributions to us. Our results of operations could be adversely affected until we are able to receive distributions from Piceance Energy on a timely basis.

We cannot control the activities on properties we do not operate and we are unable to ensure the proper operation and profitability of these non-operated properties.

Although we have representation on the board of managers of Piceance Energy, Piceance Energy is managed by Laramie, which controls its day-to-day operations. As a result, we have limited ability to exercise influence over, and control the risks associated with, the operation of these properties. The success and timing of drilling and development activities therefore will depend upon a number of factors outside of our control, including Laramie’s:

As a result of any of the above or other failure of Laramie to act in ways that are in our best interest, our results of operations could be adversely affected.

Inadequate liquidity could materially and adversely affect our business operations in the future.

IfFollowing the consummation of the Plan transactions are not consummated, we will not have sufficient liquidity to continue operations unlessand our emergence from bankruptcy, our primary source of cash flow has been borrowings under the maturity of the DIP Credit Facility is extended. See “ManagementLoan Agreement (as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a description). If our cash flow and capital resources are insufficient to fund our obligations, we may be forced to reduce our capital expenditures, seek additional equity or debt capital or restructure our debt. We cannot assure you that any of the DIP Credit Facility. If the Plan transactions are consummated, ourthese remedies could, if necessary, be affected on commercially reasonable terms, or at all. Our liquidity will beis constrained by the restrictions on Piceance Energy’s ability to distribute cash to us under the Piceance Energy Credit Facility, by our need to satisfy our obligations under our debt agreements including in particular the ExitCompass Letter of Credit Facility and Tranche B Loan (each as described in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”), which mature on December 26, 2013 and July 1, 2013, respectively, and by potential capital contributions required to be made by us to Piceance Energy. Regardless of whetherEnergy under the Plan is consummated, ourLLC Agreement. Our liquidity will be further constrained by the currently low level of natural gas prices, which reduces our cash flowflows from operations. A lackThe availability of liquidity may havecapital when the need arises will depend upon a material adverse effect onnumber of factors, some of which are beyond our operationscontrol. These factors include general economic and financial condition,market conditions, natural gas and oil prices, our credit ratings, interest rates, market perceptions of us or the natural gas and oil industry, our market value and our operating performance. We may make it impossiblebe unable to execute our long-term operating strategy if we cannot obtain capital from these sources when the need arises.

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We may be unable to successfully identify, execute or effectively integrate future acquisitions, which may negatively affect our results of operations.

We will continue to pursue acquisitions in the future, including acquisitions of natural gas and oil businesses and properties. Although we regularly engage in discussions with, and submit proposals to, acquisition candidates, suitable acquisitions may not be available in the future on reasonable terms. If we do identify an appropriate acquisition candidate, we may be unable to successfully negotiate the terms of an acquisition, finance the acquisition or, if the acquisition occurs, effectively integrate the acquired business into our existing business. Negotiations of potential acquisitions and the integration of acquired business operations may require a disproportionate amount of management’s attention and our resources. Even if we complete additional acquisitions, continued acquisition financing may not be available or available on reasonable terms, any new businesses may not generate the anticipated level of revenues, the anticipated cost efficiencies or synergies may not be realized and these businesses may not be integrated successfully or operated profitably. The success of any acquisition of natural gas and oil properties will depend on a number of factors, including the ability to estimate accurately the recoverable volumes of reserves, rates of future production and future net revenues attainable from the reserves and to assess possible environmental liabilities. Our inability to successfully identify, execute or effectively integrate future acquisitions may negatively affect our results of operations.

Due diligence of acquired natural gas and oil properties and businesses is often incomplete, which could harm our results of operations.

Even though we perform due diligence reviews (including a review of title and other records) of the natural gas and oil properties we seek to acquire that we believe is consistent with industry practices, these reviews are inherently incomplete. It is generally not feasible for us to satisfy ourperform an in-depth review of every individual property and all records involved in each acquisition. However, even an in-depth review of records and properties may not necessarily reveal existing or future obligations.potential problems or permit us to become familiar enough with the properties to assess fully their deficiencies and potential. Even when problems are identified, we may assume certain environmental and other risks and liabilities in connection with the acquired businesses and properties. The discovery of any material liabilities associated with our acquisitions could harm our results of operations.

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Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under our indebtedness, which would adversely affect our ability to operate as a going concern.industry.

We have, and will continue to have, (whether or not the Plan is consummated), a significant amount of indebtedness. Our degree of leverage could have important consequences, including the following:

In particular, the Compass Letter of Credit Facility and Tranche B Loan mature on December 26 and July 1, 2013, respectively. Our obligation to repay this indebtedness may limit our ability to use our capital for other purposes. We may also incur additional debt, including secured indebtedness, or issue preferred stock in order to maintain adequate liquidity and develop our properties to the extent desired. A higher level of indebtedness and/or preferred stock would increase the risk that we may default on our obligations. Our ability to meet our debt obligations depends on our future performance. General economic conditions, natural gas and oil prices and financial, business and other factors affect our operations and our future performance. Many of these factors are beyond our control. Factors that will affect our ability to raise cash through an offering of securities or a refinancing of our debt include financial market conditions, the value of our assets and our performance at the time we need capital.

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If the Plan transactions areconsummated,Our ability to generate cash and repay our largest shareholders willindebtedness depends on many factors beyond our control, the compositionand any failure to do so could harm our business, financial condition and results of our board of directors, and trading in our shares will be subject to limitations set forth in our amended Certificate of Incorporation.operations.

IfOur ability to fund future capital expenditures and repay our indebtedness when due (including in particular the Plan transactionsCompass Letter of Credit Facility and the Tranche B Loan which mature on December 26, 2013 and July 1, 2013, respectively) will depend on distributions from Piceance Energy, borrowings under our debt agreements and our ability to generate sufficient cash flow from operations in the future. To a certain extent, this is subject to general economic, financial, competitive, legislative and regulatory conditions and other factors that are consummated,beyond our Certificate of Incorporationcontrol, including the prices that we receive for our natural gas and Bylawsoil production.

