Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 31, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | CIMAREX ENERGY CO | ||
Entity Central Index Key | 1,168,054 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | true | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 11.1 | ||
Entity Common Stock, Shares Outstanding | 95,121,492 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Description | Cimarex Energy Co. (together with its subsidiaries, "Cimarex," the "company," "our," "we" or "us") is filing this Amendment No. 1 (this "Form 10-K/A") to amend its Annual Report on Form 10-K for the year ended December 31, 2016, originally filed with the Securities and Exchange Commission (the "SEC") on February 24, 2017 (the "Original Filing"), to correct certain errors in our Consolidated Financial Statements included in Part II, Item 8 (collectively referred to as "Financial Statements") and related footnote disclosures as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 (including the unaudited interim periods within 2016 and 2015). In connection with the corrections made in this Form 10-K/A, management reassessed the effectiveness of the company's internal control over financial reporting as of December 31, 2016 and concluded that a deficiency in the design of the company's internal controls related to the full cost ceiling test calculation represents a material weakness in our internal control over financial reporting and, therefore, that we did not maintain effective internal control over financial reporting as of December 31, 2016. In addition, this Form 10-K/A includes under Part II, Item 6 corrected selected financial data as of and for the years ended December 31, 2016 - 2012. This Form 10-K/A also amends certain other items in the Original Filing, as listed in "Items Amended in This Filing" below. |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 652,876 | $ 779,382 |
Accounts receivable: | ||
Trade, net of allowance | 42,287 | 81,888 |
Oil and gas sales, net of allowance | 217,395 | 136,537 |
Gas gathering, processing, and marketing, net of allowance | 14,888 | 6,935 |
Other | 27 | 38 |
Oil and gas well equipment and supplies | 33,342 | 54,579 |
Derivative instruments | 10,745 | |
Prepaid expenses | 7,335 | 7,036 |
Other current assets | 1,154 | 790 |
Total current assets | 969,304 | 1,077,930 |
Oil and gas properties at cost, using the full cost method of accounting: | ||
Proved properties | 16,225,495 | 15,546,948 |
Unproved properties and properties under development, not being amortized | 478,277 | 440,166 |
Gross oil and gas properties | 16,703,772 | 15,987,114 |
Less - accumulated depreciation, depletion, amortization and impairment | (14,349,505) | (13,245,832) |
Net oil and gas properties | 2,354,267 | 2,741,282 |
Fixed assets, less accumulated depreciation of $246,901 and $207,173 | 205,465 | 230,009 |
Goodwill | 620,232 | 620,232 |
Deferred income taxes | 55,835 | |
Derivative instruments | 501 | |
Other assets, net | 32,621 | 38,468 |
Total assets | 4,237,724 | 4,708,422 |
Accounts payable: | ||
Trade | 49,163 | 53,384 |
Gas gathering, processing, and marketing | 25,323 | 13,431 |
Accrued liabilities: | ||
Exploration and development | 82,320 | 56,721 |
Taxes other than income | 18,766 | 17,545 |
Other | 177,695 | 173,242 |
Derivative instruments | 49,370 | |
Revenue payable | 119,715 | 95,744 |
Total current liabilities | 522,352 | 410,067 |
Long-term debt: | ||
Principal | 1,500,000 | 1,500,000 |
Less - unamortized debt issuance costs | (12,061) | (14,380) |
Long-term debt, net | 1,487,939 | 1,485,620 |
Deferred income taxes | 157,162 | |
Asset retirement obligation | 140,770 | 153,857 |
Derivative instruments | 2,570 | |
Other liabilities | 41,104 | 43,359 |
Total liabilities | 2,194,735 | 2,250,065 |
Stockholders' equity: | ||
Common stock, $0.01 par value, 200,000,000 shares authorized, 95,123,525 and 94,820,570 shares issued, respectively | 951 | 948 |
Paid-in capital | 2,763,452 | 2,762,976 |
Retained earnings (Accumulated deficit) | (722,359) | (306,008) |
Accumulated other comprehensive income | 945 | 441 |
Total stockholders' equity | 2,042,989 | 2,458,357 |
Total liabilities and stockholders' equity | $ 4,237,724 | $ 4,708,422 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | May 31, 2015 |
Condensed Consolidated Balance Sheets | |||
Fixed assets, accumulated depreciation (in dollars) | $ 246,901 | $ 207,173 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 | |
Preferred stock, shares issued | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 | |
Common stock, shares issued | 95,123,525 | 94,820,570 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | |||
Oil sales | $ 632,934 | $ 809,664 | $ 1,308,958 |
Gas sales | 388,786 | 428,227 | 687,930 |
NGL sales | 199,498 | 179,647 | 375,941 |
Gas gathering and other | 36,033 | 34,688 | 49,602 |
Gas marketing, net of related costs of $122,655, $144,673 and $256,836 respectively | 94 | 393 | 1,745 |
Total revenues | 1,257,345 | 1,452,619 | 2,424,176 |
Costs and expenses: | |||
Impairment of oil and gas properties | 757,670 | 4,033,295 | |
Depreciation, depletion and amortization | 392,348 | 731,460 | 775,577 |
Asset retirement obligation | 7,828 | 9,121 | 10,082 |
Production | 232,002 | 299,374 | 342,304 |
Transportation, processing and other operating | 190,725 | 182,362 | 195,414 |
Gas gathering and other | 31,785 | 38,138 | 35,113 |
Taxes other than income | 61,946 | 84,764 | 128,793 |
General and administrative | 73,901 | 74,688 | 81,160 |
Stock compensation | 24,523 | 19,559 | 15,001 |
(Gain) loss on derivative instruments, net | 55,749 | (11,246) | (3,762) |
Other operating, net | 755 | 856 | 116 |
Total costs and expenses | 1,829,232 | 5,462,371 | 1,579,798 |
Operating income (loss) | (571,887) | (4,009,752) | 844,378 |
Other (income) and expense: | |||
Interest expense | 83,272 | 85,746 | 72,865 |
Capitalized interest | (21,248) | (30,589) | (35,925) |
Other, net | (10,707) | (13,576) | (28,907) |
Income (loss) before income tax | (623,204) | (4,051,333) | 836,345 |
Income tax expense (benefit) | (214,401) | (1,471,729) | 309,847 |
Net income (loss) | $ (408,803) | $ (2,579,604) | $ 526,498 |
Basic | |||
Distributed (in dollars per share) | $ 0.32 | $ 0.64 | $ 0.64 |
Undistributed (in dollars per share) | (4.70) | (28.39) | 5.37 |
Total basic (in dollars per share) | (4.38) | (27.75) | 6.01 |
Diluted | |||
Distributed (in dollars per share) | 0.32 | 0.64 | 0.64 |
Undistributed (in dollars per share) | (4.70) | (28.39) | 5.36 |
Total diluted (in dollars per share) | $ (4.38) | $ (27.75) | $ 6 |
Comprehensive income (loss): | |||
Net income (loss) | $ (408,803) | $ (2,579,604) | $ 526,498 |
Other comprehensive income (loss): | |||
Change in fair value of investments, net of tax | 504 | (661) | (87) |
Total comprehensive income (loss) | $ (408,299) | $ (2,580,265) | $ 526,411 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Gas marketing, related costs | $ 122,655 | $ 144,673 | $ 256,836 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (408,803) | $ (2,579,604) | $ 526,498 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Impairments and other valuation losses | 757,670 | 4,033,295 | |
Depreciation, depletion and amortization | 392,348 | 731,460 | 775,577 |
Asset retirement obligation | 7,828 | 9,121 | 10,082 |
Deferred income taxes | (213,286) | (1,486,439) | 309,443 |
Stock compensation | 24,523 | 19,559 | 15,001 |
(Gain) loss on derivative instruments | 55,749 | (11,246) | (3,762) |
Settlements on derivative instruments | 7,437 | 7,641 | |
Changes in non-current assets and liabilities | 3,867 | 23,230 | (2,440) |
Other, net | 1,805 | 4,206 | (3,828) |
Changes in operating assets and liabilities: | |||
Receivables, net | (49,340) | 186,699 | (35,133) |
Other current assets | 20,880 | 37,954 | (25,428) |
Accounts payable and other current liabilities | (1,453) | (276,735) | 45,714 |
Net cash provided by operating activities | 599,225 | 691,500 | 1,619,365 |
Cash flows from investing activities: | |||
Oil and gas expenditures | (699,558) | (979,044) | (2,108,250) |
Sales of oil and gas assets | 21,487 | 39,853 | 449,981 |
Sales of other assets | 7,889 | 1,178 | 8,413 |
Other capital expenditures | (22,228) | (70,592) | (90,611) |
Net cash used by investing activities | (692,410) | (1,008,605) | (1,740,467) |
Cash flows from financing activities: | |||
Net bank debt borrowings | (174,000) | ||
Proceeds from other long-term debt | 750,000 | ||
Proceeds from sale of common stock | 752,100 | ||
Financing and underwriting fees | (101) | (24,633) | (11,616) |
Dividends paid | (38,024) | (58,281) | (53,849) |
Proceeds from exercise of stock options and other | 4,804 | 21,439 | 11,898 |
Net cash (used) provided by financing activities | (33,321) | 690,625 | 522,433 |
Net change in cash and cash equivalents | (126,506) | 373,520 | 401,331 |
Cash and cash equivalents at beginning of period | 779,382 | 405,862 | 4,531 |
Cash and cash equivalents at end of period | $ 652,876 | $ 779,382 | $ 405,862 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at Dec. 31, 2013 | $ 872 | $ 1,970,113 | $ 1,862,075 | $ 1,189 | $ 3,834,249 |
Balance, shares at Dec. 31, 2013 | 87,152,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Dividends | (55,664) | (55,664) | |||
Net income (loss) | 526,498 | 526,498 | |||
Unrealized change in fair value of investments, net of tax | (87) | (87) | |||
Issuance of restricted stock awards | $ 4 | (4) | |||
Issuance of service-based restricted stock awards, shares | 487,000 | ||||
Common stock reacquired and retired | $ (1) | (13,559) | (13,560) | ||
Common stock reacquired and retired, shares | (123,000) | ||||
Restricted stock forfeited and retired | $ (1) | 1 | |||
Restricted stock forfeited and retired, shares | (135,000) | ||||
Exercise of stock options | $ 2 | 11,896 | 11,898 | ||
Exercise of stock options, shares | 211,000 | ||||
Stock-based compensation | 28,633 | 28,633 | |||
Balance at Dec. 31, 2014 | $ 876 | 1,997,080 | 2,332,909 | 1,102 | 4,331,967 |
Balance, shares at Dec. 31, 2014 | 87,592,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Dividends | (59,313) | (59,313) | |||
Net income (loss) | (2,579,604) | (2,579,604) | |||
Unrealized change in fair value of investments, net of tax | (661) | (661) | |||
Issuance of common stock | $ 69 | 729,468 | 729,537 | ||
Issuance of common stock, shares | 6,900,000 | ||||
Issuance of restricted stock awards | $ 5 | (5) | |||
Issuance of service-based restricted stock awards, shares | 471,000 | ||||
Common stock reacquired and retired | $ (2) | (21,238) | (21,240) | ||
Common stock reacquired and retired, shares | (194,000) | ||||
Restricted stock forfeited and retired | $ (1) | 1 | |||
Restricted stock forfeited and retired, shares | (90,000) | ||||
Exercise of stock options | $ 1 | 8,450 | 8,451 | ||
Exercise of stock options, shares | 142,000 | ||||
Stock-based compensation | 36,232 | 36,232 | |||
Stock-based compensation tax benefit | 12,988 | 12,988 | |||
Balance at Dec. 31, 2015 | $ 948 | 2,762,976 | (306,008) | 441 | 2,458,357 |
Balance, shares at Dec. 31, 2015 | 94,821,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Dividends | (7,548) | (7,548) | |||
Dividends in Excess of Retained Earnings | (22,803) | (22,803) | |||
Net income (loss) | (408,803) | (408,803) | |||
Unrealized change in fair value of investments, net of tax | 504 | 504 | |||
Issuance of restricted stock awards | $ 5 | (5) | |||
Issuance of service-based restricted stock awards, shares | 479,000 | ||||
Common stock reacquired and retired | $ (3) | (26,622) | (26,625) | ||
Common stock reacquired and retired, shares | (208,000) | ||||
Restricted stock forfeited and retired, shares | (32,000) | ||||
Exercise of stock options | $ 1 | 4,803 | 4,804 | ||
Exercise of stock options, shares | 64,000 | ||||
Stock-based compensation | 45,103 | 45,103 | |||
Balance at Dec. 31, 2016 | $ 951 | $ 2,763,452 | $ (722,359) | $ 945 | $ 2,042,989 |
Balance, shares at Dec. 31, 2016 | 95,124,000 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BASI Cimarex Energy Co., a Delaware corporation, is an independent oil and gas exploration and production company. Our operations are mainly located in Texas, Oklahoma and New Mexico. Basis of Presentation Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. Our significant accounting policies are discussed below. The accounts of Cimarex and its subsidiaries are presented in the accompanying Consolidated Financial Statements. All intercompany accounts and transactions were eliminated in consolidation. Segment Information We have determined that our business is comprised of only one segment because our gathering, processing and marketing activities are ancillary to our production operations and are not separately managed. Use of Estimates The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The more significant areas requiring the use of management’s estimates and judgments relate to the estimation of proved oil and gas reserves, the use of these oil and gas reserves in calculating depletion, depreciation and amortization (DD&A), the use of the estimates of future net revenues in computing ceiling test limitations and estimates of future abandonment obligations used in recording asset retirement obligations and the assessment of goodwill. The process of estimating quantities of oil and gas reserves is complex, requiring significant decisions in the evaluation of all available geological, geophysical, engineering and economic data. The data for a given field may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. As a result, material revisions to existing reserve estimates may occur from time to time. Although every reasonable effort is made to ensure that our reserve estimates represent the most accurate assessments possible, subjective decisions and available data for our various fields make these estimates generally less precise than other estimates included in financial statement disclosures. Estimates and judgments are also required in determining the allowance for doubtful accounts, impairments of unproved properties and other assets, purchase price allocation, valuation of deferred tax assets, fair value measurements and commitments and contingencies. We analyze our estimates, including those related to oil, gas and NGL revenues, and base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Cash and Cash Equivalents Cash and cash equivalents consist of cash in banks and investments readily convertible into cash, which have original maturities of three months or less. Cash equivalents are stated at cost, which approximates market value. Oil and Gas Well Equipment and Supplies We carry our inventory at the lower of cost or net realizable value, where net realizable value is estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We performed an analysis of our oil and gas well equipment and supplies as of December 31, 2016, and no impairment was required. However, the industry-wide decline in drilling operations has put downward pressure on the price of oil and gas well equipment and supplies. Declines in future periods could cause us to recognize impairments on these assets. An impairment would not affect cash flow from operating activities, but would adversely affect our net income and stockholders’ equity. Oil and Gas Properties We use the full cost method of accounting for our oil and gas operations. All costs associated with property acquisition, exploration and development activities are capitalized. Exploration and development costs include dry hole costs, geological and geophysical costs, direct overhead related to exploration and development activities and other costs incurred for the purpose of finding oil and gas reserves. Salaries and benefits paid to employees directly involved in the exploration and development of properties, as well as other internal costs that can be directly identified with acquisition, exploration and development activities, are also capitalized. Under the full cost method of accounting, no gain or loss is recognized upon the disposition of oil and gas properties unless such disposition would significantly alter the relationship between capitalized costs and proved reserves. Expenditures for maintenance and repairs are charged to production expense in the period incurred. Companies that follow the full cost accounting method are required to make quarterly ceiling test calculations. This test requires companies to record an impairment to the extent that total capitalized costs for oil and gas properties (net of accumulated DD&A and all related deferred income taxes) exceed the sum of (i) the present value discounted at 10% of estimated future net cash flows from proved reserves, (ii) the cost of properties not being amortized, (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, and (iv) all related tax effects. We currently do not have any unproven properties that are being amortized. Revenue calculations used to estimate future net cash flows from proved reserves are based on the unweighted average first-day-of-the-month prices for the prior 12 months. If net capitalized costs exceed this limit, the excess is charged to expense. At December 31, 2016, the carrying value of our oil and gas properties subject to the test did not exceed the calculated value of the ceiling limitation and, therefore, we did not recognize an impairment. However, a decline of approximately 7% or more in the value of the ceiling limitation would have resulted in an impairment. We did recognize impairments in the first three quarters of 2016 totaling $757.7 million ($481.4 million, net of tax). For the year ended December 31, 2015, full year impairments totaled $4.0 billion ($2.6 billion, net of tax). These impairments resulted primarily from the impact of decreases in the 12-month average trailing prices for oil, natural gas and NGLs utilized in determining the future net cash flows from proved reserves. If pricing conditions decline, or if there is a negative impact on one or more of the other components of the calculation, we will incur full cost ceiling impairments in future quarters. The ceiling calculation is not intended to be indicative of the fair market value of our proved reserves or future results. Impairment charges do not affect cash flow from operating activities, but do adversely affect our net income and other components of our balance sheet. Any impairment of oil and gas properties is not reversible at a later date. Depletion of proved oil and gas properties is computed on the units-of-production method, whereby capitalized costs, including future development costs and asset retirement costs, are amortized over total estimated proved reserves. Changes in our estimate of proved reserve quantities, commodity prices and impairment of oil and gas properties will cause corresponding changes in depletion expense in periods subsequent to these changes. The capitalized costs of unproved properties, including those in wells in progress, are excluded from the