Net income in the quarters was affected by:
-- Over the quarters, oil and natural gas revenue from the D6 Block has declined due to reservoir performance.-- In the quarter ended June 30, 2012, the Company recorded an additional $6 million of profit petroleum expense for the Hazira Field, reducing oil and natural gas revenue. The adjustment to profit petroleum expense was the result of a court ruling finding that the 36-inch natural gas sales pipeline that Niko and GSPC constructed to connect the Hazira Field to the local industrial area was not eligible for cost recovery.-- In the quarter ended March 31, 2011 and again in the quarter ended March 31, 2012, depletion expense increased as a result of revisions to the reserves and estimated future costs to develop the reserves.-- In each quarter, the Company expenses a portion of its exploration and evaluation costs and the level of activity has varied over the periods.-- In the quarter ended March 31, 2012, the Company impaired assets of $133 million and long term receivables of $23 million, in the quarter ended June 30, 2012, the Company impaired assets of $39 million, and in the quarter ended December 31, 2012, the Company impaired assets of $29 million.-- In each quarter, gains and losses are recognized based on fluctuations in the market prices of the Company's short-term investments that are valued at fair value.-- In the quarter ended December 31, 2011, there was a $14 million expense upon cancellation of stock options to recognize the remainder of the expense associated with the options.-- In the quarter ended March 31, 2011, there was a $9.7 million fine recorded related to the Company's guilty plea to one count of bribery under the Corruption of Foreign Public Officials Act relating to two specific instances that occurred in 2005.-- In the quarter ended June 30, 2011, there was a change in accounting estimate related to deferred income tax expense. There was a revision in the method of estimating the amount of taxable temporary differences reversing during the tax holiday period.-- In the quarter ended March 31, 2012, there was a deferred income tax recovery related to the revision of the reserve estimate, which increased the value of the tax holiday for the D6 Block. There were deferred income tax recoveries related to spending in Indonesia and Trinidad applied against the deferred income tax liabilities recorded upon the acquisitions of Voyager Energy Ltd. and Black Gold Energy LLC.-- In the quarter ended September 30, 2012, there was a deferred tax recovery of $22 million, due to a reduction in exploration and evaluation assets related to proceeds from a farm out and from a former partner in exchange for assuming the partner's obligation for future drilling commitments.-- In the quarter ended December 31, 2012, there was a deferred tax recovery of $7 million due to the issuance of the convertible notes.
CRITICAL ACCOUNTING ESTIMATES
The Company makes assumptions in applying certain critical accounting estimates that are uncertain at the time the accounting estimate is made and may have a significant effect on the consolidated financial statements of the Company.
The critical accounting estimates include oil and natural gas reserves, depletion, depreciation and amortization expense, asset impairment, decommissioning obligations, the amount and likelihood of contingent liabilities and income taxes. The critical accounting estimates are based on variable inputs including:
-- estimation of recoverable oil and natural gas reserves and future cash flows from the reserves;-- geological interpretations, exploration activities and success or failure, and the Company's plans with respect to the property and financial ability to hold the property;-- risk-free interest rates;-- estimation of future abandonment costs;-- facts and circumstances supporting the likelihood and amount of contingent liabilities; and-- interpretation of income tax laws.