We cannot assure you that our business will generate sufficient cash flow from operations, that Piceance Energy can or will make sufficient distributions to us or that future borrowings will be amended,available to us in an amount sufficient to repay our largest stockholders will enter into a Stockholder’s agreementindebtedness (including in particular the Compass Letter of Credit Facility and the collective effectTranche B Loan which mature on December 26, 2013 and July 1, 2013, respectively) or fund our other liquidity needs. If our cash flow and capital resources are insufficient to fund our needs, we may be forced to reduce our planned capital expenditures, sell assets, seek additional equity or debt capital or restructure our debt. We cannot assure you that any of these changes willremedies could, if necessary, be to allow certain holders who currently hold Notes to appointaffected on commercially reasonable terms, or at all, or substantially all of the members of our board of directors for an indefinite period. Accordingly, other shareholders may be unable to influence the outcome of director elections. In addition, the amended Certificate of Incorporation will impose certain restrictions on trading in our shares. These trading restrictions are designed to preserve the potential benefit to us of certain tax attributes, but could also have the effect of limiting liquidity in the trading of our shares. Elimination of the trading restrictions or failure to comply with or properly implement such restrictionswhich could cause us to losedefault on our tax attributes which may increaseobligations and could impair our tax liability, possibly significantly.

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Risks Related To Our Business And Industryliquidity.

Natural gas and oil prices are volatile. Lower prices have adversely affected our financial position, financial results, cash flows, access to capital and ability to grow.

Our revenues, operating results, profitability and future rate of growth depend primarily upon the prices we receive for the natural gas and oil we sell. Prices also affect the amount of cash flow available for capital expenditures and our ability to borrow money or raise additional capital.

Historically, the markets for natural gas and oil have been volatile and they are likely to continue to be volatile. Wide fluctuations in natural gas and oil prices may result from relatively minor changes in the supply of and demand for natural gas and oil, market uncertainty and other factors that are beyond our control, including:

These factors and the volatility of the energy markets make it extremely difficult to predict future natural gas and oil price movements. Declines in natural gas and oil prices not only reduce revenue, but also reduce the amount of natural gas and oil that we can produce economically and, as a result, have had, and could in the future have, a material adverse effect on our financial condition, results of operations, cash flows and reserves. Further, oil and natural gas and oil prices do not move in tandem. Because approximately 79%73% of our reserves, and 74% of Piceance Energy’s reserves, at December 31, 20112012 were natural gas reserves, we are more affected by movements in natural gas prices. Following the completion of the transaction contemplated by the Contribution Agreement, Piceance Energy’s reserves (based on our and Laramie’s estimated reserves as of April 30, 2012) will be 72% natural gas. Natural gas prices have fallen to historic lows in recent periods.

To attempt to reduce our price risk, we may enter into hedging transactions with respect to a portion of our expected future production. We cannot assure you that such transactions will reduce the risk or minimize the effect of any decline in natural gas or oil prices. Any substantial or extended decline in the prices of or demand for natural gas or oil would have a material adverse effect on our financial condition, liquidity, ability to meet our financial obligations and results of operations.

The current financial environment may have impacts on our business and financial condition that we cannot predict.

The continued instability in the global financial system and related limitation on availability of credit may continue to have an impact on our business and our financial condition, and we may continue to face challenges if conditions in the financial markets do not improve. Our ability to access the capital markets has been restricted as a result of the economic downturn and related financial market conditions and may be restricted in the future when we would like, or need, to raise capital.capital could be restricted as a result. The difficult financial environment may also limit the number of prospects for potential joint venture, asset monetization or other capital raising transactions that we may pursue in the future or reduce the values we are able to realize in those transactions,

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making these transactions uneconomic or difficult to consummate. The economic situation could also adversely affect the collectability of our trade receivables and cause our commodity hedging arrangements, if any, to be ineffective if our counterparties are unable to perform their obligations. Additionally, the current economic situation could lead to reduced demand for natural gas and oil, or lower prices for natural gas and oil, or both, which would have a negative impact on our revenues.

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Information concerning our reserves is uncertain.

There are numerous uncertainties inherent in estimating quantities of proved reserves and cash flows from such reserves, including factors beyond our control. Reserve engineering is a subjective process of estimating underground accumulations of oilnatural gas and natural gasoil that cannot be measured in an exact manner. The accuracy of an estimate of quantities of oilnatural gas and natural gasoil reserves, or of cash flows attributable to such reserves, is a function of the available data, assumptions regarding future oilnatural gas and natural gasoil prices, availability and terms of financing, expenditures for future development and exploitation activities, and engineering and geological interpretation and judgment. Reserves and future cash flows may also be subject to material downward or upward revisions based upon production history, development and exploitation activities, oilnatural gas and natural gasoil prices and regulatory changes. Actual future production, revenue, taxes, development expenditures, operating expenses, quantities of recoverable reserves and value of cash flows from those reserves may vary significantly from our assumptions and estimates. In addition, reserve engineers may make different estimates of reserves and cash flows based on the same data. Further, the difficult financing environment may inhibit our ability to finance development of our reserves in the future.

The estimated quantities of proved reserves and the discounted present value of future net cash flows attributable to those reserves as of December 31, 2011, 2010 and 20092012 included in our periodic reports filed with the SEC were prepared by our independent reserve engineers in accordance with the rules of the SEC, and are not intended to represent the fair market value of such reserves. As required by the SEC, the estimated discounted present value of future net cash flows from proved reserves is generally based on prices and costs as required by the SEC on the date of the estimate, while actual future prices and costs may be materially higher or lower. In addition, the 10% discount factor the SEC requires to be used to calculate discounted future net revenues for reporting purposes is not necessarily the most appropriate discount factor based on the cost of capital in effect from time to time and risks associated with our business and the oilnatural gas and gasoil industry in general.

We may not be able to replace production with new reserves.