costs being amortized. We do not have major development projects that are excluded from costs being amortized. On a quarterly basis, we evaluate excluded costs for inclusion in the costs to be amortized. Significant unproved properties are evaluated individually. Unproved properties that are not considered individually significant are aggregated for evaluation purposes and related costs are transferred to the costs to be amortized quarterly based on the application of historical factors. Fixed Assets, net Fixed assets consist primarily of gathering and plant facilities, vehicles, airplanes, office furniture, and computer equipment and software. These items are recorded at cost and are depreciated on the straight-line method based on expected lives of the individual assets, which range from 3 to 30 years. Goodwill Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. We have one reporting unit for which we first assess qualitative factors to determine whether it is more likely than not (with a greater than 50% threshold) that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If goodwill is determined to be impaired then it is written down to a calculated fair value by charging the impairment to expense. We evaluate our goodwill for impairment in the fourth quarter of each year and whenever events or changes in circumstances indicate the possibility that goodwill may be impaired. Based upon our qualitative assessment at December 31, 2016, goodwill was not impaired. It is possible that goodwill could become impaired in the future if commodity prices or other economic factors become less favorable. Revenue Recognition Oil, Gas and NGL Sales Revenue is recorded from the sales of oil, gas and NGLs when the product is delivered at a fixed or determinable price, title has transferred and collectability is reasonably assured. There is a ready market for our products and sales occur soon after production. Marketing Sales We market and sell natural gas for working interest owners under short term sales and supply agreements and earn a fee for such services. Revenues are recognized as gas is delivered and are reflected net of gas purchases on the consolidated statements of operations and comprehensive income (loss). Gas Imbalances We use the sales method of accounting for gas imbalances. Under this method, revenue is recorded on the basis of gas actually sold. Gas reserves are adjusted to the extent there are sufficient quantities of natural gas to make up an imbalance. A liability is established in situations where there are insufficient proved reserves available to make-up an overproduced imbalance. Imbalances have not been significant in the periods presented. General and Administrative Expenses General and administrative expenses are reported net of amounts reimbursed by working interest owners of the oil and gas properties operated by Cimarex and net of amounts capitalized pursuant to the full cost method of accounting. Derivatives Our derivative contracts are recorded on the balance sheet at fair value. Our firm sales contracts qualify for the normal purchase and normal sale exception. Contracts that qualify for this treatment do not require mark-to-market accounting treatment. See Note 4 for additional information regarding our derivative instruments. Income Taxes We record deferred tax assets and liabilities to account for the expected future tax consequences of events that have been recognized in the financial statements and tax returns. We classify all deferred tax assets and liabilities as noncurrent. We routinely assess the realizability of the deferred tax assets. If we conclude that it is more likely than not that some or all of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance. Numerous judgments and assumptions are inherent in the determination of future taxable income, including factors such as future operating conditions (particularly as related to prevailing oil and gas prices) and changing tax laws. We regularly assess and, if required, establish accruals for tax contingencies that could result from assessments of additional tax by taxing jurisdictions where the company operates. See Note 9 for additional information regarding our income taxes. Contingencies A provision for contingencies is charged to expense when the loss is probable and the cost can be reasonably estimated. Determining when expenses should be recorded for these contingencies and the appropriate amounts for accrual is a complex estimation process that includes subjective judgment. In many cases, this judgment is based on interpretation of laws and regulations, which can be interpreted differently by regulators and/or courts of law. We closely monitor known and potential legal, environmental and other contingencies and determine when we should record losses for these items based on information available to us. See Note 10 for additional information regarding our contingencies. Asset Retirement Obligations We recognize the present value of the fair value of liabilities for retirement obligations associated with tangible long-lived assets in the period in which there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This liability includes costs related to the abandonment of wells, the removal of facilities and equipment, and site restorations. Subsequent to initial measurement, the asset retirement liability is required to be accreted each period. If the fair value of a recorded asset retirement obligation changes, a revision is recorded to both the asset retirement obligation and the asset retirement capitalized cost. Capitalized costs are included as a component of the DD&A calculations. The current portions of the asset retirement obligations are recorded in “Accrued liabilities — Other” in the accompanying consolidated balance sheets and expenditures are classified as cash used in operating activities in the accompanying consolidated statements of cash flows. See Note 8 for additional information regarding our asset retirement obligations. Stock-based Compensation We recognize compensation cost related to all stock-based awards in the financial statements based on their estimated grant-date fair value. We grant various types of stock-based awards including stock options, restricted stock (including awards with service-based vesting and market condition-based vesting provisions) and restricted stock units. The fair value of stock option awards is determined using the Black-Scholes option pricing model. Service-based restricted stock and units are valued using the market price of our common stock on the grant date. The fair value of the market condition-based restricted stock is based on the grant-date market value of the award utilizing a statistical analysis. Compensation cost is recognized ratably over the applicable vesting period. To the extent compensation cost relates to employees directly involved in oil and gas acquisition, exploration, and development activities, such amounts are capitalized to oil and gas properties. Amounts not capitalized to oil and gas properties are recognized as stock compensation expense. See Note 6 for additional information regarding our stock-based compensation. Earnings (loss) per Share We calculate earnings (loss) per share recognizing that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are “participating securities” and, therefore, should be included in computing earnings per share using the two-class earnings allocation method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Our unvested share based payment awards, consisting of restricted stock and units, qualify as participating securities. See Note 7 for additional information regarding our earnings per share. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) . In July 2015, the FASB deferred the effective date by one year to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, but not before the original effective date of reporting periods beginning after December 15, 2016. The new revenue standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification . Entities can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. We intend to adopt this standard on January 1, 2018, utilizing a modified retrospective approach. Management does not believe the effect of adoption will be material to our financial statements because we follow the sales method of accounting for our oil, gas and NGL production, which is generally consistent with the revenue recognition provisions of the new standard. However, we anticipate the new standard will result in more robust footnote disclosures. We cannot currently determine the extent of the new footnote disclosures as further clarification is needed for certain practices common to the industry. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The key provision of this ASU is that a lessee must recognize (i) liabilities to make lease payments and (ii) right-of-use assets on its balance sheet. The ASU permits lessees to make a policy election to not recognize lease assets and liabilities for leases with terms of less than twelve months. Under current GAAP, a determination of whether a lease is a capital or operating lease is made at lease inception and no assets or liabilities are recognized for operating leases. Under this ASU, the determination to be made at the inception of a contract is whether the contract is, or contains, a lease. Leases convey the right to control the use of an identified asset in exchange for consideration. Only the lease components of a contract must be accounted for in accordance with this ASU. Non-lease components, such as activities that transfer a good or service to the customer, shall be accounted for under other applicable Topics. An entity may make a policy election to not separate lease and non-lease components and account for the non-lease components together with the lease components as a single lease component. This ASU retains a distinction between finance and operating leases concerning the recognition and presentation of the expense and payments related to leases in the statements of operations and comprehensive income and cash flows, however, both types of leases require the recognition of assets and liabilities on the balance sheet. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Upon transition, lessees will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. While we are in the process of evaluating the potential impact of adopting this guidance, the primary effect will be to record assets and obligations for contracts currently recognized as operating leases. We do not intend to adopt the standard early. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The standard contains various amendments, and specifies whether each amendment should be adopted using a retrospective, modified retrospective, or prospective transition method. We will adopt ASU 2016-09 effective January 1, 2017. The amendments within ASU 2016-09 related to the timing of when excess tax benefits and tax benefits on dividends on nonvested equity shares are recognized and accounting for forfeitures will be adopted using a modified retrospective method. In accordance with this method, we expect to record a cumulative-effect adjustment on that date relating to those amendments, representing an increase to beginning Deferred income taxes of approximately $33 million, a reduction to beginning Accumulated deficit of approximately $31 million and an increase to beginning Paid-in capital of approximately $2 million. The amendments within ASU 2016-09 related to the presentation in the statement of cash flows of excess tax benefits and cash outflows attributable to tax withholdings on the net settlement of equity-classified awards will be adopted using a retrospective method. In accordance with this method, we estimate that Net cash provided by operating activities would have increased and Net cash (used) provided by financing activities would have decreased by approximately $27 million, $34 million and $14 million, for the years ended December 31, 2016, 2015 and 2014, respectively. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment . This ASU eliminates step two from the goodwill impairment test. Under current guidance, if the fair value of the reporting unit is less than its carrying amount (step 1 of the goodwill impairment test), entities must complete step two to determine the impairment amount, if any. Under step two, the impairment amount is determined by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination, and comparing it to the carrying amount of the goodwill. Under this ASU, the impairment amount is the amount by which the carrying amount of the reporting unit exceeds the reporting unit’s fair value, with the amount of impairment not to exceed the carrying amount of the goodwill. This ASU retains the option to qualitatively assess whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount in order to determine if it is necessary to initiate step 1. This ASU is effective for annual or any interim goodwill impairment tests in the fiscal years beginning after December 15, 2019, with early adoption permitted for testing dates after January 1, 2017. The implementation of this ASU will affect the amount of goodwill impairment we record, if any. We adopted this ASU on January 1, 2017, and will apply its provisions in future periods if we determine our goodwill has been impaired. Subsequent Events The accompanying financial disclosures include an evaluation of subsequent events through the date of this filing. Correction of Previously Issued Consolidated Financial Statements In the course of preparing our consolidated financial statements for the quarter ended March 31, 2017, we identified an error in the quarterly ceiling test calculations used in prior periods to test our oil and gas properties for possible impairment. Specifically, the calculations did not properly consider the company's tax net operating loss carryforwards in the calculation of the capitalized costs of net oil and gas properties to be tested for impairment. This error had the effect of incorrectly reporting impairment amounts in prior periods, which resulted in incorrectly reporting depletion expense and income tax expense (benefit) in prior periods. After considering the guidance in Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and Accounting Standards Codification 250, Accounting Changes and Error Corrections, we evaluated the materiality of these amounts quantitatively and qualitatively and concluded that the error was not material to any of the company’s prior annual or interim period financial statements. The consolidated financial statements as of and for the years ended December 31, 2016, 2015 and 2014, and the unaudited interim period consolidated financial statements within the years ended December 31, 2016 and 2015 in this Form 10-K/A, have been revised in accordance with SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, in order to reflect these corrections. The corrections reflect the adjustments to impairment amounts, depletion expense and income tax expense (benefit) described above, as well as the resulting adjustments to deferred income taxes, accumulated depreciation, depletion and amortization and impairment, and retained earnings (accumulated deficit). Retained earnings as of December 31, 2013 reflected in the accompanying consolidated statements of stockholders’ equity has been reduced by $188.0 million from its previously reported balance of $2.05 billion to the corrected balance of $1.86 billion to reflect the impact of correcting the errors discussed above for the years ended December 31, 2013 ($102.9 million) and 2012 ($85.1 million). Correction of the errors discussed above impacted certain non-cash line items within the operating cash flows section of the consolidated statements of cash flows; however, the correction did not change previously reported Net cash provided by operating activities for any period. In addition to correcting the consolidated financial statements, we have also corrected the Supplemental Quarterly Financial Data (Unaudited) and the following Notes for the effects of the errors discussed above: • Note 1 – Basis of Presentation and Summary of Significant Accounting Policies • Note 7 – Earnings (Loss) Per Share • Note 9 – Income Taxes The following tables present the effect of the corrections on selected line items from the previously reported consolidated financial statements as of December 31, 2016 and 2015, and for the years ended December 31, 2016, 2015 and 2014. Consolidated Balance Sheet December 31, 2016 As Previously As Reported Corrections Corrected (in thousands) Accumulated depreciation, depletion and amortization and impairment $ (13,849,701) $ (499,804) $ (14,349,505) Net oil and gas properties $ 2,854,071 $ (499,804) $ 2,354,267 Total assets $ 4,681,693 $ (443,969) $ 4,237,724 Deferred income taxes – (asset) liability $ 126,894 $ (182,729) $ (55,835) Total liabilities $ 2,321,629 $ (126,894) $ 2,194,735 Retained earnings (accumulated deficit) $ (405,284) $ (317,075) $ (722,359) Total stockholders’ equity $ 2,360,064 $ (317,075) $ 2,042,989 Total liabilities and stockholders’ equity $ 4,681,693 $ (443,969) $ 4,237,724 Consolidated Balance Sheet December 31, 2015 As Previously As Reported Corrections Corrected (in thousands) Accumulated depreciation, depletion and amortization and impairment $ (12,710,968) $ (534,864) $ (13,245,832) Net oil and gas properties $ 3,276,146 $ (534,864) $ 2,741,282 Total assets $ 5,243,286 $ (534,864) $ 4,708,422 Deferred income tax (asset) liability $ 352,705 $ (195,543) $ 157,162 Total liabilities $ 2,445,608 $ (195,543) $ 2,250,065 Retained earnings (accumulated deficit) $ 33,313 $ (339,321) $ (306,008) Total stockholders’ equity $ 2,797,678 $ (339,321) $ 2,458,357 Total liabilities and stockholders’ equity $ 5,243,286 $ (534,864) $ 4,708,422 . Consolidated Statement of Operations and Comprehensive Income (Loss) for the Year Ended December 31, 2016 As Previously As Reported Corrections Corrected (in thousands, except per share data) Impairment of oil and gas properties $ 719,142 $ 38,528 $ 757,670 Depreciation, depletion and amortization $ 465,936 $ (73,588) $ 392,348 Total operating expenses $ 1,864,292 $ (35,060) $ 1,829,232 Operating income (loss) $ (606,947) $ 35,060 $ (571,887) Income (loss) before income tax $ (658,264) $ 35,060 $ (623,204) Income tax expense (benefit) $ (227,215) $ 12,814 $ (214,401) Net income (loss) $ (431,049) $ 22,246 $ (408,803) Total comprehensive income (loss) $ (430,545) $ 22,246 $ (408,299) Earnings (loss) per share to common stockholders: Basic Distributed $ 0.32 $ — $ 0.32 Undistributed (4.94) 0.24 (4.70) $ (4.62) $ 0.24 $ (4.38) Diluted Distributed $ 0.32 $ — $ 0.32 Undistributed (4.94) 0.24 (4.70) $ (4.62) $ 0.24 $ (4.38) Consolidated Statement of Operations and Comprehensive Income (Loss) for the Year Ended December 31, 2015 As Previously Reported Corrections As Corrected (in thousands, except per share data) Impairment of oil and gas properties $ 3,716,883 $ 316,412 $ 4,033,295 Depreciation, depletion and amortization $ 778,923 $ (47,463) $ 731,460 Total operating expenses $ 5,193,422 $ 268,949 $ 5,462,371 Operating income (loss) $ (3,740,803) $ (268,949) $ (4,009,752) Income (loss) before income tax $ (3,782,384) $ (268,949) $ (4,051,333) Income tax expense (benefit) $ (1,373,436) $ (98,293) $ (1,471,729) Net income (loss) $ (2,408,948) $ (170,656) $ (2,579,604) Total comprehensive income (loss) $ (2,409,609) $ (170,656) $ (2,580,265) Earnings (loss) per share to common stockholders: Basic Distributed $ 0.64 $ — $ 0.64 Undistributed (26.56) (1.83) (28.39) $ (25.92) $ (1.83) $ (27.75) Diluted Distributed $ 0.64 $ — $ 0.64 Undistributed (26.56) (1.83) (28.39) $ (25.92) $ (1.83) $ (27.75) Consolidated Statement of Operations and Comprehensive Income (Loss) for the Year Ended December 31, 2014 As Previously Reported Corrections As Corrected (in thousands, except per share data) Depreciation, depletion and amortization $ 806,021 $ (30,444) $ 775,577 Total operating expenses $ 1,610,242 $ (30,444) $ 1,579,798 Operating income (loss) $ 813,934 $ 30,444 $ 844,378 Income (loss) before income tax $ 805,901 $ 30,444 $ 836,345 Income tax expense (benefit) $ 298,697 $ 11,150 $ 309,847 Net income (loss) $ 507,204 $ 19,294 $ 526,498 Total comprehensive income (loss) $ 507,117 $ 19,294 $ 526,411 Earnings (loss) per share to common stockholders: Basic Distributed $ 0.64 $ — $ 0.64 Undistributed 5.15 0.22 5.37 $ 5.79 $ 0.22 $ 6.01 Diluted Distributed $ 0.64 $ — $ 0.64 Undistributed 5.14 0.22 5.36 $ 5.78 $ 0.22 $ 6.00 |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2016 | |
