In 2012, declines in forecasted commodity prices were indicators of impairment. Forecasted commodity prices at December 31, 2012 declined between 14% and 18% for natural gas and between 4% and 16% for light, sweet crude oil when compared to December 31, 2011. In the second quarter of 2012, the Company tested its gas-weighted CGUs for impairment and determined that the aggregate carrying value of these CGUs was $20 million higher than the recoverable amounts and impairments were recorded ($13 million for the Shallow Gas CGU and $7 million for the Deep Gas CGU). In the third and fourth quarters of 2012, the Company tested all of its CGUs for impairment and determined that no additional charges for impairment were required.
General and administrative expenses. General and administrative expenses excluding share-based compensation were $2.5 million ($6.07 per BOE) for the fourth quarter of 2012 compared to $2.1 million ($3.88 per BOE) in the third quarter of 2012 and $2.2 million ($3.03 per BOE) for the fourth quarter of 2011. For the year ended December 31, 2012, general and administrative expenses excluding share-based compensation were $9.2 million ($4.12 per BOE) compared to $9.4 million ($3.36 per BOE) for 2011. The decrease in cash general and administrative expenses is the result of lower employee compensation associated with reduced staff and decreased audit and tax fees as the comparative period in 2011 had higher fees associated with the adoption of IFRS. In the fourth quarter of 2012, the Company laid off some of its staff. One time severance costs of $0.5 million were recorded in the fourth quarter. Beginning in December 2012, office rent decreased by $0.1 million per month as a result of the corporate office move into lower cost office space.
Three months ended Year ended December December 31 31(thousands of dollars) 2012 2011 2012 2011General and administrative (gross) $ 3,264 $ 3,376 $ 13,374 $ 14,816Overhead recoveries (234) (490) (1,207) (1,802)Capitalized (515) (674) (2,999) (3,569) --------------------------------------General and administrative (cash) $ 2,515 $ 2,212 $ 9,168 $ 9,445Net share-based compensation 183 230 756 960 ----------------- ------------------General and administrative (net) $ 2,698 $ 2,442 $ 9,924 $ 10,405----------------------------------------------------------------------------General and administrative (cash) ($/BOE) $ 6.07 $ 3.03 $ 4.12 $ 3.36% Capitalized 16% 20% 22% 24%----------------------------------------------------------------------------
Capitalized general and administrative costs are limited to compensation and benefits and associated office rent of staff involved in capital activities.
Share-based compensation. The Company accounts for share-based compensation plans using the fair value method of accounting. Share-based compensation expense was $1.0 million in 2012 ($0.8 million net of amounts capitalized) versus $1.5 million ($1.0 million net of amounts capitalized) in 2011. Share-based compensation costs were $0.1 million for the fourth quarter of 2012 ($0.2 million net of amounts capitalized) versus $0.3 million ($0.2 million net of amounts capitalized) in the fourth quarter of 2011.