Our reserves will decline as they are produced unless we acquire new properties with proved reserves or conduct successful development and exploration drilling activities. Our future oilnatural gas and natural gasoil production is highly dependent upon our level of success in finding or acquiring additional reserves that are economically feasible and developing existing proved reserves, which is in turn dependent on, among other things, the availability of capital to fund such acquisition and development activity. A failure to acquire or develop new reserves would have a material adverse effect on our business and results of operations.

Exploration and development drilling may not result in commercially productive reserves.

We domay not always encounter commercially productiveproducing reservoirs through our drilling operations. Theoperations, new wells we drill or participate in may not be productive and we may not recover all or any portion of our investment in wells we drill or participate in. The seismic data and other technologies we may use dowould not allow us to know conclusively prior to drilling a well that oilnatural gas or natural gasoil is present or may be produced economically. The cost of drilling, completing and operating a well is often uncertain, and cost factors can adversely affect the economics of a project. Our efforts will be unprofitable if we drill dry wells or wells that are productive but do not produce enough reserves to return a profit after drilling, operating and other costs. Further, our drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, including:

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If oilnatural gas or natural gasoil prices decrease or exploration and development efforts are unsuccessful, we may be required to take further writedowns.

In the past, weWe have been required in the past to write downtake writedowns of the carrying value of our oilnatural gas and gasoil properties and other assets. Thereassets and may be required to do so in the future, which would reduce our earnings and there is a risk that we will be required to take additional writedowns in the future, which would reduce our earnings.writedowns. A writedown could occur when oilnatural gas and natural gasoil prices are low or if we have substantial downward adjustments to our estimated proved reserves, increases in our estimates of development costs or deterioration in our exploration and development results.

We account for our crude oil and natural gas and oil exploration and development activities utilizing the successful efforts method of accounting. Under this method, costs of productive exploratory wells, development dry holes and productive wells and undeveloped leases are capitalized. OilNatural gas and gasoil lease acquisition costs are also capitalized. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. If the carrying amount of our oilnatural gas and gasoil properties exceeds the estimated undiscounted future net cash flows, we will adjust the carrying amount of the oilnatural gas and gasoil properties to their estimated fair value.

We review our oilnatural gas and gasoil properties for impairment quarterly or whenever events and circumstances indicate that the carrying value may not be recoverable. Once incurred, a writedown of oilnatural gas and gasoil properties is not reversible at a later date even if natural gas or oil prices increase. Given the complexities associated with oilnatural gas and gasoil reserve estimates and the history of price volatility in the oilnatural gas and gasoil markets, events may arise that would require us to record an impairment of the recorded carrying values associated with our oilnatural gas and gasoil properties.

The exploration, development and operation of oilnatural gas and gasoil properties involve substantial risks that may result in a total loss of investment.

The business of exploring for and, to a lesser extent, developing and operating oilnatural gas and gasoil properties involves a high degree of business and financial risk, and thus a substantial risk of investment loss that even a combination of experience, knowledge and careful evaluation may not be able to overcome. OilNatural gas and gasoil drilling and production activities may be shortened, delayed or canceled as a result of a variety of factors, many of which are beyond our control. These factors include:

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We may drill wells that are unproductive or, although productive, do not produce oil and/or natural gas in economic quantities. Acquisition and completion decisions generally are based on subjective judgments and assumptions that are speculative. It is impossible to predict with certainty the production potential of a particular property or well. Furthermore, a successful completion of a well does not ensure a profitable return on the investment. A variety of geological, operational, or market-related factors, including, but not limited to, unusual or unexpected geological formations, pressures, equipment failures or accidents, fires, explosions, blowouts, cratering, pollution and other environmental risks, shortages or delays in the availability of drilling rigs and the delivery of equipment, loss of circulation of drilling fluids or other conditions may substantially delay or prevent completion of any well or otherwise prevent a property or well from being profitable. A productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or natural gas from the well, or in the event of lower than expected commodity prices. In addition, production from any well may be unmarketable if it is contaminated with water or other deleterious substances.

The marketability of our production depends mostly upon the availability, proximity and capacity of natural gas gathering systems, pipelines and processing facilities, which are owned by third parties.

The marketability of our production depends upon the availability, operation and capacity of natural gas gathering systems, pipelines and processing facilities, which are owned by third parties. The unavailability or lack of capacity of these systems and facilities could result in the shut-in of producing wells or the delay or discontinuance of development plans for properties. United States federal, state and foreign regulation of oilnatural gas and gasoil production and transportation, tax and energy policies, damage to or destruction of pipelines, general economic conditions and changes in supply and demand could adversely affect our ability to produce and market oilnatural gas and natural gas.oil. The availability of markets and the volatility of product prices are beyond our control and represent a significant risk.

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Prices may be affected by local and regional factors.

The prices to be received for our natural gas production will be determined to a significant extent by factors affecting the local and regional supply of and demand for natural gas, including the adequacy of the pipeline and processing infrastructure in the region to process, and transport, our production and that of other producers. Those factors result in basis differentials between the published indices generally used to establish the price received for regional natural gas production and the actual (frequently lower) price we receive for our production.

Seasonal weather conditions and wildlife restrictions could adversely affect our ability to conduct operations.

Our operations could be adversely affected by weather conditions and wildlife restrictions. In the Rocky Mountains, certain activities cannot be conducted as effectively during the winter months. Winter and severe weather conditions limit and may temporarily halt the ability to operate during such conditions. These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operation and capital costs, which could have a material adverse effect on our business, financial condition and results of operations. In addition, a critical habitat designation for certain wildlife under the U.S. Endangered Species Act or similar state laws could result in material restrictions to public or private land use and could delay or prohibit land access or development. The listing of certain species as threatened and endangered could have a material impact on our operations in areas where such listed species are found.

Our industry experiences numerous operating hazards that could result in substantial losses.

The exploration, development and operation of oilnatural gas and gasoil properties involve a variety of operating risks including the risk of fire, explosions, blowouts, cratering, pipe failure, abnormally pressured formations, natural disasters, acts of terrorism or vandalism, and environmental hazards, including oil spills, gas leaks, pipeline ruptures or discharges of toxic gases. These industry operating risks can result in injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigation and penalties, and suspension of operations which could result in substantial losses.