Capital Stock | |
CAPITAL STOCK | 2. CAPITAL Authorized capital stock consists of 200 million shares of common stock and 15 million shares of preferred stock. At December 31, 2016, there were no shares of preferred stock outstanding. See our Consolidated Statements of Stockholders’ Equity for detailed capital stock activity. In May 2015, we completed an underwritten public offering of 6,900,000 shares of common stock, which included 900,000 shares of common stock issued pursuant to an overallotment option to purchase additional shares granted to the underwriters. The stock was sold to the public at $109.00 per share, with a par value of $0.01, and we received net proceeds of approximately $730 million from the sale of these shares of common stock, after deducting underwriting fees. Dividends A cash dividend has been paid to stockholders in every quarter since the first quarter of 2006. In February 2016, the quarterly dividend was decreased to $0.08 per share from $0.16 per share. Dividends declared are recorded as a reduction of retained earnings to the extent retained earnings are available at the close of the period prior to the date of the declared dividend. Dividends in excess of retained earnings are recorded as a reduction of additional paid-in capital. Future dividend payments will depend on our level of earnings, financial requirements, and other factors considered relevant by the Board of Directors. Years Ended December 31, 2016 2015 2014 Dividends declared from Retained earnings (in millions) $ 7.5 $ 59.3 $ 55.7 Dividends declared from Paid-in capital (in millions) $ 22.8 $ — $ — Dividends per share $ 0.32 $ 0.64 $ 0.64 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Long-term debt | |
LONG-TERM DEBT | 3. LONG-TERM A summary of our debt is as follows: December 31, 2016 December 31, 2015 Unamortized Debt Long-term Unamortized Debt Long-term (in thousands) Principal Issuance Costs Debt, net Principal Issuance Costs Debt, net 5.875% Senior Notes $ 750,000 $ (5,691) $ 744,309 $ 750,000 $ (6,978) $ 743,022 4.375% Senior Notes 750,000 (6,370) 743,630 750,000 (7,402) 742,598 Total long-term debt $ 1,500,000 $ (12,061) $ 1,487,939 $ 1,500,000 $ (14,380) $ 1,485,620 At December 31, 2016 and 2015, we had no bank debt outstanding. All of our long-term debt is senior unsecured debt and is, therefore, pari passu with respect to the payment of both principal and interest. Bank Debt In October 2015, we entered into a new senior unsecured revolving credit facility (Credit Facility) which matures October 16, 2020. The Credit Facility has aggregate commitments of $1.0 billion, with an option to increase aggregate commitments to $1.25 billion at any time. There is no borrowing base subject to the discretion of the lenders based on the value of our proved reserves under the Credit Facility. As of December 31, 2016, we had $2.5 million in letters of credit outstanding under the Credit Facility, leaving an unused borrowing availability of $997.5 million. At our option, borrowings under the Credit Facility may bear interest at either (a) LIBOR plus 1.125 – 2.0% based on the credit rating for our senior unsecured long-term debt, or (b) a base rate (as defined in the credit agreement) plus 0.125 – 1.0%, based on the credit rating for our senior unsecured long-term debt. Unused borrowings are subject to a commitment fee of 0.125 – 0.35%, based on the credit rating for our senior unsecured long-term debt. The Credit Facility contains representations, warranties, covenants and events of default that are customary for investment grade, senior unsecured bank credit agreements, including a financial covenant for the maintenance of a defined total debt-to-capital ratio of no greater than 65%. As of December 31, 2016, we were in compliance with all of the financial and non-financial covenants. At December 31, 2016 and 2015, we had $4.5 million and $5.7 million, respectively, of unamortized debt issuance costs associated with our Credit Facility which were recorded as deferred assets and included in Other assets, net in our balance sheets. The costs are being amortized to interest expense ratably over the life of the Credit Facility. Senior Notes In June 2014, we issued $750 million of 4.375% senior notes due 2024 and received net proceeds of $740.9 million, after deducting offering discounts and costs. The net proceeds were used to pay outstanding bank debt and for general corporate purposes. The effective interest rate on the notes, including the debt issuance costs, is 4.50%. In April 2012, we issued $750 million of 5.875% senior notes due 2022 and received net proceeds of $737.0 million, after deducting underwriting discounts and offering costs. We used a portion of the net proceeds to retire our 7.125% senior notes and the remaining proceeds were used to pay outstanding bank debt and for general corporate purposes. The effective interest rate on the notes, including the debt issuance costs, is 6.04%. These senior notes are callable by us beginning May 1, 2017 at a price of 102.938% of face value declining to 100% of face value on May 1, 2020 and thereafter. Each of our outstanding senior notes is governed by an indenture containing certain covenants, events of default and other restrictive provisions with which we were in compliance as of December 31, 2016. Interest on each of the senior notes is payable semi-annually. |
DERIVATIVE INSTRUMENTS_HEDGING
DERIVATIVE INSTRUMENTS/HEDGING | 12 Months Ended |
Dec. 31, 2016 | |
Derivative instruments/hedging | |
DERIVATIVE INSTRUMENTS/HEDGING | 4. DERIVATIVE INSTR We periodically enter into derivative instruments to mitigate a portion of our potential exposure to a decline in commodity prices and the corresponding negative impact on cash flow available for reinvestment. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. Depending on changes in oil and gas futures markets and management’s view of underlying supply and demand trends, we may increase or decrease our hedging positions. We may hedge up to 50% of our oil and natural gas production on a forward five quarter basis. The following tables summarize our derivative contracts as of December 31, 2016: First Second Third Fourth Quarter Quarter Quarter Quarter Total Oil Collars: 2017: WTI (1) Volume (Bbls) 1,800,000 1,820,000 1,472,000 1,012,000 6,104,000 Wtd Avg Price - Floor $ 43.08 $ 43.08 $ 45.09 $ 46.27 $ 44.09 Wtd Avg Price - Ceiling $ 52.90 $ 52.90 $ 55.50 $ 56.98 $ 54.20 2018: WTI (1) Volume (Bbls) 540,000 — — — 540,000 Wtd Avg Price - Floor $ 47.33 $ — $ — $ — $ 47.33 Wtd Avg Price - Ceiling $ 59.11 $ — $ — $ — $ 59.11 (1) WTI refers to the West Texas Intermediate price as quoted on the New York Mercantile Exchange. First Second Third Fourth Quarter Quarter Quarter Quarter Total Gas Collars: 2017: PEPL (1) Volume (MMBtu) 9,900,000 10,010,000 8,280,000 5,520,000 33,710,000 Wtd Avg Price - Floor $ 2.52 $ 2.52 $ 2.61 $ 2.79 $ 2.59 Wtd Avg Price - Ceiling $ 3.04 $ 3.04 $ 3.12 $ 3.22 $ 3.09 Perm EP (1) Volume (MMBtu) 8,100,000 8,190,000 5,520,000 3,680,000 25,490,000 Wtd Avg Price - Floor $ 2.59 $ 2.59 $ 2.68 $ 2.86 $ 2.65 Wtd Avg Price - Ceiling $ 3.10 $ 3.10 $ 3.16 $ 3.28 $ 3.14 2018: PEPL (1) Volume (MMBtu) 2,700,000 — — — 2,700,000 Wtd Avg Price - Floor $ 2.90 $ — $ — $ — $ 2.90 Wtd Avg Price - Ceiling $ 3.32 $ — $ — $ — $ 3.32 Perm EP (1) Volume (MMBtu) 1,800,000 — — — 1,800,000 Wtd Avg Price - Floor $ 3.00 $ — $ — $ — $ 3.00 Wtd Avg Price - Ceiling $ 3.41 $ — $ — $ — $ 3.41 (1) PEPL refers to the Panhandle Eastern Pipe Line, Tex/OK Mid-Continent Index as quoted in Platt’s Inside FERC. Perm EP refers to the El Paso Natural Gas Company, Permian Basin Index as quoted in Platt’s Inside FERC. Under a collar agreement, we receive the difference between the published index price and a floor price if the index price is below the floor. We pay the difference between the ceiling price and the index price if the index price is above the contracted ceiling price. No amounts are paid or received if the index price is between the floor and the ceiling price. We have elected not to account for our derivatives as cash flow hedges. Therefore, we recognize settlements and changes in the fair value of assets or liabilities relating to our open derivative contracts in earnings. Cash settlements of our contracts are included in cash flows from operating activities in our statements of cash flows. The following table presents the net (gains) and losses from settlements and changes in fair value of our derivative contracts, and the (gains) losses from cash settlements during the periods shown below. Years Ended December 31, (in thousands) 2016 2015 2014 (Gain) loss on derivative instruments, net: Natural gas contracts $ 20,995 $ (4,472) $ 6,751 Oil contracts 34,754 (6,774) (10,512) (Gain) loss on derivative instruments, net $ 55,749 $ (11,246) $ (3,761) Settlement (gains) losses: Natural gas contracts $ (6,467) $ — $ 4,287 Oil contracts (970) — (11,928) Settlement (gains) losses $ (7,437) $ — $ (7,641) Our derivative contracts are carried at their fair value on our balance sheet using Level 2 inputs and are subject to enforceable master netting arrangements, which allow us to offset recognized asset and liability fair value amounts on contracts with the same counterparty. Our policy is to not offset asset and liability positions in our accompanying balance sheets. The following table presents the amounts and classifications of our derivative assets and liabilities as of December 31, 2016 and 2015, as well as the potential effect of netting arrangements on contracts with the same counterparty. December 31, 2016: (in thousands) Balance Sheet Location Asset Liability Oil contracts Current liabilities — Derivative instruments $ — $ 27,892 Natural gas contracts Current liabilities — Derivative instruments — 21,478 Oil contracts Non-current liabilities — Derivative instruments — 1,059 Natural gas contracts Non-current liabilities — Derivative instruments — 1,511 Total gross amounts presented in accompanying balance sheet — 51,940 Less: gross amounts not offset in the accompanying balance sheet — — Net amount: $ — $ 51,940 December 31, 2015: (in thousands) Balance Sheet Location Asset Liability Oil contracts Current assets — Derivative instruments $ 6,774 $ — Natural gas contracts Current assets — Derivative instruments 3,971 — Natural gas contracts Non-current assets — Derivative instruments 501 — Total gross amounts presented in accompanying balance sheet 11,246 — Less: gross amounts not offset in the accompanying balance sheet — — Net amount: $ 11,246 $ — We are exposed to financial risks associated with our derivative contracts from non-performance by our counterparties. We mitigate our exposure to any single counterparty by contracting with a number of financial institutions, each of which have a high credit rating and is a member of our bank credit facility. Our member banks do not require us to post collateral for our hedge liability positions. Because some of the member banks have discontinued hedging activities, in the future we may hedge with counterparties outside our bank group to obtain competitive terms and to spread counterparty risk. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Measurements | |
FAIR VALUE MEASUREMENTS | 5. FAIR VALUE ME Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The FASB has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability. The following table provides fair value measurement information for certain assets and liabilities as of December 31, 2016 and 2015. December 31, 2016 December 31, 2015 Book Fair Book Fair (in thousands) Value Value Value Value Financial Assets (Liabilities): 5.875% Notes due 2022 $ (750,000) $ (782,835) $ (750,000) $ (723,750) 4.375% Notes due 2024 $ (750,000) $ (779,453) $ (750,000) $ (683,318) Derivative instruments — assets $ — $ — $ 11,246 $ 11,246 Derivative instruments — liabilities $ (51,940) $ (51,940) $ — $ — Assessing the significance of a particular input to the fair value measurement requires judgment, including the consideration of factors specific to the asset or liability. The following methods and assumptions were used to estimate the fair value of the assets and liabilities in the table above. Debt (Level 1) The fair value of our 4.375% and 5.875% fixed rate notes was based on their last traded value before year end. Derivative Instruments (Level 2) The fair value of our derivative instruments was estimated using option pricing models. These models use certain variables including forward price and volatility curves and the strike prices for the instruments. The fair value estimates are adjusted relative to non-performance risk as appropriate. See Note 4 for further information on the fair value of our derivative instruments. Other Financial Instruments The carrying amounts of our cash, cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. Included in “Accrued liabilities — other” at December 31, 2016 and 2015, respectively, are 1) liabilities of approximately $19.3 million and $23.1 million representing the amount by which checks issued, but not yet presented to our banks, exceeded balances in applicable bank accounts; 2) accrued payroll related costs of $43.5 million and $21.5 million; and 3) accrued operating expenses of $53.9 million and $60.4 million. Our accounts receivable are primarily from either purchasers of our oil, gas, and NGL production (customers) or from exploration and production companies which own interests in properties we operate. This industry concentration has the potential to impact our overall exposure to credit risk, either positively or negatively, because our customers and joint working interest owners may be similarly affected by changes in industry conditions. We conduct credit analyses prior to making any sales to new customers or increasing credit for existing customers and may require parent company guarantees, letters of credit, or prepayments when deemed necessary. We routinely assess the recoverability of all material accounts receivable to determine their collectability. We accrue a reserve to the allowance for doubtful accounts when it is probable that a receivable will not be collected and the amount of the reserve may be reasonably estimated. At December 31, 2016 and 2015, the allowance for doubtful accounts totaled $1.6 million and $1.8 million, respectively. Major Customers Our major customer during 2016 was Sunoco Logistics Partners L.P. (Sunoco), which accounted for 20% of our consolidated revenues. Sunoco and Enterprise Products Partners L.P. (Enterprise) were our major customers in 2015, accounting for 21% and 17%, respectively, of our consolidated revenues that year. During 2014, Sunoco and Enterprise each accounted for 19% of our consolidated revenues and Oneok Partners, L.P. accounted for 10% of our consolidated revenues. If Sunoco was to stop purchasing our production, we believe there are a number of other purchasers to whom we could sell our production with some delay. If multiple significant customers were to discontinue purchasing our product, we believe there would be challenges initially, but ample markets to handle the disruption. |
STOCK-BASED AND OTHER COMPENSAT
STOCK-BASED AND OTHER COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
Stock based and other compensation | |
