Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 09, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity File Number | 001-36302 | |
Entity Registrant Name | Sundance Energy Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 61-1949225 | |
Entity Address, Address Line One | 1050 17th Street, Suite 700 | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80265 | |
City Area Code | 303 | |
Local Phone Number | 543-5700 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | SNDE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,875,672 | |
Entity Central Index Key | 0001326089 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 2,553 | $ 12,382 |
Accounts receivable trade and other | 15,153 | 27,020 |
Derivative financial instruments | 28,498 | 1,215 |
Income tax receivable | 4,729 | 3,555 |
Other current assets | 3,998 | 3,616 |
Total current assets | 54,931 | 47,788 |
Oil and gas properties, successful efforts method | 823,642 | 1,122,908 |
Less: accumulated depletion, depreciation and amortization | (443,094) | (379,961) |
Total oil and gas properties, net | 380,548 | 742,947 |
Other long-term assets: | ||
Other property and equipment, net of accumulated depreciation of $3,346 and $3,419 | 1,479 | 1,963 |
Income tax receivable | 1,172 | |
Operating lease right-of-use assets | 12,168 | 17,331 |
Derivative financial instruments | 878 | |
Other long-term assets | 1,220 | 1,835 |
TOTAL ASSETS | 450,346 | 813,914 |
Current liabilities: | ||
Accounts payable trade | 21,447 | 43,284 |
Current portion of long-term debt | 373,034 | |
Accrued liabilities | 10,019 | 26,409 |
Derivative liabilities | 7,234 | 4,394 |
Operating lease liabilities - current | 4,653 | 7,720 |
Total current liabilities | 416,387 | 81,807 |
Long-term liabilities: | ||
Long-term debt, net of current portion | 353,490 | |
Asset retirement obligations | 4,354 | 3,653 |
Operating lease liabilities - long term | 7,578 | 9,611 |
Derivative financial instruments | 3,669 | |
Deferred tax liabilities | 251 | 7,138 |
Other long-term liabilities | 252 | 1,149 |
Total long-term liabilities | 12,435 | 378,710 |
Total liabilities | 428,822 | 460,517 |
Commitments and contingencies (Note 12) | ||
Stockholders' Equity: | ||
Common stock, $0.001 value, 100,000,000 shares authorized; 6,875,672 issued and outstanding at September 30, 2020 and December 31, 2019 | 7 | 7 |
Additional paid-in capital | 633,438 | 633,246 |
Accumulated deficit | (611,247) | (279,144) |
Accumulated other comprehensive loss | (674) | (712) |
Total stockholders' equity | 21,524 | 353,397 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 450,346 | $ 813,914 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accumulated depreciation, other property and equipment | $ 3,346 | $ 3,419 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, shares issued | 6,875,672 | 6,875,672 |
Common stock, shares outstanding | 6,875,672 | 6,875,672 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 20,923 | $ 51,097 | $ 68,396 | $ 151,738 |
Operating expenses: | ||||
Lease operating and workover expense | 5,256 | 7,606 | 18,802 | 26,122 |
Gathering, processing and transportation expense | 3,329 | 3,344 | 9,673 | 9,914 |
Production taxes | 2,330 | 2,842 | 4,057 | 9,079 |
Exploration expense | 20 | 213 | 193 | 235 |
Depreciation, depletion and amortization expense | 22,758 | 23,273 | 67,527 | 67,735 |
Impairment expense | 331,877 | 907 | 331,877 | 9,990 |
General and administrative expense | 3,859 | 5,073 | 13,379 | 15,790 |
Loss (gain) on commodity derivative financial instruments | 7,193 | (16,301) | (65,652) | 6,755 |
Other expense (income), net | 106 | 23 | (2,522) | 233 |
Total operating expenses | 376,728 | 26,980 | 377,334 | 145,853 |
Income (loss) from operations: | (355,805) | 24,117 | (308,938) | 5,885 |
Other expense | ||||
Interest expense | (9,134) | (9,248) | (30,155) | (29,633) |
Total other expense | (9,134) | (9,248) | (30,155) | (29,633) |
Income (loss) before income taxes | (364,939) | 14,869 | (339,093) | (23,748) |
Income taxes | ||||
Current benefit | 33 | 103 | ||
Deferred benefit (expense) | 8,332 | (1,573) | 6,887 | 2,478 |
Total income tax benefit (expense) | 8,365 | (1,573) | 6,990 | 2,478 |
Net income (loss) | $ (356,574) | $ 13,296 | $ (332,103) | $ (21,270) |
Income (loss) per common share | ||||
Basic | $ (51.87) | $ 1.93 | $ (48.31) | $ (3.09) |
Diluted | $ (51.87) | $ 1.93 | $ (48.31) | $ (3.09) |
Weighted average shares outstanding | ||||
Basic | 6,875,017 | 6,874,146 | 6,874,962 | 6,874,082 |
Diluted | 6,875,017 | 6,874,407 | 6,874,962 | 6,874,082 |
Comprehensive income (loss) | ||||
Net income (loss) | $ (356,574) | $ 13,296 | $ (332,103) | $ (21,270) |
Other comprehensive income (loss): | ||||
Foreign currency translation | 19 | 145 | 38 | 163 |
Total comprehensive income (loss) | (356,555) | 13,441 | (332,065) | (21,107) |
Oil sales | ||||
Revenues: | ||||
Total revenues | 17,638 | 45,683 | 57,830 | 132,626 |
Natural gas sales | ||||
Revenues: | ||||
Total revenues | 1,743 | 2,823 | 5,121 | 9,617 |
Natural gas liquid sales | ||||
Revenues: | ||||
Total revenues | $ 1,542 | $ 2,591 | $ 5,445 | $ 9,495 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Common stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated other comprehensive loss | Total |
Balance at the beginning of period at Dec. 31, 2018 | $ 7 | $ 632,742 | $ (239,554) | $ (706) | $ 392,489 |
Balance at the beginning of period (in shares) at Dec. 31, 2018 | 6,874,622 | ||||
Stock-based compensation | 135 | 135 | |||
Stock-based compensation (in shares) | 1,050 | ||||
Net income (loss) | (37,209) | (37,209) | |||
Foreign currency translation | (22) | (22) | |||
Balance at the end of period at Mar. 31, 2019 | $ 7 | 632,877 | (276,763) | (728) | 355,393 |
Balance at the end of period (in shares) at Mar. 31, 2019 | 6,875,672 | ||||
Balance at the beginning of period at Dec. 31, 2018 | $ 7 | 632,742 | (239,554) | (706) | 392,489 |
Balance at the beginning of period (in shares) at Dec. 31, 2018 | 6,874,622 | ||||
Net income (loss) | (21,270) | ||||
Foreign currency translation | 163 | ||||
Balance at the end of period at Sep. 30, 2019 | $ 7 | 633,076 | (260,824) | (543) | 371,716 |
Balance at the end of period (in shares) at Sep. 30, 2019 | 6,875,672 | ||||
Balance at the beginning of period at Mar. 31, 2019 | $ 7 | 632,877 | (276,763) | (728) | 355,393 |
Balance at the beginning of period (in shares) at Mar. 31, 2019 | 6,875,672 | ||||
Stock-based compensation | 142 | 142 | |||
Net income (loss) | 2,643 | 2,643 | |||
Foreign currency translation | 40 | 40 | |||
Balance at the end of period at Jun. 30, 2019 | $ 7 | 633,019 | (274,120) | (688) | 358,218 |
Balance at the end of period (in shares) at Jun. 30, 2019 | 6,875,672 | ||||
Stock-based compensation | 57 | 57 | |||
Net income (loss) | 13,296 | 13,296 | |||
Foreign currency translation | 145 | 145 | |||
Balance at the end of period at Sep. 30, 2019 | $ 7 | 633,076 | (260,824) | (543) | 371,716 |
Balance at the end of period (in shares) at Sep. 30, 2019 | 6,875,672 | ||||
Balance at the beginning of period at Dec. 31, 2019 | $ 7 | 633,246 | (279,144) | (712) | 353,397 |
Balance at the beginning of period (in shares) at Dec. 31, 2019 | 6,875,672 | ||||
Stock-based compensation | 104 | 104 | |||
Net income (loss) | 60,242 | 60,242 | |||
Foreign currency translation | 428 | 428 | |||
Balance at the end of period at Mar. 31, 2020 | $ 7 | 633,350 | (218,902) | (284) | 414,171 |
Balance at the end of period (in shares) at Mar. 31, 2020 | 6,875,672 | ||||
Balance at the beginning of period at Dec. 31, 2019 | $ 7 | 633,246 | (279,144) | (712) | 353,397 |
Balance at the beginning of period (in shares) at Dec. 31, 2019 | 6,875,672 | ||||
Net income (loss) | (332,103) | ||||
Foreign currency translation | 38 | ||||
Balance at the end of period at Sep. 30, 2020 | $ 7 | 633,438 | (611,247) | (674) | 21,524 |
Balance at the end of period (in shares) at Sep. 30, 2020 | 6,875,672 | ||||
Balance at the beginning of period at Mar. 31, 2020 | $ 7 | 633,350 | (218,902) | (284) | 414,171 |
Balance at the beginning of period (in shares) at Mar. 31, 2020 | 6,875,672 | ||||
Stock-based compensation | 91 | 91 | |||
Net income (loss) | (35,771) | (35,771) | |||
Foreign currency translation | (409) | (409) | |||
Balance at the end of period at Jun. 30, 2020 | $ 7 | 633,441 | (254,673) | (693) | 378,082 |
Balance at the end of period (in shares) at Jun. 30, 2020 | 6,875,672 | ||||
Stock-based compensation | (3) | (3) | |||
Net income (loss) | (356,574) | (356,574) | |||
Foreign currency translation | 19 | 19 | |||
Balance at the end of period at Sep. 30, 2020 | $ 7 | $ 633,438 | $ (611,247) | $ (674) | $ 21,524 |
Balance at the end of period (in shares) at Sep. 30, 2020 | 6,875,672 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (332,103) | $ (21,270) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation, depletion and amortization expense | 67,527 | 67,735 |
Impairment expense | 331,877 | 9,990 |
Stock-based compensation | 192 | 334 |
Payable-in-kind interest | 1,711 | |
Deferred income tax (benefit) expense | (6,887) | (2,478) |
(Gain) loss on commodity derivative financial instruments | (65,652) | 6,755 |
Net cash settlements received on commodity derivative contracts | 37,410 | 5,713 |
Premiums paid on commodity derivative contracts | (152) | |
Unrealized loss on interest rate swaps | 1,008 | 4,375 |
Amortization of deferred debt issuance costs | 2,673 | 2,399 |
Write-off of deferred debt issuance costs | 1,199 | |
Gain on conveyance of oil and gas properties | (2,479) | |
Other | 94 | (68) |
Changes in assets and liabilities: | ||
Accounts receivable trade and other | 7,765 | 2,529 |
Income tax receivable | (2) | |
Accounts payable trade | (10,751) | (2,205) |
Accrued liabilities | (10,918) | 2,079 |
Other assets and liabilities, net | 510 | (635) |
Net cash provided by operating activities | 23,174 | 75,101 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures for proved oil and gas properties | (46,995) | (123,878) |
Capital expenditures for unproved oil and gas properties | (16) | (359) |
Proceeds from the sale of oil and gas properties | 50 | |
Other property and equipment | (300) | (182) |
Net cash used in investing activities | (47,311) | (124,369) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from borrowings | 17,000 | 50,000 |
Repayments of borrowings | (1,400) | |
Payments of debt issuance costs | (1,025) | (232) |
Principal payments on finance lease obligations | (222) | (118) |
Net cash provided by financing activities | 14,353 | 49,650 |
Net change in cash and cash equivalents | (9,784) | 382 |
CASH AND CASH EQUIVALENTS | ||
Beginning of period | 12,382 | 1,581 |
Effect of exchange rates on cash | (45) | (33) |
End of period | 2,553 | 1,930 |
SUPPLEMENTAL CASH FLOW DISCLOSURES | ||
Income taxes received | 101 | |
Interest paid, net of amounts capitalized | 29,749 | 24,543 |
Operating lease right-of-use assets obtained in exchange for lease liabilities | 1,420 | 9,468 |
Finance lease right-of-use assets obtained in exchange for lease liabilities | 44 | 528 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Accounts payable and accrued expenses for oil and gas properties | $ 11,504 | $ 44,069 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION Description of Operations On November 26, 2019, a new Delaware corporation named Sundance Energy Inc. (the “Company”) acquired all of the issued and outstanding ordinary shares of Sundance Energy Australia Limited (“SEAL”), an Australian Company, pursuant to a Scheme of Arrangement under Australian law (the “Scheme”) which was approved by SEAL’s shareholders on November 8, 2019 and the Federal Court of Australia on November 14, 2019. These events are collectively referred to as the “Redomiciliation”. Prior to the Redomiciliation, the Company’s ordinary shares were listed on the Australian Securities Exchange (“ASX”) and Sundance Energy Inc. had no business or operations. Following the Redomiciliation, the business and the operations of Sundance Energy Inc. consist solely of the historical business and operations of SEAL and its subsidiaries. In the Redomiciliation, all outstanding SEAL ordinary shares on November 26, 2019, were cancelled and shares of the Company’s common stock, par value $0.001 per share, were issued. Each of SEAL’s shareholders received The purpose of the Redomiciliation was to reorganize the operations of SEAL, a public company incorporated under the laws of the State of South Australia, into a structure whereby the ultimate parent company of the Sundance group of companies would be a Delaware corporation. In connection with the Redomiciliation, the ordinary shares of SEAL were delisted from the ASX, and the common stock of Sundance Energy Inc. began trading on the Nasdaq Global Market on November 26, 2019 under the ticker symbol “SNDE”, the same symbol under which SEAL’s American Depository Shares were traded on Nasdaq Global Market prior to the implementation of the Redomiciliation. Immediately following the effectiveness of the Redomiciliation, SEAL distributed all of its assets to Sundance Energy Inc., and Sundance Energy Inc. assumed all of the liabilities of SEAL. Unless the context otherwise requires, references to “Sundance,” “we,” “us,” “our,” and the “Company” refer to (i) SEAL and its subsidiaries prior to the Redomiciliation and (ii) Sundance Energy Inc. and its subsidiaries upon completion of the Redomiciliation, as applicable. Sundance Energy Inc. is an independent oil and gas company engaged in the development, production and exploration of oil, natural gas and natural gas liquids (“NGLs”) primarily targeting the Eagle Ford basin in South Texas. Basis of Presentation Prior to the Redomiciliation, SEAL reported its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”). Following the Redomiciliation, the Company retroactively transitioned to accounting principles generally accepted in the United States of America (“GAAP”) and applied GAAP retrospectively for all prior periods presented. The accompanying unaudited financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, certain disclosures required by accounting principles generally accepted in the United States and normally included in Annual Reports