We may be unable to compete effectively with larger companies, which could have a material adverse effect on our business, results of operations, and financial condition.

The natural gas and oil industry is intensely competitive, and we compete with other companies that have greater resources than us. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Many of our larger competitors not only explore for and produce natural gas and oil, but also carry on refining operations and market petroleum and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive natural gas and oil properties and exploratory prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than our financial resources permit. In addition, these companies may have a greater ability to continue exploration and development activities during periods of low natural gas and oil market prices and to absorb the burden of present and future federal, state, local and other laws and regulations. Our inability to compete effectively with larger companies could have a material adverse effect on our business, results of operations, and financial condition.

We may not receive payment for a portion of our future production.

The concentration of credit risk in a single industry affects our overall exposure to credit risk because customers may be similarly affected by changes in economic and other conditions. If economic conditions deteriorate, it is likely that situations will occur which will expose us to added risk of not being paid for natural gas or oil that we deliver. We do not attempt to obtain credit protections such as letters of credit, guarantees or prepayments from our purchasers. We are unable to predict what impact the financial difficulties of any of our purchasers may have on our future results of operations and liquidity.

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We have no long-term contracts to sell natural gas and oil.

We do not have any long-term supply or similar agreements with governments or other authorities or entities for which we act as a producer. We are therefore dependent upon our ability to sell natural gas and oil at the prevailing wellhead market price. There can be no assurance that purchasers will be available or that the prices they are willing to pay will remain stable.

Losses and liabilities from uninsured or underinsured drilling and operating activities could have a material adverse effect on our financial condition and operations.

We maintain several types of insurance against some, but not all,to cover our operations, including worker’s compensation and comprehensive general liability. Amounts over base coverages are provided by primary and excess umbrella liability policies. We also maintain operator’s extra expense coverage, which covers the control of the risks described above.drilling or producing wells as well as redrilling expenses and pollution coverage for wells out of control. Such insurance may not be adequate to cover losses or liabilities. Also, we cannot predict the continued availability of insurance at premium levels that justify its purchase. Terrorist attacks and certain potential natural disasters may change our ability to obtain adequate insurance coverage. The occurrence of a significant event that is not fully insured or indemnified against could materially and adversely affect our financial condition and operations.

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We may be unable to compete effectively with larger companies, which could have a material adverse effect on our business, results of operations, and financial condition.

The oil and natural gas industry is intensely competitive, and we compete with other companies that have greater resources than us. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Many of our larger competitors not only explore for and produce oil and natural gas, but also carry on refining operations and market petroleum and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive oil and natural gas properties and exploratory prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than our financial resources permit. In addition, these companies may have a greater ability to continue exploration and development activities during periods of low oil and natural gas market prices and to absorb the burden of present and future federal, state, local and other laws and regulations. Our inability to compete effectively with larger companies could have a material adverse effect on our business, results of operations, and financial condition.

We may not receive payment for a portion of our future production.

Our revenues are derived principally from uncollateralized sales to customers in the oil and gas industry. The concentration of credit risk in a single industry affects our overall exposure to credit risk because customers may be similarly affected by changes in economic and other conditions. Although we have not been directly affected, we are aware that some refiners have filed for bankruptcy protection, which has caused the affected producers to not receive payment for the production that was delivered. If economic conditions deteriorate, it is likely that additional, similar situations will occur which will expose us to added risk of not being paid for oil or gas that we deliver. We do not attempt to obtain credit protections such as letters of credit, guarantees or prepayments from our purchasers. We are unable to predict what impact the financial difficulties of any of our purchasers may have on our future results of operations and liquidity.

We have no long-term contracts to sell oil and gas.

We do not have any long-term supply or similar agreements with governments or other authorities or entities for which we act as a producer. We are therefore dependent upon our ability to sell oil and gas at the prevailing wellhead market price. There can be no assurance that purchasers will be available or that the prices they are willing to pay will remain stable.

We may incur substantial costs to comply with the various federal, state and local laws and regulations that affect our oilnatural gas and gasoil operations.

We are affected significantly by a substantial amount of governmental regulations that increase costs related to the drilling of wells and the transportation and processing of oilnatural gas and gas.oil. It is possible that the number and extent of these regulations, and the costs to comply with them, will increase significantly in the future. In Colorado, for example, significant new governmental regulations have been adopted that are primarily driven by concerns about wildlife and the environment. These government regulatory requirements complicate our plans for development and may result in substantial costs that are not possible to pass through to our customers and which could impact the profitability of our operations.

Our oilnatural gas and gasoil operations are subject to stringent federal, state and local laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to health and safety, land use, environmental protection or the oilnatural gas and gasoil industry generally. Legislation affecting the industry is under constant review for amendment or expansion, frequently increasing our regulatory burden. Compliance with such laws and regulations often increases our cost of doing business and, in turn, decreases our profitability. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the incurrence of investigatory or remedial obligations, or the issuance of cease and desist orders.

The environmental laws and regulations to which we are subject may, among other things:

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Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to maintain compliance, and may otherwise have a material adverse effect on our earnings, results of operations, competitive position or financial condition. Over the years, we have owned or leased numerous properties for oilnatural gas and gasoil activities upon which petroleum hydrocarbons or other materials may have been released by us or by predecessor property owners or lessees who were not under our control. Under applicable environmental laws and regulations, including CERCLA, RCRA and analogous state laws, we could be held strictly liable for the removal or remediation of previously released materials or property contamination at such locations regardless of whether we were responsible for the release or whether the operations at the time of the release were standard industry practice.

Federal and state legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.