STOCK-BASED AND OTHER COMPENSATION | 6. STOCK-BASED AND OT We have recognized non-cash stock-based compensation cost as shown below. Historical amounts may not be representative of future amounts as the value of future awards may vary from historical amounts. Years Ended December 31, (in thousands) 2016 2015 2014 Restricted stock awards Performance stock awards $ 24,183 $ 18,991 $ 12,141 Service-based stock awards 18,391 14,547 13,607 42,574 33,538 25,748 Stock option awards 2,565 2,803 3,057 45,139 36,341 28,805 Less amounts capitalized to oil and gas properties (20,616) (16,782) (13,804) Compensation expense $ 24,523 $ 19,559 $ 15,001 The increase in 2016 stock compensation is primarily related to performance awards granted in December 2015, a portion of which were amortized during 2016, forfeiture rate adjustments on the service-based stock awards, and the acceleration of expense on a portion of service-based awards for employees who participated in a voluntary early retirement incentive program. Equity Incentive Plan Our 2014 Equity Incentive Plan (the 2014 Plan) was approved by stockholders in May 2014 and our previous plan was terminated at that time. Outstanding awards under the previous plan were not impacted. A total of 6.6 million shares of common stock may be issued under the 2014 Plan, including shares available from the previous plan. The 2014 Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, dividend equivalents and other stock-based awards. Restricted Stock The following table provides information about restricted stock awards granted during the last three years. Years Ended December 31, 2016 2015 2014 Weighted Weighted Weighted Average Average Average Number Grant-Date Number Grant-Date Number Grant-Date of Shares Fair Value of Shares Fair Value of Shares Fair Value Performance stock awards 269,915 $ 117.63 263,939 $ 87.12 316,441 $ 83.22 Service-based stock awards 208,724 $ 114.61 207,180 $ 114.80 170,402 $ 136.72 Total restricted stock awards 478,639 $ 116.31 471,119 $ 99.29 486,843 $ 101.95 Performance awards were granted to eligible executives and are subject to market condition-based vesting determined by our stock price performance relative to a defined peer group’s stock price performance. After three years of continued service, an executive will be entitled to vest in 50% to 100% of the award. In accordance with Internal Revenue Code Section 162(m), certain of the amounts awarded may not be deductible for tax purposes. Service-based stock awards granted to other eligible employees and non-employee directors have vesting schedules of three to five years. Compensation cost for the performance stock awards is based on the grant-date fair value of the award utilizing a Monte Carlo simulation model. Compensation cost for the service-based vesting restricted shares is based upon the grant-date market value of the award. Such costs are recognized ratably over the applicable vesting period. The following table provides information on restricted stock activity during the year. Performance Service-based (subject to market conditions) Weighted Weighted Average Average Number of Grant-Date Number of Grant-Date Shares Fair Value Shares Fair Value Outstanding as of January 1, 2016 998,182 $ 829,808 $ Vested (243,313) $ (287,108) $ Granted 208,724 $ 269,915 $ Canceled (28,870) $ (3,345) $ Outstanding as of December 31, 2016 934,723 $ 809,270 $ The total fair value of restricted stock that vested was $67.9 million in 2016, $52.2 million in 2015, and $34.1 million in 2014. Unrecognized compensation cost related to unvested restricted stock at December 31, 2016 was $96.0 million. We expect to recognize that cost over a weighted average period of 2.8 years. Restricted Units As of December 31, 2016 and 2015, we had 8,838 restricted units outstanding. These represent restricted units held by a non-employee director who has elected to defer payment of common stock represented by the units until termination of his service on the Board of Directors. Stock Options Options that have been granted under the 2014 plan and previous plans expire seven to ten years from the grant date and have service-based vesting schedules of three to five years. The exercise price for an option under the 2014 plan is the closing price of our common stock as reported by the New York Stock Exchange (NYSE) on the date of grant. The previous plans provided that all grants have an exercise price of the average of the high and low prices of our common stock as reported by the NYSE on the date of grant. Compensation cost related to stock options is based on the grant-date fair value of the award, recognized ratably over the applicable vesting period. We estimate the fair value using the Black-Scholes option-pricing model. Expected volatilities are based on the historical volatility of our common stock. We also use historical data to estimate the probability of option exercise, expected years until exercise and potential forfeitures. We use U.S. Treasury bond rates in effect at the grant date for our risk-free interest rates. The following summarizes the options granted and related information, and the assumptions used to determine the fair value of those options. Years Ended December 31, 2016 2015 2014 Options granted 89,850 69,000 82,500 Weighted average grant-date fair value $ 33.38 $ 37.56 $ 41.69 Weighted average exercise price $ 114.07 $ 115.28 $ 139.02 Total fair value (in thousands) $ 2,999 $ 2,592 $ 3,439 Expected years until exercise 4.0 5.0 4.0 Expected stock volatility % % % Dividend yield % % % Risk-free interest rate % % % Information about outstanding stock options is summarized below. Weighted Weighted Aggregate Average Average Intrinsic Exercise Remaining Value Options Price Term (in thousands) Outstanding as of January 1, 2016 299,229 $ 93.76 Exercised (63,727) $ 75.37 Granted 89,850 $ 114.07 Canceled (1,997) $ 139.02 Forfeited (15,545) $ 123.00 Outstanding as of December 31, 2016 307,810 $ 101.72 Years $ 10,846 Exercisable as of December 31, 2016 159,449 $ 86.99 Years $ 7,996 The following table provides information regarding options exercised and the grant-date fair value of options vested. Years Ended December 31, (in thousands) 2016 2015 2014 Number of options exercised 63,727 141,517 211,258 Cash received from option exercises $ 4,804 $ 8,451 $ 11,898 Tax benefit from option exercises included in paid-in-capital (1) $ — $ 4,442 $ — Intrinsic value of options exercised $ 2,994 $ 7,467 $ 15,384 Grant-date fair value of options vested $ 2,486 $ 2,734 $ 4,419 (1) No tax benefit is recorded until the benefit reduces current taxes payable. However, in 2015 we recognized tax benefit on prior period option exercises. The following summary reflects the status of non-vested stock options as of December 31, 2016 and changes during the year. Weighted Weighted Average Average Grant-Date Exercise Options Fair Value Price Non-vested as of January 1, 2016 157,041 $ 34.77 $ 111.58 Vested (82,985) $ 29.95 $ 101.46 Granted 89,850 $ 33.38 $ 114.07 Forfeited (15,545) $ 19.70 $ 123.00 Non-vested as of December 31, 2016 148,361 $ 35.58 $ 117.55 As of December 31, 2016, there was $3.6 million of unrecognized compensation cost related to non-vested stock options. We expect to recognize that cost on a pro rata basis over a weighted average period of 2.0 years. Other Compensation We maintain and sponsor a contributory 401(k) plan for our employees. Annual matching costs related to the plan were $6.7 million, $6.4 million, and $11.0 million for 2016, 2015, and 2014, respectively. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
Earnings (Loss) per Share | |
EARNINGS (LOSS) PER SHARE | 7. EARNINGS (LOSS) P The calculations of basic and diluted net earnings (loss) per common share under the two-class method are presented below. Years Ended December 31, (in thousands, except per share data) 2016 2015 2014 Basic: Net income (loss) $ (408,803) $ (2,579,604) $ 526,498 Participating securities’ share in earnings (1) — — (10,329) Net income (loss) applicable to common stockholders $ (408,803) $ (2,579,604) $ 516,169 Diluted: Net income (loss) $ (408,803) $ (2,579,604) $ 526,498 Participating securities’ share in earnings (1) — — (10,314) Net income (loss) applicable to common stockholders $ (408,803) $ (2,579,604) $ 516,184 Shares: Basic shares outstanding 93,379 92,992 85,679 Dilutive effect of stock options — — 131 Fully diluted common stock 93,379 92,992 85,810 Excluded (2) 2,061 2,136 94 Earnings (loss) per share to common stockholders (3): Basic $ (4.38) $ (27.75) $ 6.01 Diluted $ (4.38) $ (27.75) $ (1) Participating securities are not included in undistributed earnings when a loss exists. (2) Inclusion of certain shares would have an anti-dilutive effect. (3) Earnings (loss) per share is based on actual figures rather than the rounded figures presented. |
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2016 | |
Asset Retirement Obligations | |
ASSET RETIREMENT OBLIGATIONS | 8. ASSET RETIREM The following table reflects the components of the change in the carrying amount of the asset retirement obligation for the years ended December 31, 2016 and 2015. (in thousands) 2016 2015 Asset retirement obligation at January 1, $ 164,105 $ 173,008 Liabilities incurred 3,914 4,114 Liability settlements and disposals (24,108) (25,061) Accretion expense 7,595 7,682 Revisions of estimated liabilities 3,017 4,362 Asset retirement obligation at December 31, 154,523 164,105 Less current obligation 13,753 10,248 Long-term asset retirement obligation $ 140,770 $ 153,857 During 2016 and 2015, the liability settlements and disposals included $14.9 million and $13.3 million, respectively, related to properties that were sold. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
INCOME TAXES | 9. INCOME The components of the provision for income taxes are as follows: Years Ended December 31, (in thousands) 2016 2015 2014 Current taxes: Federal expense $ — $ 14,417 $ — State (benefit) expense (1,115) 293 404 (1,115) 14,710 404 Deferred taxes: Federal (benefit) expense (201,529) (1,386,086) 293,385 State (benefit) expense (11,757) (100,353) 16,058 (213,286) (1,486,439) 309,443 $ (214,401) $ (1,471,729) $ 309,847 Federal income tax expense (benefit) for the years presented differs from the amounts that would be provided by applying the U.S. federal income tax rate, primarily due to the effect of state income taxes, non-deductible expenses and revisions. Reconciliations of the income tax expense (benefit) calculated at the federal statutory rate of 35% to the total income tax expense (benefit) are as follows: Years Ended December 31, (in thousands) 2016 2015 2014 Provision at statutory rate $ (218,122) $ (1,417,967) $ 292,721 Effect of state taxes (10,237) (64,794) 16,321 Revision of previous balances 7,181 5,997 — Other permanent differences 5,296 5,035 805 Change in valuation allowance 1,481 — — Income tax expense (benefit) $ (214,401) $ (1,471,729) $ 309,847 The components of net deferred taxes are as follows: December 31, (in thousands) 2016 2015 Assets: Stock compensation and other accrued amounts $ 58,306 $ 32,084 Net operating loss carryforward, net of valuation allowance 399,912 305,506 Credit carryforward 6,016 6,016 464,234 343,606 Liabilities: Property, plant and equipment (408,399) (500,768) Net deferred tax assets (liabilities) $ 55,835 $ (157,162) At December 31, 2016, we had a U.S. net tax operating loss carryforward of approximately $1,182.4 million, which would expire in years 2031 through 2036. We believe that the carryforward will be utilized before it expires. We recorded a $10.4 million increase to the net operating loss carryforward at December 31, 2016, for certain state losses and a corresponding increase in the state net operating loss valuation allowance of $11.9 million. The net decrease in the state net operating losses after reduction for the valuation allowance was $1.5 million. The total valuation allowance on state net operating losses at December 31, 2016, was $82.0 million because it is not more likely than not that these additional state net operating losses will be utilized before they expire. Approximately $90.9 million of the U.S. net tax operating loss carryforward is attributable to deductions taken for employee stock awards on the company’s tax returns in excess of amounts expensed through the company’s income statement. We also had an alternative minimum tax credit carryforward of approximately $6.0 million. At December 31, 2016 and 2015, we had no unrecognized tax benefits that would impact our effective rate and we have made no provisions for interest or penalties related to uncertain tax positions. The tax years 2013 through 2015 remain open to examination by the Internal Revenue Service of the United States. We file tax returns with various state taxing authorities which remain open to examination for tax years 2012 through 2015. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AN Lease Commitments We have various commitments for office space and equipment under operating lease arrangements. Rent expense for the operating leases totaled $12.9 million in 2016. Rent expense was $13.2 million and $14.3 million for 2015 and 2014, respectively. Shown below are future minimum cash payments required under these leases as of December 31, 2016. Operating (in thousands) Leases 2017 $ 9,585 2018 10,531 2019 10,677 2020 10,864 2021 11,085 Later years 44,181 Total future minimum lease payments $ 96,923 Other Commitments We have commitments of $157.5 million to finish drilling and completing wells in progress at December 31, 2016. At December 31, 2016, we had firm sales contracts to deliver approximately 46.4 Bcf of natural gas over the next twenty-two months. If this gas is not delivered, our financial commitment would be approximately $164.8 million. This commitment will fluctuate due to price volatility and actual volumes delivered. However, we believe no financial commitment will be due based on our current proved reserves and production levels from which we can fulfill these obligations. In connection with gas gathering and processing agreements, we have volume commitments over the next ten years. At December 31, 2016, if no gas is delivered, the maximum amount that would be payable under these commitments would be approximately $220.0 million. However, we believe no financial commitment will be due based on our current proved reserves and production levels from which we can fulfill these obligations. We have minimum volume delivery commitments in connection with agreements to reimburse connection costs to various pipelines. At December 31, 2016, the maximum amount that would be payable if no gas is delivered would be approximately $7.9 million. Of this total, we have accrued a liability of $2.1 million. We may have additional liabilities associated with these delivery commitments in the future depending on our production levels and drilling results. We have other various transportation, delivery, and facilities commitments in the normal course of business, which approximate $35.7 million at December 31, 2016. We currently anticipate meeting these obligations. All of the noted commitments were made in the normal course of our business. Litigation In the normal course of business, we have various litigation matters. We assess the probability of estimable amounts related to litigation matters in accordance with guidance established by the FASB and adjust our accruals accordingly. Though some of the related claims may be significant, the resolution of them we believe, individually or in the aggregate, would not have a material adverse effect on our financial condition or results of operations after consideration of current accruals. H.B. Krug, et al. v. Helmerich & Payne, Inc. In 2008, we recorded litigation expense of $119.6 million for the H.B. Krug, et al. v. Helmerich & Payne, Inc. trial court verdict, and began accruing additional post-judgment interest and costs for this case. On December 13, 2013, the Oklahoma Supreme Court reversed the trial court’s $119.6 million verdict and affirmed an alternative jury verdict for $3.65 million. The Supreme Court also remanded the case back to the trial court for consideration of potential prejudgment interest, attorney’s fees and cost awards. Accordingly, on December 31, 2013 we reduced the previously recognized litigation expense, which included related interest and costs, and the associated long-term liability by $142.8 million. On April 1, 2014, Cimarex paid the Plaintiffs $15.8 million in satisfaction of the $3.65 million damages award, the post-judgment interest award and the payment in lieu of bond, all of which are now final and not appealable. On June 24, 2014, the trial court ruled the Plaintiffs were not entitled to prejudgment interest but were entitled to attorney’s fees and costs, the amount of which will be determined at a subsequent hearing. On November 3, 2015, the Oklahoma Supreme Court affirmed the trial court’s denial of prejudgment interest. The only remaining issue is the amount of Plaintiffs’ award of attorney’s fees, which is subject to future trial and appellate court proceedings and, therefore, cannot be determined at this time. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 11. RELATED PARTY TRA Helmerich & Payne, Inc. (H&P) provides contract drilling services to Cimarex. Drilling costs of approximately $18.3 million were incurred by Cimarex related to such services for 2016. During 2015 and 2014, such costs were $7.9 million and $18.4 million, respectively. Hans Helmerich, a director of Cimarex, is Chairman of the Board of Directors of H&P. Lisa Stewart, who joined Cimarex’s Board of Directors in October 2015, is Chairman, President, Chief Executive Officer, and Chief Investment Officer of Sheridan Production Partners (Sheridan). During 2016, Cimarex paid certain affiliates of Sheridan oil and gas revenues of $177.6 thousand and joint interest billings of $5.2 thousand and received oil and gas revenues of $0.4 thousand and joint interest billings of $73.1 thousand from Sheridan affiliates. During 2015, Cimarex paid certain affiliates of Sheridan oil and gas revenues of $224.2 thousand and joint interest billings of $10.4 thousand and received oil and gas revenues of $4.1 thousand and joint interest billings of $81.5 thousand from Sheridan affiliates. Jerry Box, a director of Cimarex whose term expired May 2015, was the non-executive Chairman of the Board of Directors of Newpark Resources, Inc. (Newpark) through May 2014. Certain subsidiaries of Newpark provided various drilling services to Cimarex. Costs of such services were $589.2 thousand through May 2014. |
PROPERTY SALES AND ACQUISITIONS
PROPERTY SALES AND ACQUISITIONS | 12 Months Ended |
Dec. 31, 2016 | |
Property Acquisitions and Sales | |
PROPERTY SALES AND ACQUISITIONS | 12. PROPERTY SALES AN The following sales and acquisitions were made in the ordinary course of business. All amounts are net of customary purchase price adjustments. There were no significant sales and acquisitions in 2016 or 2015. We sold interests in various non-core oil and gas properties for $446.1 million during 2014. Most of the proceeds were related to sales of producing gas wells in southwestern Kansas and undeveloped acreage in Reagan County, Texas. During 2014, we made property acquisitions totaling $249.7 million, most of which were in our Cana area in Western Oklahoma. |
SUPPLEMENTAL DISCLOSURE OF CASH
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Disclosure of Cash Flow Information: | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | 13. SUPPLEMENTAL DISC Years Ended December 31, (in thousands) 2016 2015 2014 Cash paid during the period for: Interest expense (including capitalized amounts) $ 79,590 $ 80,785 $ 66,167 Interest capitalized $ 20,308 $ 28,819 $ 32,623 Income taxes $ 13 $ 558 $ 354 Cash received for income tax refunds $ 1,450 $ 1,503 $ 460 |
BASIS OF PRESENTATION AND SUM21
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | Basis of Presentation Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. Our significant accounting policies are discussed below. The accounts of Cimarex and its subsidiaries are presented in the accompanying Consolidated Financial Statements. All intercompany accounts and transactions were eliminated in consolidation. |
Segment Information | Segment Information We have determined that our business is comprised of only one segment because our gathering, processing and marketing activities are ancillary to our production operations and are not separately managed. |