on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies, and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2019. Except as disclosed herein The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of September 30, 2020 and our consolidated results of operations for the three and nine months ended September 30, 2020 and 2019. Going Concern The accompanying condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The market price for oil, natural gas, and NGLs decreased significantly beginning in the first quarter of 2020, continuing into the third quarter of 2020. As described in Note 3 in greater detail, the Company is required to meet certain financial and non-financial covenants as a condition to its credit facilities. Under the Company’s second lien term loan (the “Term Loan”), the Company is required to maintain an Asset Coverage Ratio of not less than ) based upon the forward month prices quoted on the NYMEX, adjusted for basis differentials or premiums and transportation costs and to reflect the Company’s commodity hedging agreements then in effect to Total Debt. Under the Company’s senior secured revolving credit facility (the “Revolving Facility”) it is required to maintain a (i) Total Debt to EBITDA Ratio of less than as of the last day of any fiscal quarter. Both the value of the Company’s oil and gas reserves, (including “Total Proved Reserves” as described in the Term Loan agreement) and the Company’s EBITDA are highly sensitive to commodity prices and the Company’s ongoing development of its properties. A breach of any covenant in the Company’s credit agreements will result in default or cross-default under the Company’s Term Loan and Revolving Facility, after any applicable grace period, which could result in acceleration of the repayment of amounts outstanding under the credit facilities to the Company’s lenders. The Company regularly enters into commodity derivative contracts to protect the cash flows associated with the Company’s proved developed producing wells and to provide supplemental liquidity to mitigate decreases in revenue due to reductions in commodity prices. Based on the Company’s historical experience, in periods of sustained low commodity prices, the prevailing market price for oil and gas services has also decreased, including the types of costs included in the Company’s lease operating expenses, drilling costs, completion costs, and costs to equip its wells. Beginning in the first quarter of 2020, the Company renegotiated pricing with a number of its vendors and entered into contractual arrangements with drilling and completion service providers. As a result, the Company realized lower drilling and completion costs on 2020 development relative to the costs incurred in 2019 and the assumed costs in the Company’s 2019 reserve report. The Company also changed its field operating procedures in response to the material drop in oil prices which further reduces its cost structure relative to those realized in 2019 and those used in the Company’s 2019 reserve report. Additionally, in early May 2020, the Company made reductions of general and administrative costs, including implementing a reduction in workforce and certain salary reductions. Commodity hedging that the Company currently has in place, combined with cost reductions are expected to reduce the impact of recent commodity price declines. The requirement for the Company to comply with the June 30, 2020 Asset Coverage Ratio covenant was removed from the Term Loan agreement; however it is unlikely that the Company would have been able to meet the covenant as of June 30, 2020. The Asset Coverage Ratio covenant continues to apply for periods subsequent to June 30, 2020. At September 30, 2020, the Company was in breach of the Total Debt to EBITDA Ratio, as well as the Current Ratio under the Revolving Facility, as a result of reclassifying it outstanding debt from long-term to current, which is an event of default, and allows the lenders to call the Company’s Revolving Facility and Term Loan (due to cross-default provisions) to be immediately due and payable. The Company is currently working with its lenders to address the status of its compliance with the covenants under the Term Loan and the Revolving Facility. In the event that repayment of some or all of the amounts outstanding under its credit facilities are accelerated and become immediately due and payable, the Company does not have sufficient liquidity to repay such outstanding amounts. These conditions and events raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date of the issuance of financial statements. Management is pursuing, or has pursued, several initiatives to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, which include the following: ● Materially limiting development activity to reduce capital expenditures and continuing to renegotiate pricing with a number of its operating expenditure vendors; ● Pursuing further changes to its cost structure in response to the material drop in oil prices; ● Pursuing additional costs savings with its vendors and reductions of other general and administrative costs; and ● Exploring transactions with the Company’s creditors to optimize its balance sheet, including exploring ways to obtain additional capital, which may include asset sales, public or private issuance of debt or equity, or any combination thereof. The Company is working with its Revolving Facility lenders to obtain a waiver of these events of default, however, there is no guarantee that the Company’s Revolving Facility lenders will agree to waive these events of default or potential events of default in the future. There can be no assurances that the Company will be successful in any restructuring of existing debt obligations or in obtaining capital sufficient to fund the refinancing of its outstanding indebtedness or to provide sufficient liquidity to meet the outstanding debt obligations of the Company, if repayment of its credit facilities is accelerated. If the Company is unsuccessful in its efforts to restructure and secure new financing, it may be necessary for the Company to seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, or an involuntary petition for bankruptcy may be filed against it. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Items subject to such estimates and assumptions include (i) oil and natural gas reserves; (ii) impairment tests of long-lived assets; (iii) depreciation, depletion and amortization; (iv) asset retirement obligations; (v) income taxes; (vi) accrued liabilities; (vii) valuation of derivative instruments; and (ix) accrued revenue and related receivables. Although management believes these estimates are reasonable, actual results could differ from these estimates. Further, these estimates and other factors, including those outside of the Company’s control, such as the impact of lower commodity prices, may have a significant negative impact to the Company’s business, financial condition, results of operations and cash flows. Customer Concentration Risk During the nine months ended September 30, 2020, the Company had two customers that each accounted for 10% or more of the Company’s total oil, NGL and natural gas sales (67% and 21% , respectively). The Company does not believe the loss of any single purchaser would materially impact the Company’s operating results because oil, natural gas, and NGLs are commodities for which there are a large number of potential buyers. Because of the adequacy of the infrastructure to transport oil and natural gas in the areas in which the Company operates, if the Company were to lose one or more customers, management believes that it could readily procure substitute or additional customers. Recently Issued and Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which provides a model, known as the current expected credit loss model (“CECL model”), to estimate the expected lifetime credit loss on financial assets, including trade and other receivables. The Company adopted the ASU effective January 1, 2020, and it did not have a material impact on the Company’s consolidated financial statements as the Company does not have a history of material credit losses. The Company continues to monitor the credit risk from trade receivable counterparties to determine if expected credit losses may become material. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure framework - Changes to the Disclosure Requirements for Fair Value Measurement, which removes or modifies current fair value disclosures and adds additional disclosures to improve effectiveness The Company adopted this ASU on January 1, 2020, and the adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 was issued to reduce the complexity of accounting for income taxes including requirements related to (i) the intraperiod tax allocation exception to the incremental approach; (ii) interim-period accounting for enacted changes in tax laws; and (iii) the year-to-date loss limitation in interim-period tax accounting. The guidance is to be applied using a prospective method, excluding amendments related to franchise taxes, which should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company does not expect adoption of ASU 2019-12 to have a material impact on the Company’s consolidated financial statements or disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 was issued to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. . The Company is evaluating the options provided by ASU 2020-04 and |
OIL AND GAS PROPERTIES
OIL AND GAS PROPERTIES | 9 Months Ended |
Sep. 30, 2020 | |
OIL AND GAS PROPERTIES | |
OIL AND GAS PROPERTIES | NOTE 2 — OIL AND GAS PROPERTIES Net capitalized costs related to the Company’s oil and gas producing activities as of September 30, 2020 and December 31, 2019 are as follows (in thousands): September 30, December 31, 2020 2019 Oil and gas properties, successful efforts method: Unproved $ 24,954 $ 25,037 Proved 795,774 1,090,774 Work in progress 2,914 7,097 823,642 1,122,908 Accumulated depletion, depreciation and amortization (443,094) (379,961) Oil and gas properties, net $ 380,548 $ 742,947 Capitalized Interest The Company capitalized interest of $0.2 million and $0.6 million for the three months ended September 30, 2020 and 2019, respectively, and $0.6 million and $2.0 million for the nine months ended September 30, 2020 and 2019, respectively. Impairment The Company assesses its long-lived assets, including oil and gas properties, for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. The impairment test compares undiscounted future net cash flows of the assets to the assets’ net book value. When it is determined that the estimated future net cash flows of an asset will not be sufficient to recover its carrying amount, an impairment loss must be recorded to reduce the carrying amount to its estimated fair value. The Company assesses impairment at the Eagle Ford field level. Fair value for oil and gas properties is generally determined based on discounted future net cash flows. These judgments and assumptions include such matters as the estimation of oil and gas reserve quantities, risks associated with the different categories of oil and gas reserves, the timing of development and production, expected future commodity prices, capital expenditures, production costs, and appropriate discount rates. The Company identified an impairment triggering event for its oil and gas properties as of September 30, 2020 due to the adverse change to its business climate resulting from oil and gas prices declining in 2020 and the resulting changes in its future development plan. As such, the Company performed a quantitative assessment as of September 30, 2020, and the estimated undiscounted cash flows from its proved properties were less than the carrying value of its proved oil and gas properties. The impairment was the result of a significantly slower pace in its development plan in light of continued depressed commodity prices and uncertainty regarding the Company’s liquidity situation. Fair value and resulting impairment expense recognized in the consolidated statement of operations for the three and nine months ended September 30, 2020 is as follows (in thousands): At September 30, 2020 Carrying costs, net Fair Value Impairment Proved oil and gas properties 687,397 355,594 331,803 During the three and nine months ended September 30, 2019, the Company recorded impairment expense of $0.9 million and $10.0 million related to assets held for sale. The Company’s Dimmit County, Texas, oil and gas properties, were classified as held for sale until they were divested in October 2019. Divestitures On June 12, 2020, the Company conveyed its interest in the petroleum exploration license 570 located in the Cooper Basin in Australia (“PEL570”) to the property’s operator. At the time of the conveyance, the Company had accrued expenses related to exploratory drilling of approximately million. As consideration for the property, the operator settled the Company’s outstanding liability for million. The property had previously been fully impaired, and therefore the Company recognized a gain on the conveyance of million nine months ended September 30, 2020, which is recorded in other income (expense) on the consolidated statement of operations. As a result of the conveyance, the Company is also relieved of its commitment to fund any further exploratory drilling for PEL570. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2020 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | NOTE 3 — LONG-TERM DEBT The following is a summary of long-term debt, including the current portion, as of September 30, 2020 and December 31, 2019 (in thousands): September 30, December 31, 2020 2019 Revolving Facility $ 130,600 $ 115,000 Term Loan 250,000 250,000 Total principal 380,600 365,000 Accrued paid in kind interest 1,711 — Unamortized debt issuance costs on Term Loan (1) (9,277) (11,510) Total long-term debt 373,034 353,490 Less: current portion of long-term debt (2) (373,034) — Total long-term debt, net of current portion $ — $ 353,490 (1) Although the Company’s debt was classified as current at September 30, 2020, the amortization period for the Company’s deferred debt issuance costs remains as the contractual term of the debt. (2) The Company has reclassified its long-term debt as a current liability as of September 30, 2020 as it was not in compliance with its Leverage Ratio covenant under its Revolving Facility, which constitutes an event of default under the Revolving Facility and a cross default under the Term Loan. The reclassification of long-term debt to current debt also results in the Company breaching the required Current Ratio. See Revolving Facility below for more information. Revolving Facility On April 23, 2018, the Company entered into a syndicated Revolving Facility with Natixis, New York Branch, as administrative agent, with initial availability of $87.5 million ($250.0 million face). The Revolving Facility is secured by certain of the Company’s oil and gas properties and will mature in October 2022. The Revolving Facility is subject to a borrowing base, which is redetermined at least semi-annually and depends on the volumes of the Company’s proved oil and gas reserves, commodity prices, estimated cash flows from these reserves and other information deemed relevant by the Revolving Facility lenders. As discussed below, the most recent redetermination was completed in June 2020. If, upon any downward adjustment of the borrowing base, the outstanding borrowings are in excess of the revised borrowing base, the Company may have to repay its indebtedness in excess of the borrowing base immediately, or in five monthly installments. In January 2020, the Company entered into the fourth amendment to the Revolving Facility, which increased the borrowing base to $210 million (with elected borrowing commitments of $190 million), increased the maximum credit amount from $250 million to $500 million, revised the Leverage Ratio, and Interest Coverage Ratio covenant (as reflected below) and appointed Toronto Dominion (Texas) LLC, as the administrative agent. As a result of the former administrative agent exiting the facility and terminating its commitments, the Company wrote-off previously capitalized deferred debt issuance costs of $1.1 million during the nine months ended September 30, 2020 in accordance with ASC 470 Debt , which is included in interest expense on the consolidated statement of operations. In June 2020, the Company entered into the fifth amendment to the Revolving Facility, which decreased the borrowing base to $170 million from $210 million. In addition to the borrowing base reduction, the amendment increased the interest rate margin to a range of On June 30, 2020, the Company unwound certain of its derivative positions for proceeds of $1.4 million. The Company’s credit agreements require that 90 % of the proceeds from such transactions be used to repay the Revolving Facility balance with a corresponding reduction in the Company’s borrowing base. Following this event, the borrowing base was $168.6 million. At September 30, 2020, the Company had outstanding borrowings of $130.6 million, outstanding letters of credit of $16.4 million and undrawn capacity of $21.7 million. As of September 30, 2020, interest on the Revolving Facility accrued at a rate equal to LIBOR, plus a margin ranging from 2.50% to 3.50 %, depending on the level of funds borrowed. The stated weighted average interest rate on the Revolving Facility was 3.40% as of September 30, 2020. Under the Revolving Facility, the Company is required to maintain the following financial ratios: ● a minimum Current Ratio, consisting of consolidated current assets (as defined in the Revolving Facility) including undrawn borrowing capacity to consolidated current liabilities (as defined in the Revolving Facility), of not less than 1.0 to 1.0 as of the last day of any fiscal quarter; ● a maximum Leverage Ratio, consisting of consolidated Total Debt to adjusted consolidated EBITDAX (as defined in the Revolving Facility), of not greater than 3.5 to 1.0 as of the last day of any fiscal quarter; and ● a minimum Interest Coverage Ratio, consisting of EBITDAX to Consolidated Interest Expense (as defined in the Revolving Facility), of not less than 1.5 to 1.0 as of the last day of any fiscal quarter (for such time as there is a similar covenant under the Company’s or SEI’s subordinated indebtedness). At September 30, 2020, the Company was not in compliance with the Leverage Ratio or the Current Ratio, as a result of the reclassification of its outstanding debt from long-term to current. The Company is currently in discussions with the Revolving Facility lenders to waive the defaults arising under the Company’s failure to comply with the Leverage Ratio and the Current Ratio as of September 30, 2020. There can be no assurance that the Company will receive these waivers. The failure to be in compliance constitutes an event of default under the Revolving Facility, and at any time after the occurrence of an event of default under the Revolving Facility, the lenders thereunder may, among other options, declare any amounts outstanding under the Revolving Facility immediately due and payable and the lenders thereunder may terminate any commitment to make further loans under the Revolving Facility. Any such acceleration of the Revolving Facility will also constitute an event of default under the Term Loan. allowing the counterparties in such contracts to terminate the contract upon notice. Because most of these derivative contracts are currently “in-the-money,” if the counterparties elect to terminate them, it will result in the value of such contracts being paid to the Company. Due to the uncertainty of obtaining a waiver from the Revolving Facility lenders, the Company has classified its derivatives as current. Term Loan On April 23, 2018, the Company entered into a $250.0 million syndicated Term Loan with Morgan Stanley Energy Capital, as administrative agent, which will mature in April 2023. The Term Loan is secured by certain of the Company’s oil and gas properties. Under the Term Loan, the Company is required to maintain the following financial ratios: ● a minimum Interest Coverage Ratio, consisting of EBITDAX to Consolidated Interest Expense (as defined in the Term Loan), of not less than 1.5 to 1.0 as of the last day of any fiscal quarter (for such time as there is a similar covenant under the Company’s or SEI’s subordinated indebtedness); and ● An Asset Coverage Ratio, consisting of Total Proved PV9% (including the effect of the Company’s derivative positions) to Total Debt (as defined in the Term Loan agreement), of not less than 1.50 to 1.0. In June 2020, the Company entered into a third amendment to the Term Loan. The third amendment: ● Increased the applicable interest rate margin from 8% to 10%, of which 2% of the applicable margin is payable-in-kind (“PIK”), effective May 30, 2020; ● Required that 50 % of excess cash flow (as defined in the Term Loan agreement) (“ECF”) generated during each quarter, if any, be used to pay down the outstanding balance on its Revolving Facility, with a permanent corresponding reduction in the borrowing base. If the outstanding balance on the Revolver is zero, any Required ECF Prepayment Amounts will be applied to reduce amounts outstanding under the Term Loan; ● Waived the Asset Coverage Ratio requirement for the period ended March 31, 2020; ● Limited the Company’s capital expenditures (as defined in the Term Loan agreement) for the period from May 1, 2020 to September 30, 2020 to $5 million; ● Limited the Company’s general and administrative expense (as defined in the Term Loan agreement) for the second and third quarters of 2020 to $3 million per quarter and ● Required the Company to negotiate in good faith with the Lenders by September 30, 2020 to reduce the Company’s total debt and leverage and explore transactions to increase the Company’s capital, which may include asset sales, public or private issuance of debt or equity, or any combination thereof. On October 16 and October 30, 2020, the Company entered into the fourth and fifth amendments to the Term Loan, respectively. Collectively, these amendments, among other things: ● Extended the delivery date of the July 1, 2020 Reserve Report prepared by a petroleum engineering firm appointed by the Term Loan lenders to October 30, 2020; ● Limit the Company’s capital expenditures (as defined in the Term Loan agreement) for the period from May 1, 2020 to December 31, 2020 to $11.1 million; ● Limit the Company’s general and administrative expense (as defined in the Term Loan agreement) for the fourth quarter of 2020 to $3.6 million; ● Require the Company to, (a) until December 31, 2020, negotiate with the Term Loan lenders in good faith on a potential workout, restructuring or similar negotiation with respect to the Term Loan, which is expected to include any or a combination of (i) mutually agreeing to a term sheet that reduces the Company’s total debt and leverage, (ii) exploring additional sources of equity capital for the Company, (iii) exploring potential transfers of the Company’s oil and gas properties (through asset sales or otherwise), and (iv) if necessary, hiring of restructuring advisors, and (b) enter into a restructuring support agreement with the Term Loan and the Revolving Facility lenders with respect to a workout or restructuring of the Company’s debt on or prior to November 30, 2020 or such later date as may be agreed; and ● Provide that the Asset Coverage Ratio as of June 30, 2020 will not apply or be tested; if the Asset Coverage Ratio as of such date had been tested, it is unlikely that the Company would have been in compliance. The Company has retained restructuring and legal advisors to assist it in its discussions with the lenders under the Term Loan and the Revolving Credit Facility. There can be no assurance that the Company will be able to enter into a restructuring support agreement within such time frame or that the Term Loan lenders will agree to an extension of the deadline to enter into a restructuring support agreement. If the Company is unsuccessful in such efforts, it may be necessary for the Company to seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, or an involuntary petition for bankruptcy may be filed against it. Interest on the Term Loan Facility accrues at a rate of (i) LIBOR (with a LIBOR floor of 1.0%) plus 8.0% plus (ii) 2% PIK. As of September 30, 2020, the stated weighted average interest rate on the Term Loan was Pursuant to the Fifth Amendment to Amended and Restated Term Loan Agreement, the Company is required to deliver on November 30, 2020 (i) a reserve report as of September 30, 2020 and (ii) a compliance certificate with respect to the Asset Coverage Ratio as of September 30, 2020. While the Company has not yet finalized its reserve report as of such date and, as such, has not yet determined whether it was in compliance with the Asset Coverage Ratio as of the same date, there is substantial risk that the Company will not be in compliance with the Asset Coverage Ratio as of such date. The failure to be in compliance with the Asset Coverage Ratio as of any date would constitute an event of default under the Term Loan, and at any time after the occurrence of an event of default under the Term Loan, the lenders thereunder may, among other options, declare any amounts outstanding thereunder immediately due and payable. Such an event of default would also constitute an event of default under the Revolving Facility. To the extent that the Company believes it would not be in compliance with the Asset Coverage Ratio, it would endeavor to work with the lenders under the Term Loan to provide for whatever waivers or amendments necessary to avoid an event of default thereunder, although there can be no assurances that the Company would be able to obtain such a waiver or amendment. |
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 9 Months Ended |
Sep. 30, 2020 | |
ASSET RETIREMENT OBLIGATIONS | |
ASSET RETIREMENT OBLIGATIONS | NOTE 4 — ASSET RETIREMENT OBLIGATIONS The Company’s asset retirement obligations represent the present value of estimated future costs associated with the plugging and abandonment of oil and gas wells, removal of equipment and facilities from leased acreage, and land restoration in accordance with applicable lease terms, local, state and federal laws. The following table summarizes the changes in the Company’s asset retirement obligations for the nine months ended September 30, 2020 (in thousands): For the nine months ended September 30, 2020 Balance, beginning of period $ 3,653 Additional liability incurred 54 Obligations on assets sold (14) Revisions in estimated cash flows 362 Accretion expense 299 Balance, end of period $ 4,354 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 5 — INCOME TAXES For the three and nine months ended September 30, 2020, income tax expense was calculated on a discrete quarterly basis, as the Company does not believe it can reliably estimate the annual effective tax rate for 2020. For the three and nine months ended September 30, 2019, income tax expense during interim periods was based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three and nine months ended September 30, 2020 and 2019 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to changes in the valuation allowance (which totaled $66.1 million for the nine months ended September 30, 2020). On March 27, 2020, President Trump signed into U.S. federal law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit (“AMT”) refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, the CARES Act, (i) eliminates the 80% of taxable income limitation by allowing corporate entities to fully utilize NOLs to offset taxable income in 2018, 2019 or 2020, (ii) allows for NOLs generated in 2018, 2019, or 2020 to be carried back 5 years , (iii) increases the net interest expense deduction limit to 50% of adjusted taxable income from 30% for tax years beginning January 1, 2019 and 2020, and (iv) allows taxpayers with AMT credits to claim a refund in 2019 for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as originally enacted by the Tax Cuts and Jobs Act in 2017. As a result of the CARES Act, we reclassified $1.2 million of expected AMT refunds from long-term to current during the nine months ended September 30, 2020. Subsequent to September 30, 2020, the Company collected $2.3 million of AMT refunds related to 2018. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment, including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. For the nine months ended September 30, 2020, the Company has concluded that a discrete quarterly calculation of income taxes is appropriate due to sensitivity of the annual effective tax rate to estimates of future income and uncertainty in future estimates due to the impacts of COVID-19. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers all available evidence (both positive and negative) in determining whether a valuation allowance is required. Such evidence includes the scheduled reversal of deferred tax liabilities, available taxes in carryback periods, projected future taxable income, and tax planning strategies in making this assessment. Judgment is required in considering the relative weight of negative and positive evidence. The Company continues to monitor facts and circumstances in the reassessment of the likelihood that operating loss carryforwards, credits, and other deferred tax assets will be utilized prior to their expiration. As a result, it may be determined that a deferred tax asset valuation allowance should be established or released. The Company increased its valuation allowance during the nine months ended September 30, 2020 as a result of current period taxable loss. Future increases or decreases in a deferred tax asset valuation allowance will impact net income through offsetting changes in income tax expense. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 6 — DERIVATIVE FINANCIAL INSTRUMENTS Commodity Derivatives The Company uses derivative instruments to mitigate volatility in commodity prices. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future cash flow from favorable price changes. The Company’s policy is to hedge, at the time the contract is entered into, at least 50% of its reasonably projected oil & gas production from the Proved Reserves classified as “Developed Producing Reserves” for a rolling 36 month period, but not more than 80% of the reasonably projected production from the Proved Reserves for a rolling 24 months and not more than 75% of the reasonably projected production from the Proved reserves for months 25 - 60 , as required by its Revolving Facility agreement. As of September 30, 2020, the Company had primarily entered into oil and gas swaps and collars and oil basis swaps. For collars, the Company receives the difference between the published index price and a floor price if the index price is below the floor price, or pays the difference between the ceiling price and the index price if the index price is above the ceiling price. No amounts are paid or received if the index price is between the floor and the ceiling prices. By using a collar, the minimum and maximum prices on the underlying production are fixed. The oil basis swaps are settled based on the difference between a published index price minus a fixed differential and the applicable local index price under which the underlying production is sold. By using a basis swap, the Company has fixed the differential between the published index price and certain of our physical pricing points. The basis swaps fix the price differential between the WTI NYMEX (Cushing Oklahoma) price and the WTI Houston Argus price. A summary of the Company’s commodity derivative positions as of September 30, 2020 follows: Oil Swaps - WTI (1) Year Volumes (Bbl) Weighted Average Price per Bbl 2020 - remaining 468,000 $ 52.97 2021 1,926,000 $ 49.36 Oil Collars - WTI Year Volumes (Bbl) Weighted Average Price per Bbl - Floor Weighted Average Price per Bbl - Ceiling 2020 - remaining 135,000 $ 55.00 $ 62.00 2021 216,000 $ 45.00 $ 65.00 2022 228,000 $ 40.00 $ 66.00 2023 160,000 $ 40.00 $ 63.10 Oil Three-Way Collars - WTI Year Volumes (Bbl) Weighted Average Price per Bbl - Floor Sold Weighted Average Price per Bbl - Floor Purchased Weighted Average Price per Bbl - Ceiling 2020 - remaining 75,000 $ 35.00 $ 50.00 $ 59.60 2021 300,000 $ 35.00 $ 50.00 $ 57.50 2022 300,000 $ 35.00 $ 50.00 $ 56.90 Propane Calls Sold - OPIS Propane Mont Belvieu - TET (2) Year Volumes (Bbl) Weighted Average Price per Bbl 2020 - remaining 54,000 $ 0.70 Oil Basis Swaps - WTI-HOU (3) Year Volumes (Bbl) Weighted Average Differential per Bbl 2020 - remaining 180,000 $ 2.98 2021 120,000 $ 2.53 Natural Gas Swaps Price Swaps - HH (4) Price Swaps - HSC (5) Year Volumes (MMBtu) Weighted Average Price per MMBtu Volumes (MMBtu) Weighted Average Price per MMBtu 2020 - remaining 300,000 $ 2.68 30,000 $ 2.53 2021 1,950,000 $ 2.70 240,000 $ 2.50 2022 840,000 $ 2.80 360,000 $ 2.54 2023 240,000 $ 2.64 The following is a list of index prices: (1) (2) Mont Belvieu – Texas Eastern Transmission (“TET”) propane as quoted by Oil Price Information Service (“OPIS”). (3) (4) (5) Interest Rate Derivatives The Company utilizes interest rate swaps to mitigate exposure to changes in market interest rates on the Company’s variable-rate indebtedness. A summary of the Company’s interest rate swaps as of September 30, 2020 follows (notional amount in thousands): Interest Rate Swaps Portion of Term Term Loan Effective Date Termination Date Notional Amount Fixed LIBOR Rate (1) Face Amount June 11, 2020 June 11, 2021 $ 125,000 3.072 % 50 % June 11, 2021 June 11, 2022 $ 125,000 3.061 % 50 % June 13, 2022 April 23, 2023 $ 125,000 3.042 % 50 % (1) % LIBOR floor, consistent with the structure of the Term Loan. Offsetting of Derivative Assets and Liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The following tables summarize the location and fair value amounts of all the Company’s derivative instruments in the consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the consolidated balance sheets (in thousands): September 30, 2020 Gross Gross Net Recognized Balance Sheet Recognized Amounts Fair Value Not Designated as ASC 815 Hedges Classification Assets/Liabilities Offset Assets/Liabilities DERIVATIVE ASSETS : Current: Commodity contracts Derivative assets $ 32,365 (3,867) $ 28,498 Interest rate swaps Derivative assets 2,584 (2,584) — Long-term (1): Commodity contracts Derivative assets — - — Interest rate swaps Derivative assets — - — Total derivative assets 34,949 28,498 DERIVATIVE LIABILITIES : Current: Commodity contracts Derivative liabilities 4,330 (3,867) 463 Interest rate swaps Derivative liabilities 9,355 (2,584) 6,771 Total current derivative liabilities 13,685 7,234 Long-term (1): Commodity contracts Derivative liabilities — - — Interest rate swaps Derivative liabilities — - — Total long-term derivative liabilities — — Total derivative liabilities 13,685 7,234 $ 21,264 $ 21,264 (1) As described under Revolving Facility in Note 3, the Company has classified all of its derivative contracts as current at September 30, 2020 due to cross-default provisions included in the counterparty contracts. December 31, 2019 Gross Gross Net Recognized Balance Sheet Recognized Amounts Fair Value Not Designated as ASC 815 Hedges Classification Assets/Liabilities Offset Assets/Liabilities DERIVATIVE ASSETS : Current: Commodity contracts Derivative assets $ 2,863 $ (1,648) $ 1,215 Interest rate swaps Derivative assets 8 (8) — Long-term: Commodity contracts Derivative assets 2,637 (1,759) 878 Interest rate swaps Derivative assets 377 (377) — Total derivative assets 5,885 2,093 DERIVATIVE LIABILITIES : Current: Commodity contracts Derivative liabilities 3,946 (1,648) 2,298 Interest rate swaps Derivative liabilities 2,104 (8) 2,096 Total current derivative liabilities 6,050 4,394 Long-term: Commodity contracts Derivative liabilities 1,761 (1,759) 2 Interest rate swaps Derivative liabilities 4,044 (377) 3,667 Total long-term derivative liabilities 5,805 3,669 Total derivative liabilities 11,855 8,063 $ (5,970) $ (5,970) Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income Not designated as ASC 815 Hedges Statement of Operations Classification 2020 2019 2020 2019 Commodity contracts Gain (loss) on commodity derivative financial instruments (7,193) 16,301 65,652 (6,755) Interest rate swap Interest expense (86) (578) (3,170) (4,604) $ (7,279) $ 15,723 $ 62,482 $ (11,359) Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk related contingent features. To minimize credit risk, most of the counterparties to the Company’s financial derivative contracts are lenders under the Company’s credit facilities and are high credit-quality financial institutions. These institutions are secured equally with the holders of Sundance’s bank debt, which eliminates the need to post collateral when Sundance is in a derivative liability position. The Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations. Refer to Note 7 for additional information regarding the valuation of derivative instruments. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 7 — FAIR VALUE MEASUREMENT The Company follows FASB ASC Topic 820 – Fair Value Measurement and Disclosure Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived from observable market data by correlation or other means. Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement. The financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets are grouped into the fair value hierarchy as follows (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Total Assets measured at fair value Derivative commodity contracts $ — $ 28,498 $ — $ 28,498 Liabilities measured at fair value Derivative commodity contracts — (463) — (463) Derivative interest rate swaps — (6,771) — (6,771) Total liabilities measured at fair value — (7,234) — (7,234) Net fair value $ — $ 21,264 $ — $ 21,264 December 31, 2019 Level 1 Level 2 Level 3 Total Assets measured at fair value Derivative commodity contracts $ — $ 2,093 $ — $ 2,093 Liabilities measured at fair value Derivative commodity contracts — (2,300) — (2,300) Derivative interest rate swaps — (5,763) — (5,763) Total liabilities measured at fair value — (8,063) — (8,063) Net fair value $ — $ (5,970) $ — $ (5,970) During the three and nine months ended September 30, 2020, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfer into or out of Level 3 fair value measurements. Measurement of Fair Value a) Derivatives The Company’s derivative instruments consist of commodity contracts (primarily swaps and collars) and interest rate swaps. The Company utilizes present value techniques and option-pricing models for valuing its derivatives. Inputs to these valuation techniques include published forward prices, volatilities, and credit risk considerations, including the incorporation of published interest rates and credit spreads. All of the significant inputs are observable, either directly or indirectly; therefore, the Company’s derivative instruments are included within the Level 2 fair value hierarchy. b) Credit Facilities As of September 30, 2020 and December 31, 2019, the Company had $250.0 million of principal debt outstanding on its Term Loan, respectively and $130.6 million and $115.0 million of principal debt outstanding on its Revolving Facility, respectively. Both credit facilities were amended in June 2020, and their carrying values approximate fair value as of September 30, 2020. c) Other Financial Instruments The carrying amounts of cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term nature. d) Non-recurring Fair Value Measurements The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities, including proved and unproved oil and gas properties. The Company estimated the fair value of its proved properties using the income approach analyses based on the net discounted future cash flows from the producing properties. Unobservable inputs (Level 3) included (1) estimates of future oil and gas production from the Company’s reserve reports, (2) commodity prices which were based on estimated as of September 30, 2020 (3) operating and development costs, (3) expected future development plans for the properties and (4) risk adjustment factors applied to proved undeveloped, probable and possible reserves and (5) discount rates representing the cost of capital. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 8 — STOCK-BASED COMPENSATION For the three and nine months ended September 30, 2020, the Company recognized stock-based compensation income of $3 thousand and expense $0.2 million, respectively, as compared to $0.1 million and $0.3 million, respectively, for the three and nine months ended September 30, 2019. The income in the three months ended September 30, 2020 resulted from a reversal of prior period expenses due to forfeitures from terminated employees. Prior to the Company’s Redomiciliation, SEAL issued restricted share units (“RSUs”) pursuant to its Long Term Incentive Plan (the “SEAL Plan”) to motivate management and employees to make decisions benefiting long-term value creation, retain management and employees and reward the achievement of the Company’s long-term goals. The RSUs are generally settled based on the achievement of certain goals established by the Company’s Compensation Committee and approved by the Company’s Board of Directors. In connection with the Redomiciliation in November 2019, Sundance Energy Inc. assumed SEAL’s obligations with respect to the settlement of the RSUs that were granted pursuant to the SEAL Plan prior to the effective date of the Redomiciliation. Accordingly, the RSUs will be settled in shares of common stock of Sundance Energy Inc. rather than ordinary shares of SEAL. Following the effective date of the Redomiciliation, no new awards or grants have been or will be made pursuant to the SEAL Plan. On July 28, 2020, the Company’s stockholders approved the Sundance Energy Inc. 2020 Equity Incentive Plan (the “2020 Equity Plan”). The 2020 Equity Plan allows the Company’s Board of Director’s to grant stock options, stock appreciation rights, restricted stock, dividend equivalents, RSUs, and other stock or cash-based awards to Company employees, consultants, and directors. An initial pool of 750,000 shares of the Company’s common stock was authorized for issuance under the 2020 Equity Plan. The following table summarizes the RSU activity from January 1, 2020 through September 30, 2020 and provides information for RSUs outstanding at the dates indicated. Weighted Average Fair Value at Number of RSUs Grant Date Outstanding at December 31, 2019 84,929 $ 22.97 Granted — $ — Vested (1) (496) $ 57.76 Forfeited (2) (24,294) $ 32.52 Outstanding at September 30, 2020 60,139 $ 18.72 (1) Vested shares are expected to be issued later during 2020. (2) Includes 7,880 shares that were forfeited as the market-based vesting conditions were not satisfied. |