Congress has considered legislation to amend the federal Safe Drinking Water Act to require the disclosure of chemicals used by the oilnatural gas and natural gasoil industry in the hydraulic fracturing process, and other legislation regulating hydraulic fracturing has been considered, and in some cases adopted, at various levels of government. Hydraulic fracturing is an important and commonly used process in the completion of unconventional natural gas wells in shale formations, as well as tight conventional formations, including many of those that we complete and produce. This process involves the injection of water, sand and chemicals under pressure into

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rock formations to stimulate natural gas production. Sponsors of these bills have asserted that chemicals used in the fracturing process could adversely affect drinking water supplies and/or that hydraulic fracturing could pose a variety of other risks. Any additional level of regulation could lead to operational delays or increased operating costs and could result in additional regulatory burdens that could make it more difficult to perform hydraulic fracturing and increase our costs of compliance and doing business.

OurNatural gas drilling and production operations require adequate sources of water to facilitate the fracturing process and the disposal of that water when it flows back to the well-bore.wellbore. If we are unable to obtain adequate water supplies and dispose of the water we use or remove at a reasonable cost and within applicable environmental rules, our ability to produce natural gas commercially and in commercial quantities would be impaired.

New environmental regulations governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing of wells may increase operating costs and cause delays, interruptions or termination of operations, the extent of which cannot be predicted, all of which could have an adverse affect on our operations and financial performance.

Further, we must remove the water Water that we useis used to fracture ournatural gas wells must be removed when it flows back to the well-bore.wellbore. Our ability to remove and dispose of water will affect our production and the cost of water treatment and disposal may affect our profitability. The imposition of new environmental initiatives and regulations could include restrictions on our ability to conduct hydraulic fracturing or disposal of waste, including produced water, drilling fluids and other wastes associated with the exploration, development and production of natural gas.

We are exposed to credit risk as it affects third parties with whom we have contracted.

Third parties with whom we have contracted may lose existing financing or be unable to obtain additional financing necessary to continue their businesses. The inability of a third party to make payments to us for our accounts receivable, or the failure of our third party suppliers to meet our demands because they cannot obtain sufficient credit to continue their operations, may cause us to experience losses and may adversely impact our liquidity and our ability to make our payments when due.

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Certain federal incomeProposed changes to U.S. tax deductions currently available with respectlaws, if adopted, could have an adverse effect on our business, financial condition, results of operations and cash flows.

The U.S. President’s Fiscal Year 2013 Budget Proposal includes provisions that would, if enacted, make significant changes to U.S. tax laws applicable to oil and natural gas exploration and development may be eliminated as a result of future legislation.

Changes contained in President Obama’s 2013 budget proposal include the elimination of certain key U.S. federal income tax preferences currently available to oil and gas exploration and production companies. SuchThese changes include, but are not limited to, (i) to:

Members of the U.S. Congress have considered similar changes to the existing federal income tax laws that affect oil and natural gas exploration and production companies. It is unclear however, whether any suchthese or similar changes will be enacted or how soon such changes could be effective.

enacted. The passage of anythis legislation as a result of the budget proposal, or any other similar changechanges in U.S. federal income tax law,laws could eliminate or postpone certain tax deductions that are currently available with respect to U.S. oil and natural gas exploration and development, and anydevelopment. Any such changechanges could negatively affecthave an adverse effect on our financial condition andposition, results of operations.operations and cash flows.

Potential legislative and regulatory actions addressing climate change could increase our costs, reduce our revenue and cash flow from natural gas and oil sales or otherwise alter the way we conduct our business.

Future changes in the laws and regulations to which we are subject may make it more difficult or expensive to conduct our operations and may have other adverse effects on us. For example, the EPAUSEPA has issued a notice of finding and determination that emissions of carbon dioxide, methane and other greenhouse gas (“GHG”)GHGs present an endangerment to human health and the environment, which allows EPAthe USEPA to begin regulating emissions of GHGs under existing provisions of the federal Clean Air Act. EPACAA. The USEPA has begun to implement GHG-related reporting and permitting rules. Similarly, the U.S. Congress has considered and may in the future consider “cap and trade” legislation that would establish an economy-wide cap on emissions of GHGs in the United States and would require most sources of GHG emissions to obtain GHG emission “allowances” corresponding to their annual emissions of GHGs. Any laws or regulations that may be adopted to restrict or reduce emissions of GHGs would likely require us to incur increased operating costs and could have an adverse effect on demand for our production.

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WeThe adoption and implementation of new statutory and regulatory requirements for derivative transactions could be adversely affected by regulatory changes resulting fromhave an adverse impact on our ability to hedge risks associated with our business and increase the Dodd-Frank Wall Street Reform and Consumer Protection Act.working capital requirements to conduct these activities.

The Dodd-Frank Wall Street ReformAct provides for new statutory and Consumer Protection Act, or the Reform Act, amongregulatory requirements for derivative transactions, including oil and natural gas hedging transactions. Among other things, imposes restrictionsthe Dodd-Frank Act provides for the creation of position limits for certain derivatives transactions, as well as requiring certain transactions to be cleared on exchanges for which cash collateral will be required. In October 2011, the CFTC approved final rules that establish position limits for futures contracts on 28 physical commodities, including four energy commodities, and swaps, futures and options that are economically equivalent to those contracts. The rules provide an exemption for “bona fide hedging” transactions or positions, but this exemption is narrower than the exemption under existing CFTC position limit rules. These newly approved CFTC position limits rules were vacated by the United States District Court for the District of Columbia in September 2012, although the CFTC has stated that it will appeal the District Court’s decision.

It is not possible at this time to predict with certainty the full effect of the Dodd-Frank Act and CFTC rules on us and the timing of such effects. The Dodd-Frank Act may require us to comply with margin requirements and with certain clearing and trade-execution requirements if we do not satisfy certain specific exceptions. The Dodd-Frank Act may also require the counterparties to our derivatives contracts to transfer or assign some of their derivatives contracts to a separate entity, which may not be as creditworthy as the current counterparty. Depending on the use and trading of certain derivatives, including energy derivatives. The nature and scope of those restrictions will be determined in significant part through implementing regulationsrules adopted by the SEC,CFTC or similar rules that may be adopted by other regulatory bodies, we might in the Commodities Futures Trading Commissionfuture be required to provide cash collateral for our commodities hedging transactions under circumstances in which we do not currently post cash collateral. Posting of such additional cash collateral could impact liquidity and other regulators.reduce our cash available for capital expenditures. A requirement to post cash collateral could therefore reduce our ability to execute hedges to reduce commodity price uncertainty and thus protect cash flows. If we reduce our use of derivatives as a result of the ReformDodd-Frank Act and regulations, our results of operations may become more volatile and our cash flows may be less predictable.