Use of Estimates | Use of Estimates The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The more significant areas requiring the use of management’s estimates and judgments relate to the estimation of proved oil and gas reserves, the use of these oil and gas reserves in calculating depletion, depreciation and amortization (DD&A), the use of the estimates of future net revenues in computing ceiling test limitations and estimates of future abandonment obligations used in recording asset retirement obligations and the assessment of goodwill. The process of estimating quantities of oil and gas reserves is complex, requiring significant decisions in the evaluation of all available geological, geophysical, engineering and economic data. The data for a given field may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. As a result, material revisions to existing reserve estimates may occur from time to time. Although every reasonable effort is made to ensure that our reserve estimates represent the most accurate assessments possible, subjective decisions and available data for our various fields make these estimates generally less precise than other estimates included in financial statement disclosures. Estimates and judgments are also required in determining the allowance for doubtful accounts, impairments of unproved properties and other assets, purchase price allocation, valuation of deferred tax assets, fair value measurements and commitments and contingencies. We analyze our estimates, including those related to oil, gas and NGL revenues, and base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash in banks and investments readily convertible into cash, which have original maturities of three months or less. Cash equivalents are stated at cost, which approximates market value. |
Oil and Gas Properties | Oil and Gas Well Equipment and Supplies We carry our inventory at the lower of cost or net realizable value, where net realizable value is estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We performed an analysis of our oil and gas well equipment and supplies as of December 31, 2016, and no impairment was required. However, the industry-wide decline in drilling operations has put downward pressure on the price of oil and gas well equipment and supplies. Declines in future periods could cause us to recognize impairments on these assets. An impairment would not affect cash flow from operating activities, but would adversely affect our net income and stockholders’ equity. Oil and Gas Properties We use the full cost method of accounting for our oil and gas operations. All costs associated with property acquisition, exploration and development activities are capitalized. Exploration and development costs include dry hole costs, geological and geophysical costs, direct overhead related to exploration and development activities and other costs incurred for the purpose of finding oil and gas reserves. Salaries and benefits paid to employees directly involved in the exploration and development of properties, as well as other internal costs that can be directly identified with acquisition, exploration and development activities, are also capitalized. Under the full cost method of accounting, no gain or loss is recognized upon the disposition of oil and gas properties unless such disposition would significantly alter the relationship between capitalized costs and proved reserves. Expenditures for maintenance and repairs are charged to production expense in the period incurred. Companies that follow the full cost accounting method are required to make quarterly ceiling test calculations. This test requires companies to record an impairment to the extent that total capitalized costs for oil and gas properties (net of accumulated DD&A and all related deferred income taxes) exceed the sum of (i) the present value discounted at 10% of estimated future net cash flows from proved reserves, (ii) the cost of properties not being amortized, (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, and (iv) all related tax effects. We currently do not have any unproven properties that are being amortized. Revenue calculations used to estimate future net cash flows from proved reserves are based on the unweighted average first-day-of-the-month prices for the prior 12 months. If net capitalized costs exceed this limit, the excess is charged to expense. At December 31, 2016, the carrying value of our oil and gas properties subject to the test did not exceed the calculated value of the ceiling limitation and, therefore, we did not recognize an impairment. However, a decline of approximately 7% or more in the value of the ceiling limitation would have resulted in an impairment. We did recognize impairments in the first three quarters of 2016 totaling $757.7 million ($481.4 million, net of tax). For the year ended December 31, 2015, full year impairments totaled $4.0 billion ($2.6 billion, net of tax). These impairments resulted primarily from the impact of decreases in the 12-month average trailing prices for oil, natural gas and NGLs utilized in determining the future net cash flows from proved reserves. If pricing conditions decline, or if there is a negative impact on one or more of the other components of the calculation, we will incur full cost ceiling impairments in future quarters. The ceiling calculation is not intended to be indicative of the fair market value of our proved reserves or future results. Impairment charges do not affect cash flow from operating activities, but do adversely affect our net income and other components of our balance sheet. Any impairment of oil and gas properties is not reversible at a later date. Depletion of proved oil and gas properties is computed on the units-of-production method, whereby capitalized costs, including future development costs and asset retirement costs, are amortized over total estimated proved reserves. Changes in our estimate of proved reserve quantities, commodity prices and impairment of oil and gas properties will cause corresponding changes in depletion expense in periods subsequent to these changes. The capitalized costs of unproved properties, including those in wells in progress, are excluded from the costs being amortized. We do not have major development projects that are excluded from costs being amortized. On a quarterly basis, we evaluate excluded costs for inclusion in the costs to be amortized. Significant unproved properties are evaluated individually. Unproved properties that are not considered individually significant are aggregated for evaluation purposes and related costs are transferred to the costs to be amortized quarterly based on the application of historical factors. |
Fixed assets, net | Fixed Assets, net Fixed assets consist primarily of gathering and plant facilities, vehicles, airplanes, office furniture, and computer equipment and software. These items are recorded at cost and are depreciated on the straight-line method based on expected lives of the individual assets, which range from 3 to 30 years. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. We have one reporting unit for which we first assess qualitative factors to determine whether it is more likely than not (with a greater than 50% threshold) that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If goodwill is determined to be impaired then it is written down to a calculated fair value by charging the impairment to expense. We evaluate our goodwill for impairment in the fourth quarter of each year and whenever events or changes in circumstances indicate the possibility that goodwill may be impaired. Based upon our qualitative assessment at December 31, 2016, goodwill was not impaired. It is possible that goodwill could become impaired in the future if commodity prices or other economic factors become less favorable. |
Revenue Recognition | Revenue Recognition Oil, Gas and NGL Sales Revenue is recorded from the sales of oil, gas and NGLs when the product is delivered at a fixed or determinable price, title has transferred and collectability is reasonably assured. There is a ready market for our products and sales occur soon after production. Marketing Sales We market and sell natural gas for working interest owners under short term sales and supply agreements and earn a fee for such services. Revenues are recognized as gas is delivered and are reflected net of gas purchases on the consolidated statements of operations and comprehensive income (loss). Gas Imbalances We use the sales method of accounting for gas imbalances. Under this method, revenue is recorded on the basis of gas actually sold. Gas reserves are adjusted to the extent there are sufficient quantities of natural gas to make up an imbalance. A liability is established in situations where there are insufficient proved reserves available to make-up an overproduced imbalance. Imbalances have not been significant in the periods presented. |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses are reported net of amounts reimbursed by working interest owners of the oil and gas properties operated by Cimarex and net of amounts capitalized pursuant to the full cost method of accounting. |
Derivatives | Derivatives Our derivative contracts are recorded on the balance sheet at fair value. Our firm sales contracts qualify for the normal purchase and normal sale exception. Contracts that qualify for this treatment do not require mark-to-market accounting treatment. See Note 4 for additional information regarding our derivative instruments. |
Income Taxes | Income Taxes We record deferred tax assets and liabilities to account for the expected future tax consequences of events that have been recognized in the financial statements and tax returns. We classify all deferred tax assets and liabilities as noncurrent. We routinely assess the realizability of the deferred tax assets. If we conclude that it is more likely than not that some or all of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance. Numerous judgments and assumptions are inherent in the determination of future taxable income, including factors such as future operating conditions (particularly as related to prevailing oil and gas prices) and changing tax laws. We regularly assess and, if required, establish accruals for tax contingencies that could result from assessments of additional tax by taxing jurisdictions where the company operates. See Note 9 for additional information regarding our income taxes. |
Contingencies | Contingencies A provision for contingencies is charged to expense when the loss is probable and the cost can be reasonably estimated. Determining when expenses should be recorded for these contingencies and the appropriate amounts for accrual is a complex estimation process that includes subjective judgment. In many cases, this judgment is based on interpretation of laws and regulations, which can be interpreted differently by regulators and/or courts of law. We closely monitor known and potential legal, environmental and other contingencies and determine when we should record losses for these items based on information available to us. See Note 10 for additional information regarding our contingencies. |
Asset Retirement Obligations | Asset Retirement Obligations We recognize the present value of the fair value of liabilities for retirement obligations associated with tangible long-lived assets in the period in which there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This liability includes costs related to the abandonment of wells, the removal of facilities and equipment, and site restorations. Subsequent to initial measurement, the asset retirement liability is required to be accreted each period. If the fair value of a recorded asset retirement obligation changes, a revision is recorded to both the asset retirement obligation and the asset retirement capitalized cost. Capitalized costs are included as a component of the DD&A calculations. The current portions of the asset retirement obligations are recorded in “Accrued liabilities — Other” in the accompanying consolidated balance sheets and expenditures are classified as cash used in operating activities in the accompanying consolidated statements of cash flows. See Note 8 for additional information regarding our asset retirement obligations. |
Stock-based Compensation | Stock-based Compensation We recognize compensation cost related to all stock-based awards in the financial statements based on their estimated grant-date fair value. We grant various types of stock-based awards including stock options, restricted stock (including awards with service-based vesting and market condition-based vesting provisions) and restricted stock units. The fair value of stock option awards is determined using the Black-Scholes option pricing model. Service-based restricted stock and units are valued using the market price of our common stock on the grant date. The fair value of the market condition-based restricted stock is based on the grant-date market value of the award utilizing a statistical analysis. Compensation cost is recognized ratably over the applicable vesting period. To the extent compensation cost relates to employees directly involved in oil and gas acquisition, exploration, and development activities, such amounts are capitalized to oil and gas properties. Amounts not capitalized to oil and gas properties are recognized as stock compensation expense. See Note 6 for additional information regarding our stock-based compensation. |
Earnings (loss) per Share | Earnings (loss) per Share We calculate earnings (loss) per share recognizing that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are “participating securities” and, therefore, should be included in computing earnings per share using the two-class earnings allocation method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Our unvested share based payment awards, consisting of restricted stock and units, qualify as participating securities. See Note 7 for additional information regarding our earnings per share. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) . In July 2015, the FASB deferred the effective date by one year to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, but not before the original effective date of reporting periods beginning after December 15, 2016. The new revenue standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification . Entities can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. We intend to adopt this standard on January 1, 2018, utilizing a modified retrospective approach. Management does not believe the effect of adoption will be material to our financial statements because we follow the sales method of accounting for our oil, gas and NGL production, which is generally consistent with the revenue recognition provisions of the new standard. However, we anticipate the new standard will result in more robust footnote disclosures. We cannot currently determine the extent of the new footnote disclosures as further clarification is needed for certain practices common to the industry. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The key provision of this ASU is that a lessee must recognize (i) liabilities to make lease payments and (ii) right-of-use assets on its balance sheet. The ASU permits lessees to make a policy election to not recognize lease assets and liabilities for leases with terms of less than twelve months. Under current GAAP, a determination of whether a lease is a capital or operating lease is made at lease inception and no assets or liabilities are recognized for operating leases. Under this ASU, the determination to be made at the inception of a contract is whether the contract is, or contains, a lease. Leases convey the right to control the use of an identified asset in exchange for consideration. Only the lease components of a contract must be accounted for in accordance with this ASU. Non-lease components, such as activities that transfer a good or service to the customer, shall be accounted for under other applicable Topics. An entity may make a policy election to not separate lease and non-lease components and account for the non-lease components together with the lease components as a single lease component. This ASU retains a distinction between finance and operating leases concerning the recognition and presentation of the expense and payments related to leases in the statements of operations and comprehensive income and cash flows, however, both types of leases require the recognition of assets and liabilities on the balance sheet. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Upon transition, lessees will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. While we are in the process of evaluating the potential impact of adopting this guidance, the primary effect will be to record assets and obligations for contracts currently recognized as operating leases. We do not intend to adopt the standard early. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The standard contains various amendments, and specifies whether each amendment should be adopted using a retrospective, modified retrospective, or prospective transition method. We will adopt ASU 2016-09 effective January 1, 2017. The amendments within ASU 2016-09 related to the timing of when excess tax benefits and tax benefits on dividends on nonvested equity shares are recognized and accounting for forfeitures will be adopted using a modified retrospective method. In accordance with this method, we expect to record a cumulative-effect adjustment on that date relating to those amendments, representing an increase to beginning Deferred income taxes of approximately $33 million, a reduction to beginning Accumulated deficit of approximately $31 million and an increase to beginning Paid-in capital of approximately $2 million. The amendments within ASU 2016-09 related to the presentation in the statement of cash flows of excess tax benefits and cash outflows attributable to tax withholdings on the net settlement of equity-classified awards will be adopted using a retrospective method. In accordance with this method, we estimate that Net cash provided by operating activities would have increased and Net cash (used) provided by financing activities would have decreased by approximately $27 million, $34 million and $14 million, for the years ended December 31, 2016, 2015 and 2014, respectively. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment . This ASU eliminates step two from the goodwill impairment test. Under current guidance, if the fair value of the reporting unit is less than its carrying amount (step 1 of the goodwill impairment test), entities must complete step two to determine the impairment amount, if any. Under step two, the impairment amount is determined by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination, and comparing it to the carrying amount of the goodwill. Under this ASU, the impairment amount is the amount by which the carrying amount of the reporting unit exceeds the reporting unit’s fair value, with the amount of impairment not to exceed the carrying amount of the goodwill. This ASU retains the option to qualitatively assess whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount in order to determine if it is necessary to initiate step 1. This ASU is effective for annual or any interim goodwill impairment tests in the fiscal years beginning after December 15, 2019, with early adoption permitted for testing dates after January 1, 2017. The implementation of this ASU will affect the amount of goodwill impairment we record, if any. We adopted this ASU on January 1, 2017, and will apply its provisions in future periods if we determine our goodwill has been impaired. |
Subsequent Events | Subsequent Events The accompanying financial disclosures include an evaluation of subsequent events through the date of this filing. |
BASIS OF PRESENTATION AND SUM22
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of the effect of the corrections on selected line items from the previously reported consolidated financial statements | Consolidated Balance Sheet December 31, 2016 As Previously As Reported Corrections Corrected (in thousands) Accumulated depreciation, depletion and amortization and impairment $ (13,849,701) $ (499,804) $ (14,349,505) Net oil and gas properties $ 2,854,071 $ (499,804) $ 2,354,267 Total assets $ 4,681,693 $ (443,969) $ 4,237,724 Deferred income taxes – (asset) liability $ 126,894 $ (182,729) $ (55,835) Total liabilities $ 2,321,629 $ (126,894) $ 2,194,735 Retained earnings (accumulated deficit) $ (405,284) $ (317,075) $ (722,359) Total stockholders’ equity $ 2,360,064 $ (317,075) $ 2,042,989 Total liabilities and stockholders’ equity $ 4,681,693 $ (443,969) $ 4,237,724 Consolidated Balance Sheet December 31, 2015 As Previously As Reported Corrections Corrected (in thousands) Accumulated depreciation, depletion and amortization and impairment $ (12,710,968) $ (534,864) $ (13,245,832) Net oil and gas properties $ 3,276,146 $ (534,864) $ 2,741,282 Total assets $ 5,243,286 $ (534,864) $ 4,708,422 Deferred income tax (asset) liability $ 352,705 $ (195,543) $ 157,162 Total liabilities $ 2,445,608 $ (195,543) $ 2,250,065 Retained earnings (accumulated deficit) $ 33,313 $ (339,321) $ (306,008) Total stockholders’ equity $ 2,797,678 $ (339,321) $ 2,458,357 Total liabilities and stockholders’ equity $ 5,243,286 $ (534,864) $ 4,708,422 . Consolidated Statement of Operations and Comprehensive Income (Loss) for the Year Ended December 31, 2016 As Previously As Reported Corrections Corrected (in thousands, except per share data) Impairment of oil and gas properties $ 719,142 $ 38,528 $ 757,670 Depreciation, depletion and amortization $ 465,936 $ (73,588) $ 392,348 Total operating expenses $ 1,864,292 $ (35,060) $ 1,829,232 Operating income (loss) $ (606,947) $ 35,060 $ (571,887) Income (loss) before income tax $ (658,264) $ 35,060 $ (623,204) Income tax expense (benefit) $ (227,215) $ 12,814 $ (214,401) Net income (loss) $ (431,049) $ 22,246 $ (408,803) Total comprehensive income (loss) $ (430,545) $ 22,246 $ (408,299) Earnings (loss) per share to common stockholders: Basic Distributed $ 0.32 $ — $ 0.32 Undistributed (4.94) 0.24 (4.70) $ (4.62) $ 0.24 $ (4.38) Diluted Distributed $ 0.32 $ — $ 0.32 Undistributed (4.94) 0.24 (4.70) $ (4.62) $ 0.24 $ (4.38) Consolidated Statement of Operations and Comprehensive Income (Loss) for the Year Ended December 31, 2015 As Previously Reported Corrections As Corrected (in thousands, except per share data) Impairment of oil and gas properties $ 3,716,883 $ 316,412 $ 4,033,295 Depreciation, depletion and amortization $ 778,923 $ (47,463) $ 731,460 Total operating expenses $ 5,193,422 $ 268,949 $ 5,462,371 Operating income (loss) $ (3,740,803) $ (268,949) $ (4,009,752) Income (loss) before income tax $ (3,782,384) $ (268,949) $ (4,051,333) Income tax expense (benefit) $ (1,373,436) $ (98,293) $ (1,471,729) Net income (loss) $ (2,408,948) $ (170,656) $ (2,579,604) Total comprehensive income (loss) $ (2,409,609) $ (170,656) $ (2,580,265) Earnings (loss) per share to common stockholders: Basic Distributed $ 0.64 $ — $ 0.64 Undistributed (26.56) (1.83) (28.39) $ (25.92) $ (1.83) $ (27.75) Diluted Distributed $ 0.64 $ — $ 0.64 Undistributed (26.56) (1.83) (28.39) $ (25.92) $ (1.83) $ (27.75) Consolidated Statement of Operations and Comprehensive Income (Loss) for the Year Ended December 31, 2014 As Previously Reported Corrections As Corrected (in thousands, except per share data) Depreciation, depletion and amortization $ 806,021 $ (30,444) $ 775,577 Total operating expenses $ 1,610,242 $ (30,444) $ 1,579,798 Operating income (loss) $ 813,934 $ 30,444 $ 844,378 Income (loss) before income tax $ 805,901 $ 30,444 $ 836,345 Income tax expense (benefit) $ 298,697 $ 11,150 $ 309,847 Net income (loss) $ 507,204 $ 19,294 $ 526,498 Total comprehensive income (loss) $ 507,117 $ 19,294 $ 526,411 Earnings (loss) per share to common stockholders: Basic Distributed $ 0.64 $ — $ 0.64 Undistributed 5.15 0.22 5.37 $ 5.79 $ 0.22 $ 6.01 Diluted Distributed $ 0.64 $ — $ 0.64 Undistributed 5.14 0.22 5.36 $ 5.78 $ 0.22 $ 6.00 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Capital Stock | |
Schedule of dividends declared | Years Ended December 31, 2016 2015 2014 Dividends declared from Retained earnings (in millions) $ 7.5 $ 59.3 $ 55.7 Dividends declared from Paid-in capital (in millions) $ 22.8 $ — $ — Dividends per share $ 0.32 $ 0.64 $ 0.64 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Long-term debt | |
Summary of debt | December 31, 2016 December 31, 2015 Unamortized Debt Long-term Unamortized Debt Long-term (in thousands) Principal Issuance Costs Debt, net Principal Issuance Costs Debt, net 5.875% Senior Notes $ 750,000 $ (5,691) $ 744,309 $ 750,000 $ (6,978) $ 743,022 4.375% Senior Notes 750,000 (6,370) 743,630 750,000 (7,402) 742,598 Total long-term debt $ 1,500,000 $ (12,061) $ 1,487,939 $ 1,500,000 $ (14,380) $ 1,485,620 |
DERIVATIVE INSTRUMENTS_HEDGING
DERIVATIVE INSTRUMENTS/HEDGING (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative instruments/hedging | |
Outstanding hedging contracts relative to future production | First Second Third Fourth Quarter Quarter Quarter Quarter Total Oil Collars: 2017: WTI (1) Volume (Bbls) 1,800,000 1,820,000 1,472,000 1,012,000 6,104,000 Wtd Avg Price - Floor $ 43.08 $ 43.08 $ 45.09 $ 46.27 $ 44.09 Wtd Avg Price - Ceiling $ 52.90 $ 52.90 $ 55.50 $ 56.98 $ 54.20 2018: WTI (1) Volume (Bbls) 540,000 — — — 540,000 Wtd Avg Price - Floor $ 47.33 $ — $ — $ — $ 47.33 Wtd Avg Price - Ceiling $ 59.11 $ — $ — $ — $ 59.11 (1) WTI refers to the West Texas Intermediate price as quoted on the New York Mercantile Exchange. First Second Third Fourth Quarter Quarter Quarter Quarter Total Gas Collars: 2017: PEPL (1) Volume (MMBtu) 9,900,000 10,010,000 8,280,000 5,520,000 33,710,000 Wtd Avg Price - Floor $ 2.52 $ 2.52 $ 2.61 $ 2.79 $ 2.59 Wtd Avg Price - Ceiling $ 3.04 $ 3.04 $ 3.12 $ 3.22 $ 3.09 Perm EP (1) Volume (MMBtu) 8,100,000 8,190,000 5,520,000 3,680,000 25,490,000 Wtd Avg Price - Floor $ 2.59 $ 2.59 $ 2.68 $ 2.86 $ 2.65 Wtd Avg Price - Ceiling $ 3.10 $ 3.10 $ 3.16 $ 3.28 $ 3.14 2018: PEPL (1) Volume (MMBtu) 2,700,000 — — — 2,700,000 Wtd Avg Price - Floor $ 2.90 $ — $ — $ — $ 2.90 Wtd Avg Price - Ceiling $ 3.32 $ — $ — $ — $ 3.32 Perm EP (1) Volume (MMBtu) 1,800,000 — — — 1,800,000 Wtd Avg Price - Floor $ 3.00 $ — $ — $ — $ 3.00 Wtd Avg Price - Ceiling $ 3.41 $ — $ — $ — $ 3.41 (1) PEPL refers to the Panhandle Eastern Pipe Line, Tex/OK Mid-Continent Index as quoted in Platt’s Inside FERC. Perm EP refers to the El Paso Natural Gas Company, Permian Basin Index as quoted in Platt’s Inside FERC. |
Net (gains) and losses from settlements and changes of derivative contracts | Years Ended December 31, (in thousands) 2016 2015 2014 (Gain) loss on derivative instruments, net: Natural gas contracts $ 20,995 $ (4,472) $ 6,751 Oil contracts 34,754 (6,774) (10,512) (Gain) loss on derivative instruments, net $ 55,749 $ (11,246) $ (3,761) Settlement (gains) losses: Natural gas contracts $ (6,467) $ — $ 4,287 Oil contracts (970) — (11,928) Settlement (gains) losses $ (7,437) $ — $ (7,641) |
Schedule of amounts and classifications of entity's derivative assets and liabilities as well as the potential effect of netting arrangements on contracts with the same counterparty | December 31, 2016: (in thousands) Balance Sheet Location Asset Liability Oil contracts Current liabilities — Derivative instruments $ — $ 27,892 Natural gas contracts Current liabilities — Derivative instruments — 21,478 Oil contracts Non-current liabilities — Derivative instruments — 1,059 Natural gas contracts Non-current liabilities — Derivative instruments — 1,511 Total gross amounts presented in accompanying balance sheet — 51,940 Less: gross amounts not offset in the accompanying balance sheet — — Net amount: $ — $ 51,940 December 31, 2015: (in thousands) Balance Sheet Location Asset Liability Oil contracts Current assets — Derivative instruments $ 6,774 $ — Natural gas contracts Current assets — Derivative instruments 3,971 — Natural gas contracts Non-current assets — Derivative instruments 501 — Total gross amounts presented in accompanying balance sheet 11,246 — Less: gross amounts not offset in the accompanying balance sheet — — Net amount: $ 11,246 $ — |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Measurements | |
Fair value measurement information for certain assets and liabilities | December 31, 2016 December 31, 2015 Book Fair Book Fair (in thousands) Value Value Value Value Financial Assets (Liabilities): 5.875% Notes due 2022 $ (750,000) $ (782,835) $ (750,000) $ (723,750) 4.375% Notes due 2024 $ (750,000) $ (779,453) $ (750,000) $ (683,318) Derivative instruments — assets $ — $ — $ 11,246 $ 11,246 Derivative instruments — liabilities $ (51,940) $ (51,940) $ — $ — |
STOCK-BASED AND OTHER COMPENS27
STOCK-BASED AND OTHER COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Options, Restricted Stock and Unit Awards | |
Recognition of non-cash stock-based compensation cost | Years Ended December 31, (in thousands) 2016 2015 2014 Restricted stock awards Performance stock awards $ 24,183 $ 18,991 $ 12,141 Service-based stock awards 18,391 14,547 13,607 42,574 33,538 25,748 Stock option awards 2,565 2,803 3,057 45,139 36,341 28,805 Less amounts capitalized to oil and gas properties (20,616) (16,782) (13,804) Compensation expense $ 24,523 $ 19,559 $ 15,001 |
Restricted Stock [Member] | |
Options, Restricted Stock and Unit Awards | |
Restricted stock rollforward | Performance Service-based (subject to market conditions) Weighted Weighted Average Average Number of Grant-Date Number of Grant-Date Shares Fair Value Shares Fair Value Outstanding as of January 1, 2016 998,182 $ 829,808 $ Vested (243,313) $ (287,108) $ Granted 208,724 $ 269,915 $ Canceled (28,870) $ (3,345) $ Outstanding as of December 31, 2016 934,723 $ 809,270 $ |
Restricted Stock and Units [Member] | |
Options, Restricted Stock and Unit Awards | |
Summary of restricted stock awards granted | Years Ended December 31, 2016 2015 2014 Weighted Weighted Weighted Average Average Average Number Grant-Date Number Grant-Date Number Grant-Date of Shares Fair Value of Shares Fair Value of Shares Fair Value Performance stock awards 269,915 $ 117.63 263,939 $ 87.12 316,441 $ 83.22 Service-based stock awards 208,724 $ 114.61 207,180 $ 114.80 170,402 $ 136.72 Total restricted stock awards 478,639 $ 116.31 471,119 $ 99.29 486,843 $ 101.95 |
Employee Stock Option [Member] | |
Options, Restricted Stock and Unit Awards | |
Outstanding stock options rollforward | . Weighted Weighted Aggregate Average Average Intrinsic Exercise Remaining Value Options Price Term (in thousands) Outstanding as of January 1, 2016 299,229 $ 93.76 Exercised (63,727) $ 75.37 Granted 89,850 $ 114.07 Canceled (1,997) $ 139.02 Forfeited (15,545) $ 123.00 Outstanding as of December 31, 2016 307,810 $ 101.72 Years $ 10,846 Exercisable as of December 31, 2016 159,449 $ 86.99 Years $ 7,996 |
Summary of information regarding options exercised and grant-date fair value of options vested | Years Ended December 31, (in thousands) 2016 2015 2014 Number of options exercised 63,727 141,517 211,258 Cash received from option exercises $ 4,804 $ 8,451 $ 11,898 Tax benefit from option exercises included in paid-in-capital (1) $ — $ 4,442 $ — Intrinsic value of options exercised $ 2,994 $ 7,467 $ 15,384 Grant-date fair value of options vested $ 2,486 $ 2,734 $ 4,419 (1) No tax benefit is recorded until the benefit reduces current taxes payable. However, in 2015 we recognized tax benefit on prior period option exercises. |
Non-vested stock options rollforward | Weighted Weighted Average Average Grant-Date Exercise Options Fair Value Price Non-vested as of January 1, 2016 157,041 $ 34.77 $ 111.58 Vested (82,985) $ 29.95 $ 101.46 Granted 89,850 $ 33.38 $ 114.07 Forfeited (15,545) $ 19.70 $ 123.00 Non-vested as of December 31, 2016 148,361 $ 35.58 $ 117.55 |
Summary of options granted, weighted average grant-date fair value, total fair value of the options and assumptions used to determine fair market value of those options | Years Ended December 31, 2016 2015 2014 Options granted 89,850 69,000 82,500 Weighted average grant-date fair value $ 33.38 $ 37.56 $ 41.69 Weighted average exercise price $ 114.07 $ 115.28 $ 139.02 Total fair value (in thousands) $ 2,999 $ 2,592 $ 3,439 Expected years until exercise 4.0 5.0 4.0 Expected stock volatility % % % Dividend yield % % % Risk-free interest rate % % % |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings (Loss) per Share | |
calculations of basic and diluted net earnings (loss) per common share | Years Ended December 31, (in thousands, except per share data) 2016 2015 2014 Basic: Net income (loss) $ (408,803) $ (2,579,604) $ 526,498 Participating securities’ share in earnings (1) — — (10,329) Net income (loss) applicable to common stockholders $ (408,803) $ (2,579,604) $ 516,169 Diluted: Net income (loss) $ (408,803) $ (2,579,604) $ 526,498 Participating securities’ share in earnings (1) — — (10,314) Net income (loss) applicable to common stockholders $ (408,803) $ (2,579,604) $ 516,184 Shares: Basic shares outstanding 93,379 92,992 85,679 Dilutive effect of stock options — — 131 Fully diluted common stock 93,379 92,992 85,810 Excluded (2) 2,061 2,136 94 Earnings (loss) per share to common stockholders (3): Basic $ (4.38) $ (27.75) $ 6.01 Diluted $ (4.38) $ (27.75) $ (1) Participating securities are not included in undistributed earnings when a loss exists. (2) Inclusion of certain shares would have an anti-dilutive effect. (3) Earnings (loss) per share is based on actual figures rather than the rounded figures presented. |
ASSET RETIREMENT OBLIGATIONS (T
ASSET RETIREMENT OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Asset Retirement Obligations | |
Change in the carrying amount of the asset retirement obligation | (in thousands) 2016 2015 Asset retirement obligation at January 1, $ 164,105 $ 173,008 Liabilities incurred 3,914 4,114 Liability settlements and disposals (24,108) (25,061) Accretion expense 7,595 7,682 Revisions of estimated liabilities 3,017 4,362 Asset retirement obligation at December 31, 154,523 164,105 Less current obligation 13,753 10,248 Long-term asset retirement obligation $ 140,770 $ 153,857 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Components of the provision for income taxes | Years Ended December 31, (in thousands) 2016 2015 2014 Current taxes: Federal expense $ — $ 14,417 $ — State (benefit) expense (1,115) 293 404 (1,115) 14,710 404 Deferred taxes: Federal (benefit) expense (201,529) (1,386,086) 293,385 State (benefit) expense (11,757) (100,353) 16,058 (213,286) (1,486,439) 309,443 $ (214,401) $ (1,471,729) $ 309,847 |
Reconciliations of income tax (benefit) expense calculated at federal statutory rate of 35% to the total income tax (benefit) expense | Years Ended December 31, (in thousands) 2016 2015 2014 Provision at statutory rate $ (218,122) $ (1,417,967) $ 292,721 Effect of state taxes (10,237) (64,794) 16,321 Revision of previous balances 7,181 5,997 — Other permanent differences 5,296 5,035 805 Change in valuation allowance 1,481 — — Income tax expense (benefit) $ (214,401) $ (1,471,729) $ 309,847 |
Components of net deferred tax liabilities | December 31, (in thousands) 2016 2015 Assets: Stock compensation and other accrued amounts $ 58,306 $ 32,084 Net operating loss carryforward, net of valuation allowance 399,912 305,506 Credit carryforward 6,016 6,016 464,234 343,606 Liabilities: Property, plant and equipment (408,399) (500,768) Net deferred tax assets (liabilities) $ 55,835 $ (157,162) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Schedule of future minimum payments required under leases | Operating (in thousands) Leases 2017 $ 9,585 2018 10,531 2019 10,677 2020 10,864 2021 11,085 Later years 44,181 Total future minimum lease payments $ 96,923 |
SUPPLEMENTAL DISCLOSURE OF CA32
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Disclosure of Cash Flow Information: | |
Supplemental Disclosure of Cash Flow Information | Years Ended December 31, (in thousands) 2016 2015 2014 Cash paid during the period for: Interest expense (including capitalized amounts) $ 79,590 $ 80,785 $ 66,167 Interest capitalized $ 20,308 $ 28,819 $ 32,623 Income taxes $ 13 $ 558 $ 354 Cash received for income tax refunds $ 1,450 $ 1,503 $ 460 |
BASIS OF PRESENTATION AND SUM33
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Jan. 01, 2017USD ($) | Dec. 31, 2013USD ($) | |
Number of reportable segments | segment | 1 | |||||
Oil and Gas Properties | ||||||
Impairment on oil and gas well equipment and supplies | 0 | |||||
Discount rate for calculating present value of estimated future net revenues from proved reserves (as a percent) | 10% | |||||
Impairment of oil and gas properties | $ 757,700,000 | $ 757,670,000 | $ 4,033,295,000 | |||
Impairment of oil and gas properties, after tax | $ 481,400,000 | 2,600,000,000 | ||||
Ceiling limitation used in ceiling test sensitivity analysis | 7.00% | |||||
Accrued liabilities | ||||||
Exploration and development | $ 82,320,000 | 56,721,000 | ||||
Taxes other than income | 18,766,000 | 17,545,000 | ||||
Other | 177,695,000 | 173,242,000 | ||||
Goodwill | ||||||
Goodwill impairment | 0 | |||||
Deferred income taxes | 157,162,000 | |||||
Retained Earnings (Accumulated Deficit) | (722,359,000) | (306,008,000) | ||||
Additional Paid in Capital | 2,763,452,000 | 2,762,976,000 | ||||
Net cash provided by operating activities | 599,225,000 | 691,500,000 | $ 1,619,365,000 | |||
Net cash (used) provided by financing activities | $ (33,321,000) | 690,625,000 | 522,433,000 | |||
Maximum [Member] | ||||||
Fixed assets, net | ||||||
Fixed assets expected lives | 30 years | |||||
Minimum [Member] | ||||||
Fixed assets, net | ||||||
Fixed assets expected lives | 3 years | |||||
Corrections | ||||||
Goodwill | ||||||
Retained Earnings (Accumulated Deficit) | $ 1,860,000,000 | |||||
Corrections | Accounting Standards Update 2016 09 [Member] | ||||||
Goodwill | ||||||
Net cash provided by operating activities | $ 27,000,000 | 34,000,000 | 14,000,000 | |||
Net cash (used) provided by financing activities | $ (27,000,000) | $ (34,000,000) | $ (14,000,000) | |||
Proforma Adjustment [Member] | Accounting Standards Update 2016 09 [Member] | ||||||
Goodwill | ||||||
Deferred income taxes | $ (33,000,000) | |||||
Retained Earnings (Accumulated Deficit) | (31,000,000) | |||||
Additional Paid in Capital | $ 2,000,000 |
BASIS OF PRESENTATION AND SUM34
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Correction of previously issued financial statements(Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Condensed Consolidated Balance Sheets | ||||||
Accumulated depreciation, depletion and amortization and impairment | $ (14,349,505) | $ (13,245,832) | ||||
Net oil and gas properties | 2,354,267 | 2,741,282 | ||||
Total assets | 4,237,724 | 4,708,422 | ||||
Deferred income taxes - (asset) liability | (55,835) | |||||
Deferred income taxes | 157,162 | |||||
Total liabilities | 2,194,735 | 2,250,065 | ||||
Retained earnings (Accumulated deficit) | (722,359) | (306,008) | ||||
Total stockholders' equity | 2,042,989 | 2,458,357 | $ 4,331,967 | $ 3,834,249 | ||
Total liabilities and stockholders' equity | 4,237,724 | 4,708,422 | ||||
Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||
Impairment of oil and gas properties | $ 757,700 | 757,670 | 4,033,295 | |||
Depreciation, depletion and amortization | 392,348 | 731,460 | 775,577 | |||
Total operating expenses | 1,829,232 | 5,462,371 | 1,579,798 | |||
Operating income (loss) | (571,887) | (4,009,752) | 844,378 | |||
Income (loss) before income tax | (623,204) | (4,051,333) | 836,345 | |||
Income tax expense (benefit) | (214,401) | (1,471,729) | 309,847 | |||
Net income (loss) | (408,803) | (2,579,604) | 526,498 | |||
Total comprehensive income (loss) | $ (408,299) | $ (2,580,265) | $ 526,411 | |||
Basic | ||||||
Distributed | $ 0.32 | $ 0.64 | $ 0.64 | |||
Undistributed | (4.70) | (28.39) | 5.37 | |||
Basic | (4.38) | (27.75) | 6.01 | |||
Diluted | ||||||
Distributed | 0.32 | 0.64 | 0.64 | |||
Undistributed | (4.70) | (28.39) | 5.36 | |||
Diluted | $ (4.38) | $ (27.75) | $ 6 | |||
As Previously Reported | ||||||
Condensed Consolidated Balance Sheets | ||||||
Accumulated depreciation, depletion and amortization and impairment | $ (13,849,701) | $ (12,710,968) | ||||
Net oil and gas properties | 2,854,071 | 3,276,146 | ||||
Total assets | 4,681,693 | 5,243,286 | ||||
Deferred income taxes - (asset) liability | 126,894 | |||||
Deferred income taxes | 352,705 | |||||
Total liabilities | 2,321,629 | 2,445,608 | ||||
Retained earnings (Accumulated deficit) | (405,284) | 33,313 | 2,050,000 | |||
Total stockholders' equity | 2,360,064 | 2,797,678 | ||||
Total liabilities and stockholders' equity | 4,681,693 | 5,243,286 | ||||
Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||
Impairment of oil and gas properties | 719,142 | 3,716,883 | ||||
Depreciation, depletion and amortization | 465,936 | 778,923 | $ 806,021 | |||
Total operating expenses | 1,864,292 | 5,193,422 | 1,610,242 | |||
Operating income (loss) | (606,947) | (3,740,803) | 813,934 | |||
Income (loss) before income tax | (658,264) | (3,782,384) | 805,901 | |||
Income tax expense (benefit) | (227,215) | (1,373,436) | 298,697 | |||
Net income (loss) | (431,049) | (2,408,948) | 507,204 | |||
Total comprehensive income (loss) | $ (430,545) | $ (2,409,609) | $ 507,117 | |||
Basic | ||||||
Distributed | $ 0.32 | $ 0.64 | $ 0.64 | |||
Undistributed | (4.94) | (26.56) | 5.15 | |||
Basic | (4.62) | (25.92) | 5.79 | |||
Diluted | ||||||
Distributed | 0.32 | 0.64 | 0.64 | |||
Undistributed | (4.94) | (26.56) | 5.14 | |||
Diluted | $ (4.62) | $ (25.92) | $ 5.78 | |||
Corrections | ||||||
Condensed Consolidated Balance Sheets | ||||||
Retained earnings (Accumulated deficit) | 1,860,000 | |||||
Corrections | Incorrect reporting of impairments, depletion expense, and income tax expense | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Reduction in stockholders' equity | (102,900) | $ (85,100) | ||||
Condensed Consolidated Balance Sheets | ||||||
Accumulated depreciation, depletion and amortization and impairment | $ (499,804) | $ (534,864) | ||||
Net oil and gas properties | (499,804) | (534,864) | ||||
Total assets | (443,969) | (534,864) | ||||
Deferred income taxes - (asset) liability | (182,729) | |||||
Deferred income taxes | (195,543) | |||||
Total liabilities | (126,894) | (195,543) | ||||
Retained earnings (Accumulated deficit) | (317,075) | (339,321) | (188,000) | |||
Total stockholders' equity | (317,075) | (339,321) | ||||
Total liabilities and stockholders' equity | (443,969) | (534,864) | ||||
Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||
Impairment of oil and gas properties | 38,528 | 316,412 | ||||
Depreciation, depletion and amortization | (73,588) | (47,463) | $ (30,444) | |||
Total operating expenses | (35,060) | 268,949 | (30,444) | |||
Operating income (loss) | 35,060 | (268,949) | 30,444 | |||
Income (loss) before income tax | 35,060 | (268,949) | 30,444 | |||
Income tax expense (benefit) | 12,814 | (98,293) | 11,150 | |||
Net income (loss) | 22,246 | (170,656) | 19,294 | |||
Total comprehensive income (loss) | $ 22,246 | $ (170,656) | $ 19,294 | |||
Basic | ||||||
Undistributed | $ 0.24 | $ (1.83) | $ 0.22 | |||
Basic | 0.24 | (1.83) | 0.22 | |||
Diluted | ||||||
Undistributed | 0.24 | (1.83) | 0.22 | |||
Diluted | $ 0.24 | $ (1.83) | $ 0.22 | |||
Retained Earnings [Member] | ||||||
Condensed Consolidated Balance Sheets | ||||||
Total stockholders' equity | $ (722,359) | $ (306,008) | $ 2,332,909 | $ 1,862,075 | ||
Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||
Net income (loss) | $ (408,803) | $ (2,579,604) | $ 526,498 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Feb. 29, 2016 | May 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Capital Stock [Line Items] | |||||
Issuance of common stock, shares | 6,900,000 | ||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | |||
Preferred stock, shares authorized | 15,000,000 | 15,000,000 | |||
Preferred stock outstanding (in shares) | 0 | ||||
Beginning balance, shares | 94,820,570 | ||||
Ending balance, shares | 95,123,525 | 94,820,570 | |||
Price per share sold | $ 109 | ||||
Proceeds from sale of common stock, net of underwriting fees | $ 730,000 | ||||
Dividends | |||||
Cash dividend declared (in dollars per share) | $ 0.08 | $ 0.16 | |||
Dividend payable | |||||
Dividend declared from Retained Earnings | $ 7,548 | $ 59,313 | $ 55,664 | ||
Dividend declared from APIC | $ 22,803 | ||||
Dividend per share | $ 0.32 | $ 0.64 | $ 0.64 | ||
Additional Shares Issued [Member] | |||||
Capital Stock [Line Items] | |||||
Issuance of common stock, shares | 900,000 | ||||
Retained Earnings [Member] | |||||
Dividend payable | |||||
Dividend declared from Retained Earnings | $ 7,548 | $ 59,313 | $ 55,664 | ||
Additional Paid-in Capital [Member] | |||||
Dividend payable | |||||
Dividend declared from APIC | $ 22,803 |
LONG-TERM DEBT - Summary (Detai
LONG-TERM DEBT - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2014 | Apr. 30, 2012 |
Debt Instrument | ||||
Principal | $ 1,500,000 | $ 1,500,000 | ||
Unamortized Debt Issuance Costs | (12,061) | (14,380) | ||
Long-term debt, net | 1,487,939 | 1,485,620 | ||
Senior Notes 5.875% [Member] | ||||
Debt Instrument | ||||
Principal | 750,000 | 750,000 | ||
Unamortized Debt Issuance Costs | (5,691) | (6,978) | ||
Long-term debt, net | $ 744,309 | $ 743,022 | $ 750,000 | |
Interest rate (as a percent) | 5.875% | 5.875% | 5.875% | |
Senior Notes 4.375% [Member] | ||||
Debt Instrument | ||||
Principal | $ 750,000 | $ 750,000 | ||
Unamortized Debt Issuance Costs | (6,370) | (7,402) | ||
Long-term debt, net | $ 743,630 | $ 742,598 | $ 750,000 | |
Interest rate (as a percent) | 4.375% | 4.375% | 4.375% |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2014 | Apr. 30, 2012 | Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument | ||||
Unamortized debt issuance costs | $ 12,061 | $ 14,380 | ||
Long-term Debt, Excluding Current Maturities | $ 1,487,939 | 1,485,620 | ||
Redemption price during first period (as a percent) | 102.938 | |||
Redemption price as a percentage fourth period and thereafter | 100.00% | |||
Revolving Credit Facility [Member] | ||||
Debt Instrument | ||||
Unamortized debt issuance costs | $ 4,500 | 5,700 | ||
Credit facility amount | 1,000,000 | |||
Credit facility, increase amount option | $ 1,250,000 | |||
Revolving Credit Facility [Member] | Minimum [Member] | ||||
Debt Instrument | ||||
Commitment fee percentage | 0.125% | |||
Revolving Credit Facility [Member] | Maximum [Member] | ||||
Debt Instrument | ||||
Commitment fee percentage | 0.35% | |||
Debt-to-Capital ratio | 65.00% | |||
Line of Credit [Member] | ||||
Debt Instrument | ||||
Letters of credit outstanding under the credit facility | $ 2,500 | |||
Unused borrowing availability | 997,500 | |||
Notes 7.125 Percent [Member] | ||||
Debt Instrument | ||||
Interest rate (as a percent) | 7.125% | |||
Senior Notes 4.375% [Member] | ||||
Debt Instrument | ||||
Unamortized debt issuance costs | $ 6,370 | $ 7,402 | ||
Issuance of senior unsecured notes | $ 740,900 | |||
Interest rate (as a percent) | 4.375% | 4.375% | 4.375% | |
Effective rate | 4.50% | |||
Long-term Debt, Excluding Current Maturities | $ 750,000 | $ 743,630 | $ 742,598 | |
Senior Notes 5.875% [Member] | ||||
Debt Instrument | ||||
Unamortized debt issuance costs | $ 5,691 | $ 6,978 | ||
Issuance of senior unsecured notes | $ 737,000 | |||
Interest rate (as a percent) | 5.875% | 5.875% | 5.875% | |
Effective rate | 6.04% | |||
Long-term Debt, Excluding Current Maturities | $ 750,000 | $ 744,309 | $ 743,022 | |
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member] | Minimum [Member] | ||||
Debt Instrument | ||||
Interest rate margin (as a percent) | 1.125% | |||
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member] | Maximum [Member] | ||||
Debt Instrument | ||||
Interest rate margin (as a percent) | 2.00% | |||
Base Rate [Member] | Revolving Credit Facility [Member] | Minimum [Member] | ||||
Debt Instrument | ||||
Interest rate margin (as a percent) | 0.125% | |||
Base Rate [Member] | Revolving Credit Facility [Member] | Maximum [Member] | ||||
Debt Instrument | ||||
Interest rate margin (as a percent) | 1.00% |
DERIVATIVE INSTRUMENTS_HEDGIN38
DERIVATIVE INSTRUMENTS/HEDGING (Details) | 12 Months Ended |
Dec. 31, 2016MMBTU / Ditem$ / MMBTU | |
Derivative | |
Percent of oil and gas production available for hedging | 50.00% |
Quater basis for oil and gas production available for hedging | item | 5 |
Derivative Contract Oil Collar W T I Index [Member] | 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 6,104,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 44.09 |
Ceiling, weighted average price (in dollars per unit) | 54.20 |
Derivative Contract Oil Collar W T I Index [Member] | First Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 1,800,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 43.08 |
Ceiling, weighted average price (in dollars per unit) | 52.90 |
Derivative Contract Oil Collar W T I Index [Member] | Second Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 1,820,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 43.08 |
Ceiling, weighted average price (in dollars per unit) | 52.90 |
Derivative Contract Oil Collar W T I Index [Member] | Third Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 1,472,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 45.09 |
Ceiling, weighted average price (in dollars per unit) | 55.50 |
Derivative Contract Oil Collar W T I Index [Member] | Fourth Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 1,012,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 46.27 |
Ceiling, weighted average price (in dollars per unit) | 56.98 |
Derivative Contract Oil Collar W T I Index [Member] | 2018 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 540,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 47.33 |
Ceiling, weighted average price (in dollars per unit) | 59.11 |
Derivative Contract Oil Collar W T I Index [Member] | First Quarter - 2018 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 540,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 47.33 |
Ceiling, weighted average price (in dollars per unit) | 59.11 |
Derivative Contract Gas Collar PEPL Index [Member] | 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 33,710,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.59 |
Ceiling, weighted average price (in dollars per unit) | 3.09 |
Derivative Contract Gas Collar PEPL Index [Member] | First Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 9,900,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.52 |
Ceiling, weighted average price (in dollars per unit) | 3.04 |
Derivative Contract Gas Collar PEPL Index [Member] | Second Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 10,010,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.52 |
Ceiling, weighted average price (in dollars per unit) | 3.04 |
Derivative Contract Gas Collar PEPL Index [Member] | Third Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 8,280,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.61 |
Ceiling, weighted average price (in dollars per unit) | 3.12 |
Derivative Contract Gas Collar PEPL Index [Member] | Fourth Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 5,520,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.79 |
Ceiling, weighted average price (in dollars per unit) | 3.22 |
Derivative Contract Gas Collar PEPL Index [Member] | 2018 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 2,700,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.90 |
Ceiling, weighted average price (in dollars per unit) | 3.32 |
Derivative Contract Gas Collar PEPL Index [Member] | First Quarter - 2018 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 2,700,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.90 |
Ceiling, weighted average price (in dollars per unit) | 3.32 |
Derivative Contract Gas Collar Perm EP [Member] | 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 25,490,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.65 |
Ceiling, weighted average price (in dollars per unit) | 3.14 |
Derivative Contract Gas Collar Perm EP [Member] | First Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 8,100,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.59 |
Ceiling, weighted average price (in dollars per unit) | 3.10 |
Derivative Contract Gas Collar Perm EP [Member] | Second Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 8,190,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.59 |
Ceiling, weighted average price (in dollars per unit) | 3.10 |
Derivative Contract Gas Collar Perm EP [Member] | Third Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 5,520,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.68 |
Ceiling, weighted average price (in dollars per unit) | 3.16 |
Derivative Contract Gas Collar Perm EP [Member] | Fourth Quarter - 2017 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 3,680,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 2.86 |
Ceiling, weighted average price (in dollars per unit) | 3.28 |
Derivative Contract Gas Collar Perm EP [Member] | 2018 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 1,800,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 3 |
Ceiling, weighted average price (in dollars per unit) | 3.41 |
Derivative Contract Gas Collar Perm EP [Member] | First Quarter - 2018 [Member] | |
Fair values of derivative assets and liabilities | |
Volume | MMBTU / D | 1,800,000 |
Weighted Average Price | |
Floor, weighted average price (in dollars per unit) | 3 |
Ceiling, weighted average price (in dollars per unit) | 3.41 |
DERIVATIVE INSTRUMENTS_HEDGIN39
DERIVATIVE INSTRUMENTS/HEDGING (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
(Gain) loss on derivative instruments, net | |||
(Gain) loss on derivative instruments, net | $ 55,749 | $ (11,246) | $ (3,762) |
(Gains) losses from settlement of derivative instruments: | |||
Settlements on derivative instruments | 7,437 | 7,641 | |
Not Designated as Hedging Instrument [Member] | |||
(Gain) loss on derivative instruments, net | |||
(Gain) loss on derivative instruments, net | 55,749 | (11,246) | (3,761) |
(Gains) losses from settlement of derivative instruments: | |||
Settlements on derivative instruments | (7,437) | (7,641) | |
Not Designated as Hedging Instrument [Member] | Oil Contracts [Member] | |||
(Gain) loss on derivative instruments, net | |||
(Gain) loss on derivative instruments, net | 34,754 | (6,774) | (10,512) |
(Gains) losses from settlement of derivative instruments: | |||
Settlements on derivative instruments | (970) | (11,928) | |
Not Designated as Hedging Instrument [Member] | Natural Gas Contracts [Member] | |||
(Gain) loss on derivative instruments, net | |||
(Gain) loss on derivative instruments, net | 20,995 | $ (4,472) | 6,751 |
(Gains) losses from settlement of derivative instruments: | |||
Settlements on derivative instruments | $ (6,467) | $ 4,287 |
DERIVATIVE INSTRUMENTS_HEDGIN40
DERIVATIVE INSTRUMENTS/HEDGING - Derivative assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Asset | ||
Total gross amounts presented in accompanying balance sheet | $ 10,745 | |
Liability | ||
Total gross amounts presented in accompanying balance sheet | $ 49,370 | |
Not Designated as Hedging Instrument [Member] | ||
Asset | ||
Total gross amounts presented in accompanying balance sheet | 11,246 | |
Net amount: | 11,246 | |
Liability | ||
Total gross amounts presented in accompanying balance sheet | 51,940 | |
Net amount: | 51,940 | |
Not Designated as Hedging Instrument [Member] | Oil Contracts [Member] | Current Assets [Member] | ||
Asset | ||
Total gross amounts presented in accompanying balance sheet | 6,774 | |
Not Designated as Hedging Instrument [Member] | Oil Contracts [Member] | Current Liabilities [Member] | ||
Liability | ||
Total gross amounts presented in accompanying balance sheet | 27,892 | |
Not Designated as Hedging Instrument [Member] | Oil Contracts [Member] | Non-Current Liabilities [Member] | ||
Liability | ||
Total gross amounts presented in accompanying balance sheet | 1,059 | |
Not Designated as Hedging Instrument [Member] | Natural Gas Contracts [Member] | Current Assets [Member] | ||
Asset | ||
Total gross amounts presented in accompanying balance sheet | 3,971 | |
Not Designated as Hedging Instrument [Member] | Natural Gas Contracts [Member] | Non-Current Assets [Member] | ||
Asset | ||
Total gross amounts presented in accompanying balance sheet | $ 501 | |
Not Designated as Hedging Instrument [Member] | Natural Gas Contracts [Member] | Current Liabilities [Member] | ||
Liability | ||
Total gross amounts presented in accompanying balance sheet | 21,478 | |
Not Designated as Hedging Instrument [Member] | Natural Gas Contracts [Member] | Non-Current Liabilities [Member] | ||
Liability | ||
Total gross amounts presented in accompanying balance sheet | $ 1,511 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2014 | Apr. 30, 2012 |
Financial Assets (Liabilities): | ||||
Derivative instruments - assets | $ 10,745 | |||
Derivative instruments - liabilities | $ (49,370) | |||
Fair Value, Inputs, Level 2 [Member] | Carrying Amount [Member] | ||||
Financial Assets (Liabilities): | ||||
Derivative instruments - assets | 11,246 | |||
Derivative instruments - liabilities | (51,940) | |||
Fair Value, Inputs, Level 2 [Member] | Fair Value [Member] | ||||
Financial Assets (Liabilities): | ||||
Derivative instruments - assets | $ 11,246 | |||
Derivative instruments - liabilities | $ (51,940) | |||
Senior Notes 5.875% [Member] | ||||
Financial Assets (Liabilities): | ||||
Interest rate (as a percent) | 5.875% | 5.875% | 5.875% | |
Senior Notes 5.875% [Member] | Carrying Amount [Member] | ||||
Financial Assets (Liabilities): | ||||
Long-term debt | $ (750,000) | $ (750,000) | ||
Senior Notes 5.875% [Member] | Fair Value [Member] | ||||
Financial Assets (Liabilities): | ||||
Long-term debt | $ (782,835) | $ (723,750) | ||
Senior Notes 4.375% [Member] | ||||
Financial Assets (Liabilities): | ||||
Interest rate (as a percent) | 4.375% | 4.375% | 4.375% | |
Senior Notes 4.375% [Member] | Carrying Amount [Member] | ||||
Financial Assets (Liabilities): | ||||
Long-term debt | $ (750,000) | $ (750,000) | ||
Senior Notes 4.375% [Member] | Fair Value [Member] | ||||
Financial Assets (Liabilities): | ||||
Long-term debt | $ (779,453) | $ (683,318) |
FAIR VALUE MEASUREMENTS - Other
FAIR VALUE MEASUREMENTS - Other instruments (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Other Financial Instruments | ||
Liabilities representing checks issued but not yet presented for payment | $ 19.3 | $ 23.1 |
Accrued payroll related general and administrative expenses | 43.5 | 21.5 |
Accrued operating expenses | 53.9 | 60.4 |
Allowance for Trade Receivables [Member] | ||
Other Financial Instruments | ||
Aggregate allowance for doubtful accounts | $ 1.6 | $ 1.8 |
FAIR VALUE MEASUREMENTS - Conce
FAIR VALUE MEASUREMENTS - Concentration (Details) - Sales Revenue, Goods, Net [Member] | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Enterprise Products | |||
Concentration Risk | |||
Percentage of sales to revenue, major customers (as a percent) | 17.00% | 19.00% | |
Sunoco Logistics | |||
Concentration Risk | |||
Percentage of sales to revenue, major customers (as a percent) | 20.00% | 21.00% | 19.00% |
Oneok | |||
Concentration Risk | |||
Percentage of sales to revenue, major customers (as a percent) | 10.00% |
STOCK-BASED and OTHER COMPENS44
STOCK-BASED and OTHER COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Options, Restricted Stock and Unit Awards | |||
Compensation cost before capitalized cost | $ 45,139 | $ 36,341 | $ 28,805 |
Less amounts capitalized to oil and gas properties | (20,616) | (16,782) | (13,804) |
Compensation expense | $ 24,523 | 19,559 | 15,001 |
Maximum number of shares of common stock that may be issued under the Stock Incentive Plan | 6,600,000 | ||
Restricted Stock and Units [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Compensation cost before capitalized cost | $ 42,574 | $ 33,538 | $ 25,748 |
Restricted Stock [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Restricted stock granted (in shares) | 478,639 | 471,119 | 486,843 |
Restricted stock granted, weighted average grant-date fair value (in dollars per share) | $ 116.31 | $ 99.29 | $ 101.95 |
Performance Based Restricted Stock [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Compensation cost before capitalized cost | $ 24,183 | $ 18,991 | $ 12,141 |
Restricted stock granted (in shares) | 269,915 | 263,939 | 316,441 |
Restricted stock granted, weighted average grant-date fair value (in dollars per share) | $ 117.63 | $ 87.12 | $ 83.22 |
Vesting period | 3 years | ||
Performance Based Restricted Stock [Member] | Maximum [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Award vesting percentage | 100.00% | ||
Performance Based Restricted Stock [Member] | Minimum [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Award vesting percentage | 50.00% | ||
Service Based Restricted Stock [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Compensation cost before capitalized cost | $ 18,391 | $ 14,547 | $ 13,607 |
Restricted stock granted (in shares) | 208,724 | 207,180 | 170,402 |
Restricted stock granted, weighted average grant-date fair value (in dollars per share) | $ 114.61 | $ 114.80 | $ 136.72 |
Service Based Restricted Stock [Member] | Maximum [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Vesting period | 5 years | ||
Service Based Restricted Stock [Member] | Minimum [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Vesting period | 3 years | ||
Employee Stock Option [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Compensation cost before capitalized cost | $ 2,565 | $ 2,803 | $ 3,057 |
Employee Stock Option [Member] | Maximum [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Vesting period | 5 years | ||
Employee Stock Option [Member] | Minimum [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Vesting period | 3 years |
STOCK-BASED and OTHER COMPENS45
STOCK-BASED and OTHER COMPENSATION - RSA and RSU activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted Stock [Member] | |||
Restricted stock and unit activity | |||
Granted (in shares) | 478,639 | 471,119 | 486,843 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Granted | $ 116.31 | $ 99.29 | $ 101.95 |
Fair value of resticted stock vested | $ 67.9 | $ 52.2 | $ 34.1 |
Performance Based Restricted Stock [Member] | |||
Restricted stock and unit activity | |||
Outstanding at the beginning of the period (in shares) | 829,808 | ||
Vested (in shares) | (287,108) | ||
Granted (in shares) | 269,915 | 263,939 | 316,441 |
Canceled (in shares) | (3,345) | ||
Outstanding at the end of the period (in shares) | 809,270 | 829,808 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding beginning of period | $ 82.99 | ||
Vested | 81.53 | ||
Granted | 117.63 | $ 87.12 | $ 83.22 |
Canceled | 87.14 | ||
Outstanding end of period | $ 96.41 | $ 82.99 | |
Service Based Restricted Stock [Member] | |||
Restricted stock and unit activity | |||
Outstanding at the beginning of the period (in shares) | 998,182 | ||
Vested (in shares) | (243,313) | ||
Granted (in shares) | 208,724 | 207,180 | 170,402 |
Canceled (in shares) | (28,870) | ||
Outstanding at the end of the period (in shares) | 934,723 | 998,182 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding beginning of period | $ 91.37 | ||
Vested | 92.37 | ||
Granted | 114.61 | $ 114.80 | $ 136.72 |
Canceled | 110.84 | ||
Outstanding end of period | $ 96.57 | $ 91.37 | |
Restricted Stock Units (RSUs) [Member] | |||
Restricted stock and unit activity | |||
Outstanding at the beginning of the period (in shares) | 8,838 | ||
Outstanding at the end of the period (in shares) | 8,838 | 8,838 |
STOCK-BASED and OTHER COMPENS46
STOCK-BASED and OTHER COMPENSATION - Options, assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted Stock and Units [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Unrecognized compensation costs related to unvested awards (in dollars) | $ 96,000 | ||
Expected period to recognize unamortized compensation costs related to unvested awards | 2 years 9 months 18 days | ||
Restricted Stock Units (RSUs) [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Share Based Compensation Arrangement by Share Based Payment Award, Equity Instruments Other than Options, Outstanding, Number | 8,838 | 8,838 | |
Employee Stock Option [Member] | |||
Options, Restricted Stock and Unit Awards | |||
Unrecognized compensation costs related to unvested awards (in dollars) | $ 3,600 | ||
Expected period to recognize unamortized compensation costs related to unvested awards | 2 years | ||
Outstanding Stock Options | |||
Outstanding balance at beginning of period (in shares) | 299,229 | ||
Granted (in shares) | 89,850 | 69,000 | 82,500 |
Exercised (in shares) | (63,727) | (141,517) | (211,258) |
Canceled (in shares) | (1,997) | ||
Forfeited (in shares) | (15,545) | ||
Outstanding balance at end of period (in shares) | 307,810 | 299,229 | |
Exercisable at end of period (in shares) | 159,449 | ||
Weighted Average Exercise Price | |||
Outstanding balance at beginning of period (in dollars per share) | $ 93.76 | ||
Granted (in dollars per share) | 114.07 | $ 115.28 | $ 139.02 |
Exercised (in dollars per share) | 75.37 | ||
Canceled (in dollars per share) | 139.02 | ||
Forfeited (in dollars per share) | 123 | ||
Outstanding at end of period (in dollars per share) | 101.72 | $ 93.76 | |
Exercisable at end of period (in dollars per share) | $ 86.99 | ||
Weighted Average Remaining Term | |||
Weighted Average Remaining Term, Outstanding at end of period | 4 years 7 months 6 days | ||
Weighted Average Remaining Term, Exercisable at end of period | 3 years 4 months 24 days | ||
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Value Outstanding at end of period (in dollars) | $ 10,846 | ||
Aggregate Intrinsic Value Exercisable at the end of the period (in dollars) | $ 7,996 | ||
Grant-Date Fair value | |||
Number of options exercised (in shares) | 63,727 | 141,517 | 211,258 |
Cash received from option exercises | $ 4,804 | $ 8,451 | $ 11,898 |
Tax benefit from option exercises included in paid-in-capital | 4,442 | ||
Intrinsic value of stock options exercised | 2,994 | 7,467 | 15,384 |
Grant date fair value of options vested | $ 2,486 | $ 2,734 | $ 4,419 |
Granted (in dollars per share) | $ 33.38 | $ 37.56 | $ 41.69 |
Non-vested Stock Options | |||
Non-vested at the beginning of the period (in shares) | 157,041 | ||
Granted (in shares) | 89,850 | 69,000 | 82,500 |
Vested (in shares) | (82,985) | ||
Forfeited (in shares) | (15,545) | ||
Non-vested at the end of the period (in shares) | 148,361 | 157,041 | |
Weighted Average Grant Date Fair Value - Non-Vested Stock Options | |||
Non-vested as of January (in dollars per share) | $ 34.77 | ||
Granted (in dollars per share) | 33.38 | $ 37.56 | $ 41.69 |
Vested (in dollars per share) | 29.95 | ||
Forfeited (in dollars per share) | 19.70 | ||
Non-vested as of December (in dollars per share) | 35.58 | 34.77 | |
Weighted Average Exercise Price - Non-Vested Stock Options | |||
Non-vested at the beginning of the period (in dollars per share) | 111.58 | ||
Granted (in dollars per share) | 114.07 | ||
Vested (in dollars per share) | 101.46 | ||
Forfeited (in dollars per share) | 123 | ||
Non-vested at the end of the period (in dollars per share) | $ 117.55 | $ 111.58 | |
Assumptions used to determine the fair market value of options | |||
Granted (in shares) | 89,850 | 69,000 | 82,500 |
Weighted average grant-date fair value | $ 33.38 | $ 37.56 | $ 41.69 |
Weighted average exercise price | $ 114.07 | $ 115.28 | $ 139.02 |
Total fair value of options granted | $ 2,999 | $ 2,592 | $ 3,439 |
Expected years until exercise | 4 years | 5 years | 4 years |
Expected stock volatility (as a percent) | 36.70% | 36.60% | 36.70% |
Dividend yield (as a percent) | 0.30% | 0.60% | 0.50% |
Risk-free interest rate (as a percent) | 0.96% | 1.60% | 1.80% |
Maximum [Member] | Employee Stock Option [Member] | |||
Grant-Date Fair value | |||
Vesting period | 5 years | ||
Term of options from grant to expiration | 10 years | ||
Minimum [Member] | Employee Stock Option [Member] | |||
Grant-Date Fair value | |||
Vesting period | 3 years | ||
Term of options from grant to expiration | 7 years |
STOCK-BASED and OTHER COMPENS47
STOCK-BASED and OTHER COMPENSATION - 401(k) Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock based and other compensation | |||
Annual costs related to the plan | $ 6.7 | $ 6.4 | $ 11 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic: | |||
Net income (loss) | $ (408,803) | $ (2,579,604) | $ 526,498 |
Participating securities' share in earnings (in dollars) | (10,329) | ||
Net income (loss) applicable to common stockholders | (408,803) | (2,579,604) | 516,169 |
Diluted: | |||
Net income (loss) | (408,803) | (2,579,604) | 526,498 |
Participating securities' share in earnings (in dollars) | (10,314) | ||
Net income (loss) applicable to common stockholders | $ (408,803) | $ (2,579,604) | $ 516,184 |
Shares: | |||
Basic shares outstanding | 93,379 | 92,992 | 85,679 |
Dilutive effect of stock options | 131 | ||
Fully diluted common stock (in shares) | 93,379 | 92,992 | 85,810 |
Excluded antidilutive securities (in shares) | 2,061 | 2,136 | 94 |
Earnings per share to common shareholders | |||
Basic (in dollars per share) | $ (4.38) | $ (27.75) | $ 6.01 |
Diluted (in dollars per share) | $ (4.38) | $ (27.75) | $ 6 |
ASSET RETIREMENT OBLIGATIONS (D
ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Asset Retirement Obligations | ||||
Balance at beginning of year | $ 164,105 | $ 173,008 | ||
Liabilities incurred | 3,914 | 4,114 | ||
Liability settlements and disposals | (24,108) | (25,061) | ||
Accretion expense | 7,595 | 7,682 | ||
Revisions of estimated liabilities | 3,017 | 4,362 | ||
Balance at end of year | 164,105 | 173,008 | $ 154,523 | $ 164,105 |
Less current obligation | (13,753) | (10,248) | ||
Long-term asset retirement obligation | $ 140,770 | $ 153,857 | ||
Liability settlements and disposals related to properties that were sold | $ 14,900 | $ 13,300 |
INCOME TAXES - Components of th
INCOME TAXES - Components of the Provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current Taxes: | |||
Federal (benefit) | $ 14,417 | ||
State (benefit) | $ (1,115) | 293 | $ 404 |
Current taxes (benefit) | (1,115) | 14,710 | 404 |
Deferred Taxes: | |||
Federal | (201,529) | (1,386,086) | 293,385 |
State | (11,757) | (100,353) | 16,058 |
Deferred income taxes | (213,286) | (1,486,439) | 309,443 |
Total income tax expense (benefits) | $ (214,401) | $ (1,471,729) | $ 309,847 |
INCOME TAXES - Reconciliations
INCOME TAXES - Reconciliations of the income tax (benefit) expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliations of the income tax (benefit) expense | |||
Provision at statutory rate | $ (218,122) | $ (1,417,967) | $ 292,721 |
Effect of state taxes | (10,237) | (64,794) | 16,321 |
Revision of previous balances | 7,181 | 5,997 | |
Other permanent differences | 5,296 | 5,035 | 805 |
Change in valuation allowance | 1,481 | ||
Total income tax expense (benefits) | $ (214,401) | $ (1,471,729) | $ 309,847 |
INCOME TAXES - Components of ne
INCOME TAXES - Components of net deferred tax liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Long-term Assets: | ||
Stock compensation and other accrued amounts | $ 58,306 | $ 32,084 |
Net operating loss carryforward, net of valuation allowance | 399,912 | 305,506 |
Credit carryforward | 6,016 | 6,016 |
Deferred Tax Assets, Gross, Total | 464,234 | 343,606 |
Long-term Liabilities: | ||
Property, plant and equipment | (408,399) | (500,768) |
Net deferred tax assets | $ 55,835 | |
Net deferred tax liabilities | $ (157,162) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Loss Carryforwards [Line Items] | |||
U.S. net tax operating loss carryforward | $ 1,182.4 | ||
U.S. net tax operating loss carryforward recorded to equity when utilized to reduce taxes payable | 90.9 | ||
Alternative minimum tax credit carryforward | 6 | ||
Unrecognized tax benefits that would impact the entity's effective rate | 0 | $ 0 | |
Provisions for interest or penalties related to uncertain tax positions | $ 0 | $ 0 | |
U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
State [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforward | $ 10.4 | ||
Valuation allowance against net operating losses | 11.9 | ||
Net valuation allowance, deferred tax asset change in amount | 1.5 | ||
Total valuation allowance on net operating losses | $ 82 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Minimum lease (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies | |||
Rental expense | $ 12,900 | $ 13,200 | $ 14,300 |
Future minimum payments under leases | |||
2,017 | 9,585 | ||
2,018 | 10,531 | ||
2,019 | 10,677 | ||
2,020 | 10,864 | ||
2,021 | 11,085 | ||
Later years | 44,181 | ||
Total future minimum lease payments | $ 96,923 |
COMMITMENTS AND CONTINGENCIES55
COMMITMENTS AND CONTINGENCIES - Other Commitments (Details) $ in Millions | Dec. 31, 2016USD ($) |
Drilling Commitments [Member] | |
Construction, Drilling and Purchase Commitments | |
Commitments for purchases and other expenditures | $ 157.5 |
COMMITMENTS AND CONTINGENCIES56
COMMITMENTS AND CONTINGENCIES - Other Commitments - Delivery, operating leases (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($)Bcf | |
Non-cancelable operating leases | |
Future minimum operating lease arrangements | $ 96,923 |
Natural Gas Sales Contracts [Member] | |
Delivery Commitments | |
Volume of gas deliverable (in Bcf) | Bcf | 46.4 |
Delivery term | 22 months |
Financial commitment upon nondelivery | $ 164,800 |
Gas Gathering And Processing Agreements [Member] | |
Delivery Commitments | |
Delivery term | 10 years |
Financial commitment upon nondelivery | $ 220,000 |
Minimum Volume Agreement [Member] | |
Delivery Commitments | |
Financial commitment upon nondelivery | 7,900 |
Accrued liabilities | 2,100 |
Other Transportation, Delivery And Facilities Commitments [Member] | |
Delivery Commitments | |
Other commitments | $ 35,700 |
COMMITMENTS AND CONTINGENCIES57
COMMITMENTS AND CONTINGENCIES - Litigation (Details) - Helmerich and Payne Case [Member] - USD ($) $ in Thousands | Apr. 01, 2014 | Dec. 13, 2013 | Dec. 31, 2008 | Dec. 31, 2013 |
Loss Contingencies | ||||
Accrued litigation expense | $ 119,600 | |||
Reversal of initial award to plaintiff, disgorgement | $ 119,600 | |||
Loss Contingency, Damages Awarded, Value | $ 3,650 | |||
Reduction in previously recognized litigation expense and associated long-term liability | $ 142,800 | |||
Payments to plaintiff | $ 15,800 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 5 Months Ended | 12 Months Ended | ||
May 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Sheridan Production Parnters [Member] | ||||
Related Party Transactions | ||||
Revenues from related party | $ 400 | $ 4,100 | ||
Payments to related party | 177,600 | 224,200 | ||
Payments from related parties for joint interest billings | 73,100 | 81,500 | ||
Certain Affiliates Of Sheridan Production Partners [Member] | ||||
Related Party Transactions | ||||
Payments to related party | 5,200 | 10,400 | ||
Helmerich and Payne, Inc [Member] | ||||
Related Party Transactions | ||||
Contract drilling services costs | $ 18,300,000 | $ 7,900,000 | $ 18,400,000 | |
Subsidiary of Newpark Resources, Inc [Member] | ||||
Related Party Transactions | ||||
Contract drilling services costs | $ 589,200 |
PROPERTY SALES AND ACQUISITIO59
PROPERTY SALES AND ACQUISITIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property Sales | |||
Acquisition of interest in oil and gas properties | $ 249,700 | ||
Sales of other assets | $ 7,889 | $ 1,178 | 8,413 |
Non Core Oil and Gas Properties [Member] | |||
Property Sales | |||
Sale of interests in oil and gas properties | $ 446,100 |
SUPPLEMENTAL DISCLOSURE OF CA60
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash paid during the period for: | |||
Interest expense (including capitalized amounts) | $ 79,590 | $ 80,785 | $ 66,167 |
Interest capitalized | 20,308 | 28,819 | 32,623 |
Income taxes | 13 | 558 | 354 |
Cash received for income taxes | $ 1,450 | $ 1,503 | $ 460 |