PAYROLL PROTECTION PROGRAM
PAYROLL PROTECTION PROGRAM | 9 Months Ended |
Sep. 30, 2020 | |
PAYROLL PROTECTION PROGRAM | |
PAYROLL PROTECTION PROGRAM | NOTE 9 — PAYROLL PROTECTION PROGRAM In connection with the Payroll Protection Program (“PPP”) established by the CARES Act, the Company borrowed approximately $1.9 million on May 12, 2020. Under the PPP, the Company will be eligible for loan forgiveness up to the full amount of the PPP note. The forgiveness amount will be equal to the amount that the Company spends during the 24-week period beginning May 12, 2020 on payroll costs, plus payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020, up to certain limitations set forth in the regulations. The Company intends to apply for forgiveness of this indebtedness and believes it is probable it will comply with the loan forgiveness conditions. The Company has accounted for the PPP note as an in-substance government grant and has recorded $1.1 million and $1.9 million as a reduction general and administrative expenses during the three and nine months ended September 30, 2020. The receipt of the PPP note is included in operating cash flows on the consolidated statement of cash flows for the nine months ended September 30, 2020. In the unlikely event that the PPP loan were not to be forgiven, an event of default under the Revolving Facility or the Term Loan would cause a default under the PPP loan and acceleration of any amounts due. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 10 — EARNINGS PER SHARE The reconciliations between basic and diluted earnings (loss) per share are as follows (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income (loss) $ (356,574) $ 13,296 $ (332,103) $ (21,270) Weighted average shares: Weighted average common shares outstanding, basic 6,875,017 6,874,146 6,874,962 6,874,082 Diluted effect of incremental shares related to RSUs (1) — 261 — — Weighted average common shares outstanding, diluted 6,875,017 6,874,407 6,874,962 6,874,082 Net income (loss) per share: Basic $ (51.87) $ 1.93 $ (48.31) $ (3.09) Diluted $ (51.87) $ 1.93 $ (48.31) $ (3.09) (1) For the three and nine months ended September 30, 2020, the Company had a net loss and therefore the diluted earnings per share calculation for that period excludes anti-dilutive shares of nil and 2 shares of service-based awards. For the nine months ended September 30, 2019, the Company had a net loss and therefore the diluted earnings per share calculation for that period excludes anti-dilutive shares of 337 shares of service-based awards. |
OTHER BALANCE SHEET DETAIL
OTHER BALANCE SHEET DETAIL | 9 Months Ended |
Sep. 30, 2020 | |
OTHER BALANCE SHEET DETAIL | |
OTHER BALANCE SHEET DETAIL | NOTE 11 — OTHER BALANCE SHEET DETAIL The following table summarizes components of selected balance sheet accounts as of the dates presented (in thousands): September 30, December 31, 2020 2019 Accounts receivable trade and other Oil, natural gas and NGL sales (1) $ 6,196 $ 18,211 Joint interest owners 141 260 Commodity derivative receivables and other 4,609 4,342 Receivable due from buyer (Dimmit County oil and gas properties) (2) 4,207 4,207 $ 15,153 $ 27,020 Other property and equipment, net Owned property and equipment $ 3,850 $ 4,449 Finance lease right-of-use assets 975 933 Accumulated depreciation (3,346) (3,419) $ 1,479 $ 1,963 Accrued liabilities Oil and natural gas properties: Capital expenditures $ 2,007 $ 4,168 Re-fracture liability 297 764 Lease operating and workover expenses and other 2,785 7,393 Accrued interest payable 343 6,885 General and administrative expense 4,268 6,894 Finance lease liabilities 319 305 $ 10,019 $ 26,409 Other long-term liabilities Finance lease liabilities - non-current $ 237 $ 429 Re-fracture liability — 688 Other 15 32 $ 252 $ 1,149 (1) Receivables are from contracts with customers. (2) The Company sold its Dimmit County assets in October 2019 and has as a receivable due from the Buyer for post-closing adjustments. The Buyer has disputed certain items in the purchase and sale agreement (“PSA”) and the receivable is past due. The Buyer has commenced an audit of the post-closing statement (as allowed under the PSA). The Company does not believe the dispute has any merit, and will continue to pursue collection through legal channels. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 — COMMITMENTS AND CONTINGENCIES Leases The Company enters into leases as lessee to conduct its normal operations. At September 30, 2020, the Company had operating leases in place primarily for its use of compression equipment, land right of way and surface use arrangements, office facilities, and other production equipment and finance leases in place for its use of field vehicles and office equipment. Most of the Company’s leasing arrangements include extension and termination options, including evergreen provisions, all of which provide the Company flexibility in retaining the underlying facilities and equipment, as well as some protection from future price variability. The Company recognizes options to extend or terminate its leases as part of its assessment of the lease term, when it is reasonably certain to exercise the option. Some of the Company’s contracts have pricing that is variable within a range based on throughput, others have a set rate increase at predetermined intervals, and others are silent as to future increases or have a rate that is undefined for the variable components. The Company’s leases do not have future variable payments related to indices. For contracts with throughput provisions subject to a range, future payments have been included in the calculation of the lease liabilities at the contract minimum rate. Future payment increases for leases with set rate increases have been incorporated into the calculation of the lease liabilities, including the escalations. Future variable payments such as for movement or demobilization of the underlying leased asset have typically been excluded from the calculation of the lease liabilities unless they are determinable, and are expensed as incurred. The Company has applied judgment to determine the lease term for some of its lease contracts which include renewal or termination options. Certain of the Company’s leases include an “evergreen” provision that allows the contract term to continue on a month-to-month or year-to-year basis following expiration of the initial term included in the contract. The term of the lease is determined to be the non-cancelable period in the contract, plus the period beyond that cancellation period that the Company believes it is reasonably certain it will need the equipment for operational purposes. The Company’s lease obligations as of September 30, 2020 will mature as follows (in thousands): Operating Leases Finance Leases 2020 - remaining $ 4,750 $ 327 2021 3,531 223 2022 2,613 30 2023 1,311 1 2024 117 - Thereafter 1,447 - Total lease payments $ 13,769 $ 581 Less: Interest (1,538) (24) Total discounted lease payments $ 12,231 $ 557 Marketing, Gathering, Processing and Transportation Commitments In 2018, the Company entered into contracts with a large midstream company to gather, process, transport and market oil, NGL and natural gas production for certain acquired properties. The contracts contain a Minimum Revenue Commitment (“MRC”) that requires payment of minimum annual fees for those services. Fixed fees are expensed as incurred and settled with the purchaser on a monthly basis. If, at the end of each calendar year, the Company fails to satisfy the MRC under any of the contracts, the Company is required to pay a shortfall. If the volumes and associated fees under a contract exceed the MRC for any contractual year, the overage can be applied to reduce the commitment under that contract, if any, in the following year. The total remaining MRC by fiscal year are as follows (in thousands): 2020 - remaining 2021 2022 Total Hydrocarbon gathering and handling agreement $ 9,420 $ 13,737 $ 6,453 $ 29,610 Crude oil and condensate purchase agreements 1,773 7,386 4,173 13,332 Gas processing agreement - - - - Gas transportation agreements - - - - Total MRC $ 11,193 $ 21,123 $ 10,626 $ 42,942 Current production from the producing wells dedicated under these agreements is not sufficient to meet the MRC for the hydrocarbon gathering and handling agreement and crude oil and condensate purchase agreements. Based on the Company’s 2020 development plan, it expects to have a shortfall under those agreements for the year ending December 31, 2020. The Company expects that any shortfall incurred specifically under the crude oil and condensate purchase agreements will be offset by overages generated from the prior year. The Company’s ability to meet this commitment in future periods will depend on the pace of development through the term of the contract. Litigation The Company is involved in various legal proceedings and claims in the ordinary course of business, including mechanic’s liens and contract disputes, and recognizes a contingent liability when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. While the outcome of these lawsuits and claims cannot be predicted with certainty, it is the opinion of management that, as of the date of this report, it is not probable that these claims and litigation will have a material adverse impact on the Company. Accordingly, no material amounts for loss contingencies associated with litigation, claims or assessments have been accrued as of September 30, 2020. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 13 — SUBSEQUENT EVENTS On October 16 and October 30, 2020, the Company entered into the fourth and fifth amendments to the Term Loan, respectively. Refer to Note 3 for additional information. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
BASIS OF PRESENTATION | |
Basis of Preparation | Basis of Presentation Prior to the Redomiciliation, SEAL reported its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”). Following the Redomiciliation, the Company retroactively transitioned to accounting principles generally accepted in the United States of America (“GAAP”) and applied GAAP retrospectively for all prior periods presented. The accompanying unaudited financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, certain disclosures required by accounting principles generally accepted in the United States and normally included in Annual Reports on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies, and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2019. Except as disclosed herein The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of September 30, 2020 and our consolidated results of operations for the three and nine months ended September 30, 2020 and 2019. |
Going Concern | Going Concern The accompanying condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The market price for oil, natural gas, and NGLs decreased significantly beginning in the first quarter of 2020, continuing into the third quarter of 2020. As described in Note 3 in greater detail, the Company is required to meet certain financial and non-financial covenants as a condition to its credit facilities. Under the Company’s second lien term loan (the “Term Loan”), the Company is required to maintain an Asset Coverage Ratio of not less than ) based upon the forward month prices quoted on the NYMEX, adjusted for basis differentials or premiums and transportation costs and to reflect the Company’s commodity hedging agreements then in effect to Total Debt. Under the Company’s senior secured revolving credit facility (the “Revolving Facility”) it is required to maintain a (i) Total Debt to EBITDA Ratio of less than as of the last day of any fiscal quarter. Both the value of the Company’s oil and gas reserves, (including “Total Proved Reserves” as described in the Term Loan agreement) and the Company’s EBITDA are highly sensitive to commodity prices and the Company’s ongoing development of its properties. A breach of any covenant in the Company’s credit agreements will result in default or cross-default under the Company’s Term Loan and Revolving Facility, after any applicable grace period, which could result in acceleration of the repayment of amounts outstanding under the credit facilities to the Company’s lenders. The Company regularly enters into commodity derivative contracts to protect the cash flows associated with the Company’s proved developed producing wells and to provide supplemental liquidity to mitigate decreases in revenue due to reductions in commodity prices. Based on the Company’s historical experience, in periods of sustained low commodity prices, the prevailing market price for oil and gas services has also decreased, including the types of costs included in the Company’s lease operating expenses, drilling costs, completion costs, and costs to equip its wells. Beginning in the first quarter of 2020, the Company renegotiated pricing with a number of its vendors and entered into contractual arrangements with drilling and completion service providers. As a result, the Company realized lower drilling and completion costs on 2020 development relative to the costs incurred in 2019 and the assumed costs in the Company’s 2019 reserve report. The Company also changed its field operating procedures in response to the material drop in oil prices which further reduces its cost structure relative to those realized in 2019 and those used in the Company’s 2019 reserve report. Additionally, in early May 2020, the Company made reductions of general and administrative costs, including implementing a reduction in workforce and certain salary reductions. Commodity hedging that the Company currently has in place, combined with cost reductions are expected to reduce the impact of recent commodity price declines. The requirement for the Company to comply with the June 30, 2020 Asset Coverage Ratio covenant was removed from the Term Loan agreement; however it is unlikely that the Company would have been able to meet the covenant as of June 30, 2020. The Asset Coverage Ratio covenant continues