Our disclosure controls and procedures may not prevent or detect all acts of fraud.

Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within our companies have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its implementingstated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

Failure to maintain an effective system of internal control over financial reporting may have an adverse effect on our stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and the rules and regulations capitalpromulgated by the SEC to implement Section 404, we are required to furnish a report by our management to include in our annual reports on Form 10-K regarding the effectiveness of our internal control over financial reporting. The report includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or margin requirements or other limitationsnot our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management.

We have in the past, and in the future may discover, areas of our internal control over financial reporting which may require improvement. Prior to our emergence from bankruptcy, management concluded we had material weaknesses with respect to maintaining an effective financial reporting and closing process to prepare financial statements in accordance with U.S. generally accepted accounting principles. The majority of the factors contributing to our material weaknesses related to the impact the bankruptcy had on critical accounting processes and related accounting resources. At December 31, 2012, management performed an assessment of the design and operating effectiveness of internal control over financial reporting and determined that there were control gaps in our internal control and related processes that require remediation to be performed by management. Furthermore, while completing our December 31, 2012 year end close process, adjustments were identified relating to commodity derivative activitiesthe application of fresh start

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accounting that impacted amounts, the presentation of the financial statements and related disclosures previously reported in our quarterly report on Form 10-Q for the quarter ended September 30, 2012. Accordingly, management concluded that these findings were evidence that a material weakness still exists as of December 31, 2012. These material weaknesses have not been remedied and the effectiveness of our internal control over financial reporting in the future will depend on our ability to fulfill the steps to remediate these and other material weaknesses. If we are imposed, thisunable to assert that our internal control over financial reporting is effective now or in any future period, or if our auditors are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.

Risks Related to Texadian

Texadian’s risk management strategies may not be effective.

Texadian is exposed to volatility in crude oil prices. To minimize such exposures, inventory levels are monitored when making decisions with respect to risk management. Generally, Texadian only purchases crude oil products for which it has a market and structures its purchase and sales contracts so that price fluctuations for those products do not materially affect the margin it receives. Texadian also seeks to maintain a position that is substantially balanced; however, it may experience net unbalanced positions for short periods of time as a result of transportation and delivery variances, as well as logistical issues associated with inland river conditions. Physical inventory is monitored and managed to a balanced position over a reasonable period of time. Additionally, when delays in delivery or receipt do occur they are hedged using future positions and the resulting gains or losses are recorded as derivative income or losses in the month they are realized. Texadian’s business is also affected by counterparty risk including non-performance by suppliers, vendors and counterparties, fluctuations in crude oil prices, transportation costs, the weather, energy prices, interest rates, and foreign currency exchange rates. Although Texadian may engage in hedging transactions to manage these risks, such transactions may not be successful in mitigating its exposure to these fluctuations and may adversely affect reporting and operating results.

Texadian is subject to numerous laws and regulations globally that could adversely affect operating results.

Texadian is required to comply with the numerous and broad reaching laws and regulations administered by United States federal, state, local, and Canadian governmental agencies relating to, but not limited to, the sourcing, transporting, storing and merchandising of crude oil. Any failure to comply with applicable laws and regulations could subject Texadian to administrative penalties and injunctive relief, civil remedies, including fines, injunctions, and recalls of its products.

Texadian is subject to economic downturns, political instability and other risks of doing business with a globally sourced and traded commodity, which could adversely affect operating results.

If we are not successful in entering into hedging transactions, economic downturns and volatile conditions may have a negative impact on Texadian’s ability to secure hedges.execute its business strategies and on its financial position and its results of operations. Texadian’s results of operations could be affected by changes in trade, monetary and fiscal policies, laws and regulations, and other activities of governments, agencies, and similar organizations, including political conditions, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, burdensome taxes and tariffs, enforceability of legal agreements and judgments, and other trade barriers.

Risks Related to our Common Stock

The market for our common stock has been historically illiquid which may affect your ability to sell your shares.

The volume of trading in our stock has historically been low. Since our emergence from bankruptcy, the average daily trading volume for our stock has been approximately 121,500 shares, although the majority of the trading days had volume of less than 5,000 shares. Having a market for shares without substantial liquidity can adversely affect the price of the stock at a time when you might want to sell your shares. We cannot assure investors that a more active trading market will develop even if we issue more equity in the future.

Issuance of shares in connection with financing transactions, under stock incentive plans or in settlement of pending claims will dilute current stockholders.

We have outstanding warrants exercisable for 9,592,125 shares of our common stock. In addition, requirementspursuant to our stock incentive plan, our management is authorized to grant stock awards to our employees, directors and limitations imposed on our derivative counterparties could increaseconsultants. We will likely have to issue additional shares of common stock in satisfaction of unsecured claims which may be allowed by the costsBankruptcy Court in the future. You will incur dilution upon the conversion of hedges.the warrants, the exercise of any outstanding stock awards or the grant of any

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restricted stock or upon the issuance of shares in satisfaction of claims. In addition, if we raise additional funds by issuing additional common stock, or securities convertible into or exchangeable or exercisable for common stock, further dilution to our existing stockholders will result, and new investors could have rights superior to existing stockholders.

Reduced liquidity and price volatility could result in a loss to investors.

Although our common stock is traded on the OTC Bulletin Board, there can be no assurance as to the liquidity of an investment in our common stock or as to the price an investor may realize upon the sale of our common stock. These prices are determined in the marketplace and may be influenced by many factors, including the liquidity of the market for our common stock, the market price of our common stock, investor perception and general economic and market conditions. This price volatility may make it more difficult for our stockholders to sell shares when they want at prices that they find attractive. We do not know of any one particular factor that has caused volatility in our stock price. However, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies. Broad market factors and the investing public’s negative perception of our business may reduce our stock price, regardless of our operating performance.

Concentrated stock ownership and a restrictive certificate of incorporation provision may discourage unsolicited acquisition proposals.

Zell Credit Opportunities Fund, L.P. (“ZCOF”), Whitebox Advisors, LLC (“Whitebox”) and Waterstone Capital Management, L.P. (“Waterstone”) separately own or will have the right to acquire as of March 25, 2013, approximately 36.6%, 27.3% and 19.1%, respectively, or when aggregated, 79.9% of our outstanding common stock. The level of their combined ownership of shares of common stock could have the effect of discouraging or impeding an unsolicited acquisition proposal. In addition, the change in ownership limitations contained in Article 11 of our certificate of incorporation could have the effect of discouraging or impeding an unsolicited takeover proposal.

Future sales of our common stock may depress our stock price.

No prediction can be made as to the effect, if any, that future sales of our common stock, or the availability of our common stock for future sales, will have on the market price of our common stock. Sales in the public market of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock. The potential effect of these shares being sold may be to depress the price at which our common stock trades.

None.

Properties

Piceance Energy

Piceance Energy is a joint venture between the Company and Laramie. All of the assets that Laramie and Delta contributed to Piceance Energy are located within Garfield and Mesa Counties, Colorado and are within a 10-mile radius in the Piceance Basin geologic province. All of the natural gas and oil reserves associated with such assets produce from the same geologic formations, the Mesaverde and Mancos Formations, and some of the acreage is contiguous. Laramie and its predecessor company have drilled over 300 natural gas wells with over a 99% success rate in the Piceance Basin. Laramie is the manager of Piceance. Piceance Energy is owned 66.66% by Laramie and 33.34% by our wholly-owned subsidiary, Par Piceance Energy Equity.

Our core asset andis our minority equity investment in Piceance Energy. Piceance Energy’s primary area of activity is in the Vega Area of the Piceance Basin in western Colorado. The Williams Fork member of the Mesa VerdeMesaverde formation is the primary producing interval and has been successfully developed throughout the Piceance Basin. The geology of the Piceance Basin is characterized as highly consistent and predictable over large areas, which generally equates to reliable timing and cost expectations during drilling and completion activities, as well as minimal well-to-well variance in production and reserves when completed with the same methodology.

Vega Area

Since 2005 we have dedicated significant financial capital and human resources to the development of our Vega Unit and surrounding leasehold in Mesa County, Colorado, which in combination is referred to as the Vega Area. The Vega Area is comprised of the Vega Unit, the Buzzard Creek Unit, the North Vega leasehold, and the North Buzzard Creek leasehold. Our working interests in the Vega Area vary between 95-100%. In 2008, we acquired an additional 17,300 net acres, which increased our position to approximately 22,375 net acres. At December 31, 2011, proved reserves in the Vega Area totaled 89 Bcfe. Production in the Vega Area averaged 27.9 Mmcfe/d in 2011.

South PiceanceEncana Operated Wells

We have a 5% working interest in 163 producing22 wells in the southern region of the Piceance Basin. We also have a 5% working interest in additionalThese wells drilled pursuant toare operated by Encana and were obtained through the February 2008 agreement with Encana, but will not incur any capital expenditures on these wells in accordance with the carry provisions of the agreement. Most of our interests in the South Piceance assets will be contributed to Piceance Energy pursuant to the Contribution Agreement; however we will retain a direct economic interest in certain wells in the South Piceance area.Encana.

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Point Arguello and Rocky Point Units

We own the equivalent of a 6.07% gross working interest in the Point Arguello Unit and related facilities located Offshoreoffshore California in the Santa Barbara Channel. Within this unit there are three producing platforms (Hidalgo, Harvest and Hermosa). This interest will not be contributed to Piceance Energy. We also own a 6.25% working interest in the development of the easteastern half of OCS Block 451 in the Rocky Point Unit.

Reserves

For a table presenting the natural gas and oil reserves we own directly or indirectly through Piceance Energy, see “Item 1.
Business – Natural Gas and Oil Operations,”

Internal Controls Over Reserve Estimates, Technical Qualifications and Technologies Used