to apply for periods subsequent to June 30, 2020. At September 30, 2020, the Company was in breach of the Total Debt to EBITDA Ratio, as well as the Current Ratio under the Revolving Facility, as a result of reclassifying it outstanding debt from long-term to current, which is an event of default, and allows the lenders to call the Company’s Revolving Facility and Term Loan (due to cross-default provisions) to be immediately due and payable. The Company is currently working with its lenders to address the status of its compliance with the covenants under the Term Loan and the Revolving Facility. In the event that repayment of some or all of the amounts outstanding under its credit facilities are accelerated and become immediately due and payable, the Company does not have sufficient liquidity to repay such outstanding amounts. These conditions and events raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date of the issuance of financial statements. Management is pursuing, or has pursued, several initiatives to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, which include the following: ● Materially limiting development activity to reduce capital expenditures and continuing to renegotiate pricing with a number of its operating expenditure vendors; ● Pursuing further changes to its cost structure in response to the material drop in oil prices; ● Pursuing additional costs savings with its vendors and reductions of other general and administrative costs; and ● Exploring transactions with the Company’s creditors to optimize its balance sheet, including exploring ways to obtain additional capital, which may include asset sales, public or private issuance of debt or equity, or any combination thereof. The Company is working with its Revolving Facility lenders to obtain a waiver of these events of default, however, there is no guarantee that the Company’s Revolving Facility lenders will agree to waive these events of default or potential events of default in the future. There can be no assurances that the Company will be successful in any restructuring of existing debt obligations or in obtaining capital sufficient to fund the refinancing of its outstanding indebtedness or to provide sufficient liquidity to meet the outstanding debt obligations of the Company, if repayment of its credit facilities is accelerated. If the Company is unsuccessful in its efforts to restructure and secure new financing, it may be necessary for the Company to seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, or an involuntary petition for bankruptcy may be filed against it. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Items subject to such estimates and assumptions include (i) oil and natural gas reserves; (ii) impairment tests of long-lived assets; (iii) depreciation, depletion and amortization; (iv) asset retirement obligations; (v) income taxes; (vi) accrued liabilities; (vii) valuation of derivative instruments; and (ix) accrued revenue and related receivables. Although management believes these estimates are reasonable, actual results could differ from these estimates. Further, these estimates and other factors, including those outside of the Company’s control, such as the impact of lower commodity prices, may have a significant negative impact to the Company’s business, financial condition, results of operations and cash flows. |
Customer Concentration Risk | Customer Concentration Risk During the nine months ended September 30, 2020, the Company had two customers that each accounted for 10% or more of the Company’s total oil, NGL and natural gas sales (67% and 21% , respectively). The Company does not believe the loss of any single purchaser would materially impact the Company’s operating results because oil, natural gas, and NGLs are commodities for which there are a large number of potential buyers. Because of the adequacy of the infrastructure to transport oil and natural gas in the areas in which the Company operates, if the Company were to lose one or more customers, management believes that it could readily procure substitute or additional customers. |
Recently Issued and Adopted Accounting Standards | Recently Issued and Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which provides a model, known as the current expected credit loss model (“CECL model”), to estimate the expected lifetime credit loss on financial assets, including trade and other receivables. The Company adopted the ASU effective January 1, 2020, and it did not have a material impact on the Company’s consolidated financial statements as the Company does not have a history of material credit losses. The Company continues to monitor the credit risk from trade receivable counterparties to determine if expected credit losses may become material. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure framework - Changes to the Disclosure Requirements for Fair Value Measurement, which removes or modifies current fair value disclosures and adds additional disclosures to improve effectiveness The Company adopted this ASU on January 1, 2020, and the adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 was issued to reduce the complexity of accounting for income taxes including requirements related to (i) the intraperiod tax allocation exception to the incremental approach; (ii) interim-period accounting for enacted changes in tax laws; and (iii) the year-to-date loss limitation in interim-period tax accounting. The guidance is to be applied using a prospective method, excluding amendments related to franchise taxes, which should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company does not expect adoption of ASU 2019-12 to have a material impact on the Company’s consolidated financial statements or disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 was issued to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. . The Company is evaluating the options provided by ASU 2020-04 and |
OIL AND GAS PROPERTIES (Tables)
OIL AND GAS PROPERTIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
OIL AND GAS PROPERTIES | |
Schedule of oil and gas producing activities | Net capitalized costs related to the Company’s oil and gas producing activities as of September 30, 2020 and December 31, 2019 are as follows (in thousands): September 30, December 31, 2020 2019 Oil and gas properties, successful efforts method: Unproved $ 24,954 $ 25,037 Proved 795,774 1,090,774 Work in progress 2,914 7,097 823,642 1,122,908 Accumulated depletion, depreciation and amortization (443,094) (379,961) Oil and gas properties, net $ 380,548 $ 742,947 |
Schedule of fair value and resulting impairment expense | Fair value and resulting impairment expense recognized in the consolidated statement of operations for the three and nine months ended September 30, 2020 is as follows (in thousands): At September 30, 2020 Carrying costs, net Fair Value Impairment Proved oil and gas properties 687,397 355,594 331,803 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LONG-TERM DEBT | |
Summary of long-term debt | The following is a summary of long-term debt, including the current portion, as of September 30, 2020 and December 31, 2019 (in thousands): September 30, December 31, 2020 2019 Revolving Facility $ 130,600 $ 115,000 Term Loan 250,000 250,000 Total principal 380,600 365,000 Accrued paid in kind interest 1,711 — Unamortized debt issuance costs on Term Loan (1) (9,277) (11,510) Total long-term debt 373,034 353,490 Less: current portion of long-term debt (2) (373,034) — Total long-term debt, net of current portion $ — $ 353,490 (1) Although the Company’s debt was classified as current at September 30, 2020, the amortization period for the Company’s deferred debt issuance costs remains as the contractual term of the debt. (2) The Company has reclassified its long-term debt as a current liability as of September 30, 2020 as it was not in compliance with its Leverage Ratio covenant under its Revolving Facility, which constitutes an event of default under the Revolving Facility and a cross default under the Term Loan. The reclassification of long-term debt to current debt also results in the Company breaching the required Current Ratio. See Revolving Facility below for more information. |
ASSET RETIREMENT OBLIGATIONS (T
ASSET RETIREMENT OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ASSET RETIREMENT OBLIGATIONS | |
Schedule of reconciliation of the Company's asset retirement obligations | The following table summarizes the changes in the Company’s asset retirement obligations for the nine months ended September 30, 2020 (in thousands): For the nine months ended September 30, 2020 Balance, beginning of period $ 3,653 Additional liability incurred 54 Obligations on assets sold (14) Revisions in estimated cash flows 362 Accretion expense 299 Balance, end of period $ 4,354 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Summary of commodity derivative positions | A summary of the Company’s commodity derivative positions as of September 30, 2020 follows: Oil Swaps - WTI (1) Year Volumes (Bbl) Weighted Average Price per Bbl 2020 - remaining 468,000 $ 52.97 2021 1,926,000 $ 49.36 Oil Collars - WTI Year Volumes (Bbl) Weighted Average Price per Bbl - Floor Weighted Average Price per Bbl - Ceiling 2020 - remaining 135,000 $ 55.00 $ 62.00 2021 216,000 $ 45.00 $ 65.00 2022 228,000 $ 40.00 $ 66.00 2023 160,000 $ 40.00 $ 63.10 Oil Three-Way Collars - WTI Year Volumes (Bbl) Weighted Average Price per Bbl - Floor Sold Weighted Average Price per Bbl - Floor Purchased Weighted Average Price per Bbl - Ceiling 2020 - remaining 75,000 $ 35.00 $ 50.00 $ 59.60 2021 300,000 $ 35.00 $ 50.00 $ 57.50 2022 300,000 $ 35.00 $ 50.00 $ 56.90 Propane Calls Sold - OPIS Propane Mont Belvieu - TET (2) Year Volumes (Bbl) Weighted Average Price per Bbl 2020 - remaining 54,000 $ 0.70 Oil Basis Swaps - WTI-HOU (3) Year Volumes (Bbl) Weighted Average Differential per Bbl 2020 - remaining 180,000 $ 2.98 2021 120,000 $ 2.53 Natural Gas Swaps Price Swaps - HH (4) Price Swaps - HSC (5) Year Volumes (MMBtu) Weighted Average Price per MMBtu Volumes (MMBtu) Weighted Average Price per MMBtu 2020 - remaining 300,000 $ 2.68 30,000 $ 2.53 2021 1,950,000 $ 2.70 240,000 $ 2.50 2022 840,000 $ 2.80 360,000 $ 2.54 2023 240,000 $ 2.64 The following is a list of index prices: (1) (2) Mont Belvieu – Texas Eastern Transmission (“TET”) propane as quoted by Oil Price Information Service (“OPIS”). (3) (4) (5) |
Summary of interest rate swaps | Interest Rate Swaps Portion of Term Term Loan Effective Date Termination Date Notional Amount Fixed LIBOR Rate (1) Face Amount June 11, 2020 June 11, 2021 $ 125,000 3.072 % 50 % June 11, 2021 June 11, 2022 $ 125,000 3.061 % 50 % June 13, 2022 April 23, 2023 $ 125,000 3.042 % 50 % (1) % LIBOR floor, consistent with the structure of the Term Loan. |
Summary of derivative instruments offset in the consolidated balance sheets | The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The following tables summarize the location and fair value amounts of all the Company’s derivative instruments in the consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the consolidated balance sheets (in thousands): September 30, 2020 Gross Gross Net Recognized Balance Sheet Recognized Amounts Fair Value Not Designated as ASC 815 Hedges Classification Assets/Liabilities Offset Assets/Liabilities DERIVATIVE ASSETS : Current: Commodity contracts Derivative assets $ 32,365 (3,867) $ 28,498 Interest rate swaps Derivative assets 2,584 (2,584) — Long-term (1): Commodity contracts Derivative assets — - — Interest rate swaps Derivative assets — - — Total derivative assets 34,949 28,498 DERIVATIVE LIABILITIES : Current: Commodity contracts Derivative liabilities 4,330 (3,867) 463 Interest rate swaps Derivative liabilities 9,355 (2,584) 6,771 Total current derivative liabilities 13,685 7,234 Long-term (1): Commodity contracts Derivative liabilities — - — Interest rate swaps Derivative liabilities — - — Total long-term derivative liabilities — — Total derivative liabilities 13,685 7,234 $ 21,264 $ 21,264 (1) As described under Revolving Facility in Note 3, the Company has classified all of its derivative contracts as current at September 30, 2020 due to cross-default provisions included in the counterparty contracts. December 31, 2019 Gross Gross Net Recognized Balance Sheet Recognized Amounts Fair Value Not Designated as ASC 815 Hedges Classification Assets/Liabilities Offset Assets/Liabilities DERIVATIVE ASSETS : Current: Commodity contracts Derivative assets $ 2,863 $ (1,648) $ 1,215 Interest rate swaps Derivative assets 8 (8) — Long-term: Commodity contracts Derivative assets 2,637 (1,759) 878 Interest rate swaps Derivative assets 377 (377) — Total derivative assets 5,885 2,093 DERIVATIVE LIABILITIES : Current: Commodity contracts Derivative liabilities 3,946 (1,648) 2,298 Interest rate swaps Derivative liabilities 2,104 (8) 2,096 Total current derivative liabilities 6,050 4,394 Long-term: Commodity contracts Derivative liabilities 1,761 (1,759) 2 Interest rate swaps Derivative liabilities 4,044 (377) 3,667 Total long-term derivative liabilities 5,805 3,669 Total derivative liabilities 11,855 8,063 $ (5,970) $ (5,970) |
Summary of derivative instruments in statement of operations | Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income Not designated as ASC 815 Hedges Statement of Operations Classification 2020 2019 2020 2019 Commodity contracts Gain (loss) on commodity derivative financial instruments (7,193) 16,301 65,652 (6,755) Interest rate swap Interest expense (86) (578) (3,170) (4,604) $ (7,279) $ 15,723 $ 62,482 $ (11,359) |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE MEASUREMENT | |
Schedule of balance sheets grouped into the fair value hierarchy | The financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets are grouped into the fair value hierarchy as follows (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Total Assets measured at fair value Derivative commodity contracts $ — $ 28,498 $ — $ 28,498 Liabilities measured at fair value Derivative commodity contracts — (463) — (463) Derivative interest rate swaps — (6,771) — (6,771) Total liabilities measured at fair value — (7,234) — (7,234) Net fair value $ — $ 21,264 $ — $ 21,264 December 31, 2019 Level 1 Level 2 Level 3 Total Assets measured at fair value Derivative commodity contracts $ — $ 2,093 $ — $ 2,093 Liabilities measured at fair value Derivative commodity contracts — (2,300) — (2,300) Derivative interest rate swaps — (5,763) — (5,763) Total liabilities measured at fair value — (8,063) — (8,063) Net fair value $ — $ (5,970) $ — $ (5,970) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
STOCK-BASED COMPENSATION | |
Schedule of restricted share units | Weighted Average Fair Value at Number of RSUs Grant Date Outstanding at December 31, 2019 84,929 $ 22.97 Granted — $ — Vested (1) (496) $ 57.76 Forfeited (2) (24,294) $ 32.52 Outstanding at September 30, 2020 60,139 $ 18.72 (1) Vested shares are expected to be issued later during 2020. (2) Includes 7,880 shares that were forfeited as the market-based vesting conditions were not satisfied. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
Schedule of reconciliation between basic and diluted earnings per share | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income (loss) $ (356,574) $ 13,296 $ (332,103) $ (21,270) Weighted average shares: Weighted average common shares outstanding, basic 6,875,017 6,874,146 6,874,962 6,874,082 Diluted effect of incremental shares related to RSUs (1) — 261 — — Weighted average common shares outstanding, diluted 6,875,017 6,874,407 6,874,962 6,874,082 Net income (loss) per share: Basic $ (51.87) $ 1.93 $ (48.31) $ (3.09) Diluted $ (51.87) $ 1.93 $ (48.31) $ (3.09) (1) For the three and nine months ended September 30, 2020, the Company had a net loss and therefore the diluted earnings per share calculation for that period excludes anti-dilutive shares of nil and 2 shares of service-based awards. For the nine months ended September 30, 2019, the Company had a net loss and therefore the diluted earnings per share calculation for that period excludes anti-dilutive shares of 337 shares of service-based awards. |
OTHER BALANCE SHEET DETAIL (Tab
OTHER BALANCE SHEET DETAIL (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
OTHER BALANCE SHEET DETAIL | |
Summary of components of selected balance sheet accounts | The following table summarizes components of selected balance sheet accounts as of the dates presented (in thousands): September 30, December 31, 2020 2019 Accounts receivable trade and other Oil, natural gas and NGL sales (1) $ 6,196 $ 18,211 Joint interest owners 141 260 Commodity derivative receivables and other 4,609 4,342 Receivable due from buyer (Dimmit County oil and gas properties) (2) 4,207 4,207 $ 15,153 $ 27,020 Other property and equipment, net Owned property and equipment $ 3,850 $ 4,449 Finance lease right-of-use assets 975 933 Accumulated depreciation (3,346) (3,419) $ 1,479 $ 1,963 Accrued liabilities Oil and natural gas properties: Capital expenditures $ 2,007 $ 4,168 Re-fracture liability 297 764 Lease operating and workover expenses and other 2,785 7,393 Accrued interest payable 343 6,885 General and administrative expense 4,268 6,894 Finance lease liabilities 319 305 $ 10,019 $ 26,409 Other long-term liabilities Finance lease liabilities - non-current $ 237 $ 429 Re-fracture liability — 688 Other 15 32 $ 252 $ 1,149 (1) Receivables are from contracts with customers. (2) The Company sold its Dimmit County assets in October 2019 and has as a receivable due from the Buyer for post-closing adjustments. The Buyer has disputed certain items in the purchase and sale agreement (“PSA”) and the receivable is past due. The Buyer has commenced an audit of the post-closing statement (as allowed under the PSA). The Company does not believe the dispute has any merit, and will continue to pursue collection through legal channels. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of operating lease obligations | The Company’s lease obligations as of September 30, 2020 will mature as follows (in thousands): Operating Leases Finance Leases 2020 - remaining $ 4,750 $ 327 2021 3,531 223 2022 2,613 30 2023 1,311 1 2024 117 - Thereafter 1,447 - Total lease payments $ 13,769 $ 581 Less: Interest (1,538) (24) Total discounted lease payments $ 12,231 $ 557 |
Schedule of finance lease obligations | The Company’s lease obligations as of September 30, 2020 will mature as follows (in thousands): Operating Leases Finance Leases 2020 - remaining $ 4,750 $ 327 2021 3,531 223 2022 2,613 30 2023 1,311 1 2024 117 - Thereafter 1,447 - Total lease payments $ 13,769 $ 581 Less: Interest (1,538) (24) Total discounted lease payments $ 12,231 $ 557 |
Schedule of the commitments that have initial or remaining noncancelable terms in excess of one year | If the volumes and associated fees under a contract exceed the MRC for any contractual year, the overage can be applied to reduce the commitment under that contract, if any, in the following year. The total remaining MRC by fiscal year are as follows (in thousands): 2020 - remaining 2021 2022 Total Hydrocarbon gathering and handling agreement $ 9,420 $ 13,737 $ 6,453 $ 29,610 Crude oil and condensate purchase agreements 1,773 7,386 4,173 13,332 Gas processing agreement - - - - Gas transportation agreements - - - - Total MRC $ 11,193 $ 21,123 $ 10,626 $ 42,942 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - $ / shares | Nov. 26, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Conversion of Stock [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Total Proved Reserves, PV percentage | 9.00% | ||
Term Loan | Minimum | |||
Conversion of Stock [Line Items] | |||
Asset Coverage Ratio | 1.50 | ||
Revolving Facility | Minimum | |||
Conversion of Stock [Line Items] | |||
Current Ratio | 1 | ||
Revolving Facility | Maximum | |||
Conversion of Stock [Line Items] | |||
Leverage Ratio | 3.5 | ||
Common stock | |||
Conversion of Stock [Line Items] | |||
Number of shares issued for 100 shares holding | 1 | ||
Number of shares converted into one share | 100 |
BASIS OF PRESENTATION - Risks a
BASIS OF PRESENTATION - Risks and Uncertainties (Details) - Sales - Customer concentration risk - Oil, natural gas and NGL | 9 Months Ended |
Sep. 30, 2020customer | |
Concentration Risk [Line Items] | |
Number of major customers | 2 |
Purchaser A | |
Concentration Risk [Line Items] | |
Percentages by purchaser that accounted for 10% or more, Company's oil, NGL and natural gas sales | 67.00% |
Purchaser B | |
Concentration Risk [Line Items] | |
Percentages by purchaser that accounted for 10% or more, Company's oil, NGL and natural gas sales | 21.00% |
OIL AND GAS PROPERTIES (Details
OIL AND GAS PROPERTIES (Details) - USD ($) $ in Thousands | Jun. 12, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Oil and gas properties, successful efforts method: | ||||||
Unproved | $ 24,954 | $ 24,954 | $ 25,037 | |||
Proved | 795,774 | 795,774 | 1,090,774 | |||
Work in progress | 2,914 | 2,914 | 7,097 | |||
Total | 823,642 | 823,642 | 1,122,908 | |||
Accumulated depletion, depreciation and amortization | (443,094) | (443,094) | (379,961) | |||
Total oil and gas properties, net | 380,548 | 380,548 | $ 742,947 | |||
Capitalized interest | 200 | $ 600 | 600 | $ 2,000 | ||
Impairment expense | $ 331,877 | 907 | 331,877 | 9,990 | ||
Impairment expenses of proved oil and gas properties | $ 331,803 | |||||
Cooper Basin | ||||||
Oil and gas properties, successful efforts method: | ||||||
Accrued expenses on exploratory drilling | $ 3,700 | |||||
Settlement amount for accrued expenses on exploratory drilling | 900 | |||||
Gain on conveyance | $ 2,800 | |||||
Proved Oil And Gas Eagle Ford Formation assets located in Dimmit County, Texas | ||||||
Oil and gas properties, successful efforts method: | ||||||
Impairment expense | $ 900 | $ 10,000 |
OIL AND GAS PROPERTIES - Fair v
OIL AND GAS PROPERTIES - Fair value and resulting impairment expense (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
OIL AND GAS PROPERTIES | |
Proved oil and gas properties, Carrying costs, net | $ 687,397 |
Proved oil and gas properties, Fair Value | 355,594 |
Proved oil and gas properties, Impairment | $ 331,803 |
LONG-TERM DEBT - Summary of lon
LONG-TERM DEBT - Summary of long-term debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Principal | $ 380,600 | $ 365,000 |
Accrued paid in kind interest | 1,711 | |
Total long-term debt | 373,034 | 353,490 |
Less: current portion of long-term debt | (373,034) | |
Total long-term debt, net of current portion | 353,490 | |
Revolving Facility | ||
Debt Instrument [Line Items] | ||
Principal | 130,600 | 115,000 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Principal | 250,000 | 250,000 |
Unamortized debt issuance costs | $ (9,277) | $ (11,510) |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) $ in Thousands | Jun. 30, 2020USD ($) | May 31, 2020USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Oct. 31, 2020 | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($)installment | Jan. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Apr. 23, 2018USD ($) |
Debt Instrument [Line Items] | |||||||||||
Current borrowing capacity | $ 87,500 | ||||||||||
Maximum borrowing capacity | 250,000 | ||||||||||
Number of installments | installment | 5 | ||||||||||
Write-off of deferred debt issuance costs | $ 1,199 | ||||||||||
Available borrowing capacity | $ 21,700 | $ 21,700 | $ 21,700 | ||||||||
Face amount | $ 250,000 | ||||||||||
Total Proved Reserves, PV percentage | 9.00% | ||||||||||
Percentage of excess cash flow used to pay down Revolving Facility | 50.00% | ||||||||||
Capital expenditure limitation | 5,000 | ||||||||||
General and administrative expense limitation | 3,000 | $ 3,000 | |||||||||
Subsequent event | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Capital expenditure limitation | $ 11,100 | ||||||||||
General and administrative expense limitation | $ 3,600 | ||||||||||
Revolving Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Maximum borrowing capacity | $ 170,000 | $ 210,000 | 168,600 | $ 170,000 | 168,600 | $ 168,600 | $ 500,000 | $ 250,000 | |||
Borrowing base | 210,000 | ||||||||||
Elected borrowing commitments | $ 190,000 | ||||||||||
Write-off of deferred debt issuance costs | 1,100 | ||||||||||
Legal and financing fees | 1,000 | 1,000 | 1,000 | ||||||||
Derivative positions for proceeds | $ 1,400 | ||||||||||
Percentage of proceeds from transactions to repay line of credit | 90.00% | ||||||||||
Line of credit outstanding | 130,600 | 130,600 | 130,600 | ||||||||
Letters of credit outstanding | $ 16,400 | $ 16,400 | $ 16,400 | ||||||||
Interest rate | 3.40% | 3.40% | 3.40% | ||||||||
Revolving Facility | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stated rate | 2.50% | 2.50% | |||||||||
Current Ratio | 1 | ||||||||||
Interest Coverage Ratio | 1.5 | ||||||||||
Revolving Facility | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stated rate | 3.50% | 3.50% | |||||||||
Leverage Ratio | 3.5 | ||||||||||
Revolving Facility | LIBOR | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, variable rate | 2.50% | ||||||||||
Revolving Facility | LIBOR | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, variable rate | 3.50% | ||||||||||
Term Loan | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, variable rate | 8.00% | 10.00% | |||||||||
Interest rate | 11.00% | 11.00% | 11.00% | ||||||||
Interest payable-in-kind | 2.00% | 2.00% | |||||||||
Term Loan | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest Coverage Ratio | 1.5 | ||||||||||
Asset Coverage Ratio | 1.50 | ||||||||||
Term Loan | Floor | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stated rate | 1.00% | 1.00% | 1.00% | ||||||||
Term Loan | LIBOR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, variable rate | 8.00% |
ASSET RETIREMENT OBLIGATIONS (D
ASSET RETIREMENT OBLIGATIONS (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |
Balance, beginning of year | $ 3,653 |
Additional liability incurred | 54 |
Obligations on assets sold | (14) |
Revisions in estimated cash flows | 362 |
Accretion expense | 299 |
Balance, end of year | $ 4,354 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Oct. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Federal statutory rate | 21.00% | 21.00% | 21.00% | 21.00% | ||
Change in valuation allowance | $ 66.1 | |||||
Prior To The CARES Act | Tax years beginning January 1, 2019 and 2020 | ||||||
Net interest expense deduction limit as a percentage of adjusted taxable income | 30.00% | |||||
The CARES Act | ||||||
Reclassification of long term AMT credit refund to current | $ 1.2 | $ 1.2 | ||||
The CARES Act | Subsequent event | ||||||
Proceeds from Prior Period Alternate Minimum Tax Credit Refund | $ 2.3 | |||||
COVID-19 pandemic | The CARES Act | ||||||
Percentage of taxable income limitation eliminated to allow companies to fully utilize NOLs | 80.00% | |||||
NOLs allowed to be carried back, term | 5 years | |||||
COVID-19 pandemic | The CARES Act | Tax years beginning January 1, 2019 and 2020 | ||||||
Net interest expense deduction limit as a percentage of adjusted taxable income | 50.00% |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) - Revolving Facility | 9 Months Ended |
Sep. 30, 2020 | |
Projected Period Thirty Six Months | |
Derivative | |
Hedging period of proved reserves classified as Developed Producing Reserves | 36 months |
Projected Period Thirty Seven to Sixty Months | |
Derivative | |
Hedging period of proved reserves classified as Developed Producing Reserves | 24 months |
Maximum | Projected Period Thirty Six Months | |
Derivative | |
Hedging percentage of reasonably projected oil and gas production | 80.00% |
Maximum | Projected Period Thirty Seven to Sixty Months | |
Derivative | |
Hedging percentage of reasonably projected oil and gas production | 75.00% |
Hedging period of proved reserves classified as Developed Producing Reserves | 60 months |
Minimum | Projected Period Thirty Six Months | |
Derivative | |
Hedging percentage of reasonably projected oil and gas production | 50.00% |
Minimum | Projected Period Thirty Seven to Sixty Months | |
Derivative | |
Hedging period of proved reserves classified as Developed Producing Reserves | 25 months |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Derivative Positions (Details) | 9 Months Ended |
Sep. 30, 2020MMBTU$ / bbl$ / MMBTUbbl | |
Propane | 2020 - remaining | |
Derivative | |
Volumes (Bbl) | bbl | 54,000 |
Weighted Average Price per Bbl, MMBtu | 0.70 |
WTI - HOU | 2020 - remaining | |
Derivative | |
Volumes (Bbl) | bbl | 180,000 |
Weighted Average Price per Bbl, MMBtu | 2.98 |
WTI - HOU | 2021 | |
Derivative | |
Volumes (Bbl) | bbl | 120,000 |
Weighted Average Price per Bbl, MMBtu | 2.53 |
HH | 2020 - remaining | |
Derivative | |
Volumes (MMBtu) | MMBTU | 300,000 |
Weighted Average Price per Bbl, MMBtu | $ / MMBTU | 2.68 |
HH | 2021 | |
Derivative | |
Volumes (MMBtu) | MMBTU | 1,950,000 |
Weighted Average Price per Bbl, MMBtu | $ / MMBTU | 2.70 |
HH | 2022 | |
Derivative | |
Volumes (MMBtu) | MMBTU | 840,000 |
Weighted Average Price per Bbl, MMBtu | $ / MMBTU | 2.80 |
HSC | 2020 - remaining | |
Derivative | |
Volumes (MMBtu) | MMBTU | 30,000 |
Weighted Average Price per Bbl, MMBtu | $ / MMBTU | 2.53 |
HSC | 2021 | |
Derivative | |
Volumes (MMBtu) | MMBTU | 240,000 |
Weighted Average Price per Bbl, MMBtu | $ / MMBTU | 2.50 |
HSC | 2022 | |
Derivative | |
Volumes (MMBtu) | MMBTU | 360,000 |
Weighted Average Price per Bbl, MMBtu | $ / MMBTU | 2.54 |
HSC | 2023 | |
Derivative | |
Volumes (MMBtu) | MMBTU | 240,000 |
Weighted Average Price per Bbl, MMBtu | $ / MMBTU | 2.64 |
Swaps | WTI | 2020 - remaining | |
Derivative | |
Volumes (Bbl) | bbl | 468,000 |
Weighted Average Price per Bbl, MMBtu | 52.97 |
Swaps | WTI | 2021 | |
Derivative | |
Volumes (Bbl) | bbl | 1,926,000 |
Weighted Average Price per Bbl, MMBtu | 49.36 |
Collars [Member] | WTI | 2020 - remaining | |
Derivative | |
Volumes (Bbl) | bbl | 135,000 |
Weighted Average Price per Bbl, MMBtu - Floor | 55 |
Weighted Average Price per Bbl, MMBtu - Ceiling | 62 |
Collars [Member] | WTI | 2021 | |
Derivative | |
Volumes (Bbl) | bbl | 216,000 |
Weighted Average Price per Bbl, MMBtu - Floor | 45 |
Weighted Average Price per Bbl, MMBtu - Ceiling | 65 |
Collars [Member] | WTI | 2022 | |
Derivative | |
Volumes (Bbl) | bbl | 228,000 |
Weighted Average Price per Bbl, MMBtu - Floor | 40 |
Weighted Average Price per Bbl, MMBtu - Ceiling | 66 |
Collars [Member] | WTI | 2023 | |
Derivative | |
Volumes (Bbl) | bbl | 160,000 |
Weighted Average Price per Bbl, MMBtu - Floor | 40 |
Weighted Average Price per Bbl, MMBtu - Ceiling | 63.10 |
Three-Way Collars | WTI | 2020 - remaining | |
Derivative | |
Volumes (Bbl) | bbl | 75,000 |
Weighted Average Price per Bbl, MMBtu - Ceiling | 59.60 |
Three-Way Collars | WTI | 2021 | |
Derivative | |
Volumes (Bbl) | bbl | 300,000 |
Weighted Average Price per Bbl, MMBtu - Ceiling | 57.50 |
Three-Way Collars | WTI | 2022 | |
Derivative | |
Volumes (Bbl) | bbl | 300,000 |
Weighted Average Price per Bbl, MMBtu - Ceiling | 56.90 |
Three-Way Collars | WTI | Purchased | 2020 - remaining | |
Derivative | |
Weighted Average Price per Bbl, MMBtu - Floor | 50 |
Three-Way Collars | WTI | Purchased | 2021 | |
Derivative | |
Weighted Average Price per Bbl, MMBtu - Floor | 50 |
Three-Way Collars | WTI | Purchased | 2022 | |
Derivative | |
Weighted Average Price per Bbl, MMBtu - Floor | 50 |
Three-Way Collars | WTI | Sold | 2020 - remaining | |
Derivative | |
Weighted Average Price per Bbl, MMBtu - Floor | 35 |
Three-Way Collars | WTI | Sold | 2021 | |
Derivative | |
Weighted Average Price per Bbl, MMBtu - Floor | 35 |
Three-Way Collars | WTI | Sold | 2022 | |
Derivative | |
Weighted Average Price per Bbl, MMBtu - Floor | 35 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) - Derivative interest rate swaps $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
June 11, 2020 - June 11, 2021 | |
Derivative | |
Notional Amount | $ 125,000 |
Portion of Term Loan Face Amount | 50.00% |
June 11, 2021 - June 11, 2022 | |
Derivative | |
Notional Amount | $ 125,000 |
Portion of Term Loan Face Amount | 50.00% |
June 13, 2022 - April 23, 2023 | |
Derivative | |
Notional Amount | $ 125,000 |
Portion of Term Loan Face Amount | 50.00% |
LIBOR | |
Derivative | |
Floor interest rate | 1.00% |
LIBOR | June 11, 2020 - June 11, 2021 | |
Derivative | |
Fixed Rate | 3.072% |
LIBOR | June 11, 2021 - June 11, 2022 | |
Derivative | |
Fixed Rate | 3.061% |
LIBOR | June 13, 2022 - April 23, 2023 | |
Derivative | |
Fixed Rate | 3.042% |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Offsetting of Derivative Assets (Details) - Not designated as ASC 815 Hedges - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative Asset | ||
Gross Recognized Assets | $ 34,949 | $ 5,885 |
Net Recognized Fair Value Assets | 28,498 | 2,093 |
Derivative commodity contracts | Derivative assets current | ||
Derivative Asset | ||
Gross Recognized Assets | 32,365 | 2,863 |
Gross Amount Offset | (3,867) | (1,648) |
Net Recognized Fair Value Assets | 28,498 | 1,215 |
Derivative commodity contracts | Derivative assets non-current | ||
Derivative Asset | ||
Gross Recognized Assets | 2,637 | |
Gross Amount Offset | (1,759) | |
Net Recognized Fair Value Assets | 878 | |
Derivative interest rate swaps | Derivative assets current | ||
Derivative Asset | ||
Gross Recognized Assets | 2,584 | 8 |
Gross Amount Offset | $ (2,584) | (8) |
Derivative interest rate swaps | Derivative assets non-current | ||
Derivative Asset | ||
Gross Recognized Assets | 377 | |
Gross Amount Offset | $ (377) |
DERIVATIVE FINANCIAL INSTRUME_7
DERIVATIVE FINANCIAL INSTRUMENTS - Offsetting of Derivative Liabilities (Details) - Not designated as ASC 815 Hedges - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Offsetting Liabilities | ||
Gross Recognized Liabilities | $ 13,685 | $ 11,855 |
Net Recognized Fair Value Liabilities | 7,234 | 8,063 |
Gross Recognized Assets/ Liabilities | 21,264 | (5,970) |
Net Recognized Fair Value Assets/ Liabilities | 21,264 | (5,970) |
Derivative liabilities current | ||
Offsetting Liabilities | ||
Gross Recognized Liabilities | 13,685 | 6,050 |
Net Recognized Fair Value Liabilities | 7,234 | 4,394 |
Derivative liabilities non-current | ||
Offsetting Liabilities | ||
Gross Recognized Liabilities | 5,805 | |
Net Recognized Fair Value Liabilities | 3,669 | |
Derivative commodity contracts | Derivative liabilities current | ||
Offsetting Liabilities | ||
Gross Recognized Liabilities | 4,330 | 3,946 |
Gross Amounts Offset | (3,867) | (1,648) |
Net Recognized Fair Value Liabilities | 463 | 2,298 |
Derivative commodity contracts | Derivative liabilities non-current | ||
Offsetting Liabilities | ||
Gross Recognized Liabilities | 1,761 | |
Gross Amounts Offset | (1,759) | |
Net Recognized Fair Value Liabilities | 2 | |
Derivative interest rate swaps | Derivative liabilities current | ||
Offsetting Liabilities | ||
Gross Recognized Liabilities | 9,355 | 2,104 |
Gross Amounts Offset | (2,584) | (8) |
Net Recognized Fair Value Liabilities | $ 6,771 | 2,096 |
Derivative interest rate swaps | Derivative liabilities non-current | ||
Offsetting Liabilities | ||
Gross Recognized Liabilities | 4,044 | |
Gross Amounts Offset | (377) | |
Net Recognized Fair Value Liabilities | $ 3,667 |
DERIVATIVE FINANCIAL INSTRUME_8
DERIVATIVE FINANCIAL INSTRUMENTS - Gain (Loss) Recognized (Details) - Not designated as ASC 815 Hedges - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Income | $ (7,279) | $ 15,723 | $ 62,482 | $ (11,359) |
Derivative commodity contracts | Gain (loss) on commodity derivative financial instruments | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Income | (7,193) | 16,301 | 65,652 | (6,755) |
Derivative interest rate swaps | Interest expense | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain (Loss) Recognized in Income | $ (86) | $ (578) | $ (3,170) | $ (4,604) |
FAIR VALUE MEASUREMENT - Assets
FAIR VALUE MEASUREMENT - Assets and Liabilities (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Liabilities measured at fair value | ||
Liabilities measured at fair value | $ (7,234) | $ (8,063) |
Net fair value | 21,264 | (5,970) |
Derivative commodity contracts | ||
Assets measured at fair value | ||
Derivative assets | 28,498 | 2,093 |
Liabilities measured at fair value | ||
Liabilities measured at fair value | (463) | (2,300) |
Derivative interest rate swaps | ||
Liabilities measured at fair value | ||
Liabilities measured at fair value | (6,771) | (5,763) |
Level 2 | ||
Liabilities measured at fair value | ||
Liabilities measured at fair value | (7,234) | (8,063) |
Net fair value | 21,264 | (5,970) |
Level 2 | Derivative commodity contracts | ||
Assets measured at fair value | ||
Derivative assets | 28,498 | 2,093 |
Liabilities measured at fair value | ||
Liabilities measured at fair value | (463) | (2,300) |
Level 2 | Derivative interest rate swaps | ||
Liabilities measured at fair value | ||
Liabilities measured at fair value | $ (6,771) | $ (5,763) |
FAIR VALUE MEASUREMENT - Transf
FAIR VALUE MEASUREMENT - Transfers Between Levels (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | |
FAIR VALUE MEASUREMENT | ||
Fair value transfer of assets from level 1 to level 2 | $ 0 | $ 0 |
Fair value transfer of assets from level 2 to level 1 | 0 | 0 |
Fair value transfer of liabilities from level 1 to level 2 | 0 | 0 |
Fair value transfer of liabilities from level 2 to level 1 | 0 | 0 |
Fair value transfer of assets into level 3 | 0 | 0 |
Fair value transfer of assets out of level 3 | 0 | 0 |
Fair value transfer of liabilities into level 3 | 0 | 0 |
Fair value transfer of liabilities out of level 3 | $ 0 | $ 0 |
FAIR VALUE MEASUREMENT - Credit
FAIR VALUE MEASUREMENT - Credit Facilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Principal debt outstanding | $ 380,600 | $ 365,000 |
Revolving Facility | ||
Debt Instrument [Line Items] | ||
Principal debt outstanding | 130,600 | 115,000 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Principal debt outstanding | $ 250,000 | $ 250,000 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of RSU Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Nov. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jul. 28, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Recognized stock based compensation expense | $ 3 | $ 100 | $ 192 | $ 334 | ||
Number of RSUs | ||||||
Granted (in shares) | 0 | |||||
Forfeited (in shares) | (7,880) | |||||
2020 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock authorized | 750,000 | |||||
Restricted Share Units | ||||||
Number of RSUs | ||||||
Outstanding at beginning (in shares) | 84,929 | |||||
Vested (in shares) | (496) | |||||
Forfeited (in shares) | (24,294) | |||||
Outstanding at ending (in shares) | 60,139 | 60,139 | ||||
Weighted Average Fair Value at Grant Date | ||||||
Outstanding at beginning (per share) | $ 22.97 | |||||
Vested (per share) | 57.76 | |||||
Forfeited (per share) | 32.52 | |||||
Outstanding at ending (per share) | $ 18.72 | $ 18.72 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 9 Months Ended |
Sep. 30, 2020shares | |
STOCK-BASED COMPENSATION | |
Forfeited (in shares) | 7,880 |
PAYROLL PROTECTION PROGRAM (Det
PAYROLL PROTECTION PROGRAM (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | May 12, 2020 | Apr. 23, 2018 | |
Payroll Protection Program | ||||
Amount borrowed | $ 250 | |||
PPP | ||||
Payroll Protection Program | ||||
Amount borrowed | $ 1.9 | |||
Proceeds from government grant | $ 1.1 | $ 1.9 | ||
Reduction in general and administrative expenses | $ 1.1 | $ 1.9 |
EARNINGS PER SHARE - Reconcilia
EARNINGS PER SHARE - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
EARNINGS PER SHARE | ||||||||
Net income (loss) | $ (356,574) | $ (35,771) | $ 60,242 | $ 13,296 | $ 2,643 | $ (37,209) | $ (332,103) | $ (21,270) |
Weighted average shares : | ||||||||
Weighted average common shares outstanding, basic | 6,875,017 | 6,874,146 | 6,874,962 | 6,874,082 | ||||
Diluted effect of incremental shares related to RSUs | 261 | |||||||
Weighted average common shares outstanding, diluted | 6,875,017 | 6,874,407 | 6,874,962 | 6,874,082 | ||||
Net income (loss) per share: | ||||||||
Basic | $ (51.87) | $ 1.93 | $ (48.31) | $ (3.09) | ||||
Diluted | $ (51.87) | $ 1.93 | $ (48.31) | $ (3.09) |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Service - based Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Diluted effect of Incremental shares related to restricted share units | 0 | 2 | 337 |
OTHER BALANCE SHEET DETAIL (Det
OTHER BALANCE SHEET DETAIL (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts receivable trade and other | ||
Oil, natural gas and NGL sales | $ 6,196 | $ 18,211 |
Joint interest owners | 141 | 260 |
Commodity derivative receivables and other | 4,609 | 4,342 |
Receivable due from buyer (Dimmit County oil and gas properties) | 4,207 | 4,207 |
Total accounts receivable trade and other | 15,153 | 27,020 |
Other property and equipment, net | ||
Owned property and equipment | 3,850 | 4,449 |
Finance lease right-of-use assets | 975 | 933 |
Accumulated depreciation | (3,346) | (3,419) |
Other property and equipment, net | 1,479 | 1,963 |
Oil and natural gas properties: | ||
Capital expenditures | 2,007 | 4,168 |
Re-fracture liability | 297 | 764 |
Lease operating and workover expenses and other | 2,785 | 7,393 |
Accrued interest payable | 343 | 6,885 |
General and administrative expense | 4,268 | 6,894 |
Finance lease liabilities | 319 | 305 |
Total accrued liabilities | 10,019 | 26,409 |
Other long-term liabilities | ||
Finance lease liabilities - non-current | 237 | 429 |
Re-fracture liability | 688 | |
Other | 15 | 32 |
Other long-term liabilities | $ 252 | $ 1,149 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Summary of lease obligations (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Operating leases | |
2020 - remaining | $ 4,750 |
2021 | 3,531 |
2022 | 2,613 |
2023 | 1,311 |
2024 | 117 |
Thereafter | 1,447 |
Total | 13,769 |
Less: Interest | (1,538) |
Total discounted lease payments | 12,231 |
Finance Leases | |
2020 - remaining | 327 |
2021 | 223 |
2022 | 30 |
2023 | 1 |
Total | 581 |
Less: Interest | (24) |
Total discounted lease payments | $ 557 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Total Commitments (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Minimum revenue commitment | |
2020 - remaining | $ 11,193 |
2021 | 21,123 |
2022 | 10,626 |
Total | 42,942 |
Hydrocarbon gathering and handling agreement | |
Minimum revenue commitment | |
2020 - remaining | 9,420 |
2021 | 13,737 |
2022 | 6,453 |
Total | 29,610 |
Crude oil and condensate purchase agreements | |
Minimum revenue commitment | |
2020 - remaining | 1,773 |
2021 | 7,386 |
2022 | 4,173 |
Total | $ 13,332 |