Our policies regarding internal controls over reserve estimates requires reserves to be in compliance with the SEC definitions and guidance, and for reserves to be prepared by an independent third party reserve engineering firm under the supervision of our Corporate Engineering Manager. Delta’s Corporate Engineering Manager has a Bachelor of Science degree in Petroleum Engineering with over 19 years of industry experience, and with positions of increasing responsibility within Delta’s corporate reservoir engineering department. The Corporate Engineering Manager reports directly to our President and Chief Executive Officer. Qualified petroleum engineers in our Denver office provide to our third party reserves engineers reserves estimate preparation material such as property interests, production, current costs of operation and development, current prices for production, geoscience and engineering data, and other information. This information is reviewed by knowledgeablecertain members of our reserve engineering department to ensure accuracy and completeness of the data prior to submission to our third party reserve engineering firm. To prepare our reservesenior management. The reserves estimates we retained Ralph E. Davis Associates, Inc. in 2009 and 2010, andshown herein have been independently evaluated by Netherland, Sewell & Associates, Inc. (“NSAI”), a worldwide leader of petroleum property analysis for industry and financial organizations and government agencies. NSAI was founded in 2011. The individual1961 and performs consulting petroleum engineering services under Texas Board of Professional Engineers Registration No. F-2699. Within NSAI, the technical persons primarily responsible for preparing the estimates set forth in the NSAI reserves report incorporated herein are Mr. Dan Paul Smith and Mr. John Hattner. Mr. Smith has been practicing consulting petroleum engineering at RDAINSAI since 1980. Mr. Smith is a Licensed Professional Engineer in the State of Texas (License No. 49093) and has over 30 years of practical experience in petroleum engineering and in the estimation and evaluation of reserves. He graduated from Mississippi State University in 1973 with a Bachelor of Science Degree in Petroleum Engineering. Mr. Hattner has been practicing consulting petroleum geology at NSAI since 1991. Mr. Hattner is a Licensed Professional Geoscientist in the State of Texas, Geology, (License No. 559) and has over 30 years of practical experience in petroleum geosciences, with over 20 years experience in the estimation and evaluation of reserves. He graduated from University of Miami, Florida, in 1976 with a Bachelor of Science Degree in Geology; from Florida State University in 1980 with a Master of Science Degree in Geological Oceanography; and from Saint Mary’s College of California in 1989 with a Master of Business Administration Degree. Both technical principals meet or exceed the education, training, and experience requirements set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers; both are proficient in judiciously applying industry standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserves definitions and guidelines. A letter which identifies the professional qualifications of the individuals at NSAI who waswere responsible for overseeing the preparation of our reserve estimates as of December 31, 2010 is a Licensed Professional Engineer by the State of Texas, and graduated in 1968 with a Bachelor of Science Degree in Chemical Engineering with a Petroleum Engineering option. The individual has in excess of forty years’ experience in the Petroleum Industry including the preparation of reserve evaluation studies and reserve audits for public and private companies for the purpose of reserve certification filings in foreign countries, domestic regulatory filings, financial disclosures and corporate strategic planning. The individuals at NSAI who are responsible for overseeing the preparation of our reserve estimates as of December 31, 2011 include: a Licensed Professional Engineer by the State of Texas, who graduated in 1973 with a Bachelor of Science Degree in Petroleum Engineering. This individual has in excess of thirty years’ experience in the Petroleum Industry including the preparation of reserve evaluation studies. The other individual at NSAI responsible for overseeing our reserve estimates is a Licensed Professional Geologist in the State of Texas who graduated in 1976 with a Bachelor of Science Degree in Geology. This individual also has in excess of thirty years’ experience in the Petroleum Industry including the preparation of reserve evaluation studies. A letter which identifies the professional qualifications of the individual at NSAI who was responsible for overseeing the preparation of our reserve estimates as of December 31, 20112012 has been filed as a part of Exhibit 99.1 to this report.

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A variety of methodologies were used to determine our proved reserve estimates. The principal methodologies employed are decline curve analysis, analog type curve analysis, volumetrics, material balance, pressure transient analysis, petrophysics/log analysis and analogy. Some combination of these methods is used to determine reserve estimates in substantially all of our fields.

Reserves Reported to Other Agencies

On July 6, 2012, we filed a report with the Bankruptcy Court with respect to our estimated natural gas and oil reserves that were contributed to Piceance Energy as a part of the bankruptcy process. We did not file any reports during the year ended December 31, 2011other report with anya federal authority or agency other than the SEC with respect to our estimates of oilnatural gas and natural gasoil reserves.

Proved Undeveloped Reserves

Our proved undeveloped reserves declined from 10.5 Bcfe at December 31, 2010 to zero at December 31, 2011 due toSubstantially all of our limited capital availability and low gas prices. During the year eleven Piceance wells that had been proved undeveloped reserves at December 31, 2010 were moved to proved developed.2012 are held through our minority equity ownership in Piceance Energy. As we are not the operator of these properties, we cannot predict or control the timing of the development of the properties.

Impairment of Long Lived Assets

We periodically compare our historical cost basis of each proved developed and undeveloped oil and gas property to its expected future undiscounted net cash flow from each property (on a field by field basis). Estimates of expected future cash flows represent management’s best estimate based on reasonable and supportable assumptions and projections. If the expected future net cash flows exceed the carrying value of the property, no impairment is recognized. If the carrying value of the property exceeds the expected future cash flows, an impairment exists and is measured by the excess of the carrying value over the estimated fair value of the asset. As a result of this assessment, during the period from January 1, 2012 through August 31, 2012 and during the year ended December 31, 2011, we recorded impairment provisions related to continuing operations attributable to our proved and unproved properties and other items of $420approximately $151.3 million which primarily included impairmentsand $420.4 million, respectively. At August 31, 2012, the impairment charge we recorded was the result of $399.4 million related to Vega area provedvarious transactions resulting from our emergence from Chapter 11 and unproved properties.from the application of fresh start accounting effective September 1, 2012.

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At December 31, 2011, our oil and gas assets were classified as held for use and no impairment charges resulted from the analysis performed at December 31, 2011 as the estimated undiscounted net cash flows exceeded carrying amounts for all properties. At August 31, 2012, the impairment recorded was a result of various transactions resulting from the emergence from Chapter 11 and the application of fresh start accounting. Subsequent to the end of the reporting period, in August 2012, the Bankruptcy Court approved a plan of sale of substantially all of our assets and accordingly these assets will beare classified as held for sale in reporting periods subsequent toperiod at June 30, 2012 and will bewere subject to a material write-down to fair value at that time. Our assets may be further adjusted in the future due to the outcome of the Chapter 11 Cases or the application of “fresh start” accounting upon the Company’s emergence from Chapter 11.

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Production Volumes, Unit Prices and Costs

The following table sets forth certain information regarding our volumes of production sold and average prices received associated with our production and sales of natural gas and crude oil for the respective periods in 2012 and the years ended December 31, 2011 2010, and 2009.2010.

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Productive Wells and Acreage

The table below shows, as of December 31, 2011,2012, the approximate number of gross and net producing oil and gas wells by state and their related developed acres owned by us.us, as well as our share of gross and net wells and developed acres related to our 33.34% equity ownership in Piceance Energy. Calculations include 100% of wells and acreage owned by us and our subsidiaries. Developed acreage consists of acres spaced or assignable to productive wells.

Undeveloped Acreage

At December 31, 2011,2012, we held undeveloped acreage by state as set forth below:

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Drilling Activity

During the respective periods in 2012 and the years indicated,ended December 31, 2011 and 2010, we drilled or participated in the drilling of the following productive and nonproductive exploratory and development wells: