Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 04, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Sanchez Energy Corp | |
Entity Central Index Key | 0001528837 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 100,154,182 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 179,538 | $ 197,613 |
Oil and natural gas receivables | 69,290 | 87,222 |
Joint interest billings receivables | 10,979 | 33,263 |
Accounts receivable - related entities | 10,161 | 6,099 |
Fair value of derivative instruments | 6,263 | 15,714 |
Other current assets | 24,679 | 33,070 |
Total current assets | 300,910 | 372,981 |
Oil and natural gas properties, on the basis of successful efforts accounting: | ||
Proved oil and natural gas properties | 3,864,327 | 3,792,431 |
Unproved oil and natural gas properties | 299,456 | 328,643 |
Total oil and natural gas properties | 4,163,783 | 4,121,074 |
Less: Accumulated depreciation, depletion, amortization and impairment | (1,947,558) | (1,761,949) |
Total oil and natural gas properties, net | 2,216,225 | 2,359,125 |
Other assets: | ||
Fair value of derivative instruments | 9,346 | 12,102 |
Right of use assets, net | 280,139 | |
Investments (includes investment in SNMP measured at fair value of $0.8 million and $3.9 million as of September 30, 2019 and December 31, 2018, respectively) | 12,200 | 16,664 |
Other assets | 43,990 | 59,088 |
Total assets | 2,862,810 | 2,819,960 |
Current liabilities: | ||
Debtor in possession financing | 50,000 | |
Accounts payable | 14,372 | 32,382 |
Other payables | 16,739 | 74,628 |
Accrued liabilities: | ||
Capital expenditures | 7,232 | 61,970 |
Other | 66,298 | 102,728 |
Fair value of derivative instruments | 700 | 706 |
Short term debt | 304 | |
Short-term lease liabilities | 109,494 | |
Other current liabilities | 31,961 | 75,581 |
Total current liabilities | 296,796 | 348,299 |
Long term debt, net of premium, discount and debt issuance costs | 166,956 | 2,395,408 |
Asset retirement obligations | 49,183 | 46,175 |
Fair value of derivative instruments | 366 | |
Long-tern lease liabilities | 173,990 | |
Liabilities subject to compromise | 2,398,106 | |
Other liabilities | 1 | 21,407 |
Total liabilities | 3,085,032 | 2,811,655 |
Commitments and contingencies (Note 17) | ||
Mezzanine equity: | ||
Preferred units ($1,000 liquidation preference, 500,000 units authorized, issued and outstanding as of September 30, 2019 and December 31, 2018) | 474,857 | 452,828 |
Stockholders' deficit: | ||
Preferred stock ($0.01 par value, 15,000,000 shares authorized; 619,503 and 1,838,985 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively, of 4.875% Convertible Perpetual Preferred Stock, Series A; 2,466,013 and 3,527,830 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively, of 6.500% Convertible Perpetual Preferred Stock, Series B) | 31 | 53 |
Common stock ($0.01 par value, 300,000,000 shares authorized; 100,154,824 and 87,328,424 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively) | 1,014 | 881 |
Additional paid-in capital | 1,371,698 | 1,367,427 |
Accumulated deficit | (2,069,822) | (1,812,884) |
Total stockholders' deficit | (697,079) | (444,523) |
Total liabilities and stockholders' equity deficit | $ 2,862,810 | $ 2,819,960 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Investment in SNMP measured at fair value | $ 800 | $ 3,900 |
Liquidation preference | $ 1,000 | $ 1,000 |
Preferred units, shares authorized | 500,000 | 500,000 |
Preferred units, shares issued | 500,000 | 500,000 |
Preferred units, shares outstanding | 500,000 | 500,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 100,154,824 | 87,328,424 |
Common stock, shares outstanding | 100,154,824 | 87,328,424 |
Series A Preferred Stock | ||
Preferred stock, shares issued | 619,503 | 1,838,985 |
Preferred stock, shares outstanding | 619,503 | 1,838,985 |
Dividend rate (as a percent) | 4.875% | 4.875% |
Series B Preferred Stock | ||
Preferred stock, shares issued | 2,466,013 | 3,527,830 |
Preferred stock, shares outstanding | 2,466,013 | 3,527,830 |
Dividend rate (as a percent) | 6.50% | 6.50% |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
REVENUES: | ||||
Sales and marketing revenues | $ 7,283 | $ 7,012 | $ 18,103 | $ 16,910 |
Total revenues | 162,546 | 277,710 | 574,350 | 788,251 |
OPERATING COSTS AND EXPENSES: | ||||
Oil and natural gas production expenses | 74,740 | 75,594 | 231,441 | 225,186 |
Exploration expenses | 164 | 2,698 | 4,983 | 3,247 |
Sales and marketing expenses | 6,672 | 7,239 | 16,591 | 16,498 |
Production and ad valorem taxes | 9,867 | 15,221 | 34,682 | 42,898 |
Depreciation, depletion, amortization and accretion | 57,864 | 67,944 | 187,920 | 189,515 |
Impairment of oil and natural gas properties | 9,761 | 3,117 | 22,906 | 4,259 |
General and administrative expense | 20,915 | 21,312 | 66,266 | 73,199 |
Prepetition restructuring charges | 18,231 | 41,855 | ||
Total operating costs and expenses | 198,214 | 193,125 | 606,644 | 554,802 |
Operating income (loss) | (35,668) | 84,585 | (32,294) | 233,449 |
Other income (expense): | ||||
Interest income | 221 | 1,130 | 1,447 | 3,400 |
Other income (expense) | (12,829) | (7,677) | (13,785) | 2,467 |
Gain on sale of oil and natural gas properties | 1,528 | |||
Interest expense | (22,884) | (44,154) | (111,998) | (132,664) |
Net gains (losses) on commodity derivatives | 13,200 | (28,286) | (20,827) | (142,384) |
Total other expense | (22,292) | (78,987) | (145,163) | (267,653) |
Reorganization Items | 55,321 | 55,321 | ||
Income (loss) before income taxes | (113,281) | 5,598 | (232,778) | (34,204) |
Income tax benefit | (833) | (23) | ||
Net income (loss) | (112,448) | 5,598 | (232,755) | (34,204) |
Less: | ||||
Preferred stock dividends | (2,312) | (3,987) | (7,153) | (11,961) |
Preferred unit dividends and distributions | (12,500) | (12,500) | (37,500) | (34,908) |
Preferred unit amortization | (7,638) | (6,458) | (22,029) | (18,577) |
Net loss attributable to common stockholders | $ (134,898) | $ (17,347) | $ (299,437) | $ (99,650) |
Net loss per common share - basic and diluted (in dollars per share) | $ (1.39) | $ (0.21) | $ (3.14) | $ (1.22) |
Weighted average number of shares used to calculate net loss attributable to common stockholders - basic and diluted (in shares) | 97,395 | 82,073 | 95,272 | 81,597 |
Oil sales | ||||
REVENUES: | ||||
Revenues | $ 106,016 | $ 161,243 | $ 362,424 | $ 473,178 |
Natural gas liquid sales | ||||
REVENUES: | ||||
Revenues | 22,675 | 69,995 | 92,891 | 175,833 |
Natural gas sales | ||||
REVENUES: | ||||
Revenues | $ 26,572 | $ 39,460 | $ 100,932 | $ 122,330 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) shares in Thousands, $ in Thousands | Series A Preferred Stock | Series B Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit. | Total |
Balance at Dec. 31, 2017 | $ 18 | $ 35 | $ 845 | $ 1,362,118 | $ (1,832,156) | $ (469,140) |
Balance (in shares) at Dec. 31, 2017 | 1,839 | 3,528 | 83,985 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Adoption of accounting standards | 22,739 | 22,739 | ||||
Issuance of common stock | $ 1 | 565 | 566 | |||
Issuance of common stock (in shares) | 100 | |||||
Dividends on Series A and Series B Preferred Stock | $ 8 | 3,979 | (3,987) | |||
Dividends on Series A and Series B Preferred Stock (in shares) | 805 | |||||
Dividends on SN UnSub Preferred Units | (12,500) | (12,500) | ||||
Distributions - SN UnSub Preferred Units | 2,592 | 2,592 | ||||
Accretion of discount on SN UnSub Preferred Units | (5,930) | (5,930) | ||||
Restricted stock awards, net of forfeitures | $ 4 | (4) | ||||
Restricted stock awards, net of forfeitures (in shares) | 283 | |||||
Non-cash stock-based compensation | (375) | (375) | ||||
Net income (loss) | (4,815) | (4,815) | ||||
Balance at Mar. 31, 2018 | $ 18 | $ 35 | $ 858 | 1,366,283 | (1,834,057) | (466,863) |
Balance (in shares) at Mar. 31, 2018 | 1,839 | 3,528 | 85,173 | |||
Balance at Dec. 31, 2017 | $ 18 | $ 35 | $ 845 | 1,362,118 | (1,832,156) | (469,140) |
Balance (in shares) at Dec. 31, 2017 | 1,839 | 3,528 | 83,985 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Accretion of discount on SN UnSub Preferred Units | (18,577) | |||||
Net income (loss) | (34,204) | |||||
Balance at Sep. 30, 2018 | $ 18 | $ 35 | $ 883 | 1,369,511 | (1,909,067) | (538,620) |
Balance (in shares) at Sep. 30, 2018 | 1,839 | 3,528 | 87,530 | |||
Balance at Mar. 31, 2018 | $ 18 | $ 35 | $ 858 | 1,366,283 | (1,834,057) | (466,863) |
Balance (in shares) at Mar. 31, 2018 | 1,839 | 3,528 | 85,173 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Dividends on Series A and Series B Preferred Stock | (3,987) | (3,987) | ||||
Dividends on SN UnSub Preferred Units | (12,500) | (12,500) | ||||
Accretion of discount on SN UnSub Preferred Units | (6,189) | (6,189) | ||||
Restricted stock awards, net of forfeitures | $ 26 | (26) | ||||
Restricted stock awards, net of forfeitures (in shares) | 2,625 | |||||
Non-cash stock-based compensation | 4,651 | 4,651 | ||||
Net income (loss) | (34,987) | (34,987) | ||||
Balance at Jun. 30, 2018 | $ 18 | $ 35 | $ 884 | 1,370,908 | (1,891,720) | (519,875) |
Balance (in shares) at Jun. 30, 2018 | 1,839 | 3,528 | 87,798 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Dividends on Series A and Series B Preferred Stock | (3,987) | (3,987) | ||||
Dividends on SN UnSub Preferred Units | (12,500) | (12,500) | ||||
Accretion of discount on SN UnSub Preferred Units | (6,458) | (6,458) | ||||
Restricted stock awards, net of forfeitures | $ (1) | 1 | ||||
Restricted stock awards, net of forfeitures (in shares) | (268) | |||||
Non-cash stock-based compensation | (1,398) | (1,398) | ||||
Net income (loss) | 5,598 | 5,598 | ||||
Balance at Sep. 30, 2018 | $ 18 | $ 35 | $ 883 | 1,369,511 | (1,909,067) | (538,620) |
Balance (in shares) at Sep. 30, 2018 | 1,839 | 3,528 | 87,530 | |||
Balance at Dec. 31, 2018 | $ 18 | $ 35 | $ 881 | 1,367,427 | (1,812,884) | (444,523) |
Balance (in shares) at Dec. 31, 2018 | 1,839 | 3,528 | 87,329 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Adoption of accounting standards | 42,499 | 42,499 | ||||
Dividends on Series A and Series B Preferred Stock | $ 79 | 3,908 | (2,516) | 1,471 | ||
Dividends on Series A and Series B Preferred Stock (in shares) | 7,898 | |||||
Dividends on SN UnSub Preferred Units | (12,500) | (12,500) | ||||
Accretion of discount on SN UnSub Preferred Units | (7,033) | (7,033) | ||||
Restricted stock awards, net of forfeitures | $ (1) | 1 | ||||
Restricted stock awards, net of forfeitures (in shares) | (270) | |||||
Exchange of preferred stock for common stock | $ (11) | $ (10) | $ 48 | (27) | ||
Exchange of preferred stock for common stock (in shares) | (1,059) | (1,017) | 4,837 | |||
Non-cash stock-based compensation | 141 | 141 | ||||
Net income (loss) | (67,342) | (67,342) | ||||
Balance at Mar. 31, 2019 | $ 7 | $ 25 | $ 1,007 | 1,371,450 | (1,859,776) | (487,287) |
Balance (in shares) at Mar. 31, 2019 | 780 | 2,511 | 99,794 | |||
Balance at Dec. 31, 2018 | $ 18 | $ 35 | $ 881 | 1,367,427 | (1,812,884) | (444,523) |
Balance (in shares) at Dec. 31, 2018 | 1,839 | 3,528 | 87,329 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Accretion of discount on SN UnSub Preferred Units | (22,029) | |||||
Net income (loss) | (232,755) | |||||
Balance at Sep. 30, 2019 | $ 6 | $ 25 | $ 1,014 | 1,371,698 | (2,069,822) | (697,079) |
Balance (in shares) at Sep. 30, 2019 | 620 | 2,466 | 100,155 | |||
Balance at Mar. 31, 2019 | $ 7 | $ 25 | $ 1,007 | 1,371,450 | (1,859,776) | (487,287) |
Balance (in shares) at Mar. 31, 2019 | 780 | 2,511 | 99,794 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Dividends on Series A and Series B Preferred Stock | (2,325) | (2,325) | ||||
Dividends on SN UnSub Preferred Units | (12,500) | (12,500) | ||||
Accretion of discount on SN UnSub Preferred Units | (7,358) | (7,358) | ||||
Restricted stock awards, net of forfeitures | $ 4 | (4) | ||||
Restricted stock awards, net of forfeitures (in shares) | (81) | |||||
Exchange of preferred stock for common stock | $ (1) | $ 2 | (1) | |||
Exchange of preferred stock for common stock (in shares) | (155) | 363 | ||||
Non-cash stock-based compensation | 158 | 158 | ||||
Net income (loss) | (52,965) | (52,965) | ||||
Balance at Jun. 30, 2019 | $ 6 | $ 25 | $ 1,013 | 1,371,603 | (1,934,924) | (562,277) |
Balance (in shares) at Jun. 30, 2019 | 625 | 2,511 | 100,076 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Dividends on Series A and Series B Preferred Stock | (2,312) | (2,312) | ||||
Dividends on SN UnSub Preferred Units | (12,500) | (12,500) | ||||
Accretion of discount on SN UnSub Preferred Units | (7,638) | (7,638) | ||||
Restricted stock awards, net of forfeitures | $ (1) | 1 | ||||
Restricted stock awards, net of forfeitures (in shares) | (38) | |||||
Exchange of preferred stock for common stock | $ (45) | $ 2 | (2) | |||
Exchange of preferred stock for common stock (in shares) | (5) | 117 | ||||
Non-cash stock-based compensation | 96 | 96 | ||||
Net income (loss) | (112,448) | (112,448) | ||||
Balance at Sep. 30, 2019 | $ 6 | $ 25 | $ 1,014 | $ 1,371,698 | $ (2,069,822) | $ (697,079) |
Balance (in shares) at Sep. 30, 2019 | 620 | 2,466 | 100,155 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (232,755) | $ (34,204) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation, depletion, amortization and accretion | 187,920 | 189,515 |
Impairment of oil and natural gas properties | 22,906 | 4,259 |
Gain on sale of oil and natural gas properties | (1,528) | |
Stock-based compensation expense | 355 | 4,344 |
Net losses on commodity derivative contracts | 20,827 | 142,384 |
Net cash settlements paid on commodity derivative contracts | (5,799) | (69,317) |
(Gain) loss on other derivatives | (276) | 5,262 |
Loss on investments | 4,464 | 3,361 |
Loss (gain) on sale of inventory | 143 | (571) |
Loss on other assets | 858 | |
Loss on contingency | 11,800 | |
Loss on prepaid asset impairment | 11,755 | |
Amortization of deferred gain on Western Catarina Midstream Divestiture | (17,790) | |
Amortization of debt issuance costs | 8,275 | 12,706 |
Accretion of debt discount, net | 1,019 | 1,112 |
Reorganization items | 39,238 | |
Accounts receivable | 41,305 | 1,982 |
Accounts receivable - related entities | (4,062) | (3,365) |
Other payables | (40,452) | 8,537 |
Accrued liabilities | 59,218 | 17,595 |
Other current liabilities | (20,519) | (12,531) |
Other assets and liabilities, net | 5,330 | (2,225) |
Net cash provided by operating activities | 99,750 | 249,526 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures for the development of oil and natural gas properties | (114,655) | (452,296) |
Proceeds from the sale of oil and natural gas properties | 1,425 | |
Acquisition of oil and natural gas properties | 2,834 | |
Payments for purchases of other assets | (761) | (9,573) |
Proceeds from the sale of other assets | 5,199 | 3,788 |
Net cash used in investing activities | (110,217) | (453,822) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from borrowings, including borrowings under DIP Facility | 57,922 | 539,865 |
Repayment of borrowings | (18,327) | (103,262) |
Financing costs, including costs related to DIP Facility | (9,505) | (12,995) |
Preferred dividends paid | (11,961) | |
Cash paid to tax authority for employee stock-based compensation awards | (198) | (705) |
Preferred unit distributions paid | (37,500) | (22,408) |
Net cash (used in) provided by financing activities | (7,608) | 388,534 |
(Decrease) increase in cash and cash equivalents | (18,075) | 184,238 |
Cash and cash equivalents, beginning of period | 197,613 | 184,434 |
Cash and cash equivalents, end of period | 179,538 | 368,672 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Change in asset retirement obligations | 129 | 1,532 |
Change in accrued capital expenditures | (54,871) | 24,652 |
ROU assets obtained in exchange for operating lease obligations | 361,648 | |
SUPPLEMENTAL DISCLOSURE: | ||
Cash paid for interest | 84,803 | $ 120,775 |
Cash paid for reorganization items | $ 9,521 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2019 | |
Organization and Business | |
Organization and Business | Note 1. Organization and Business Sanchez Energy Corporation (together with our consolidated subsidiaries, “Sanchez Energy,” the “Company,” “we,” “our,” “us” or similar terms), a Delaware corporation formed in August 2011, is an independent exploration and production company focused on the acquisition and development of oil and natural gas resources in the onshore United States. We are currently focused on the horizontal development of significant resource potential from the Eagle Ford Shale in South Texas, and we also have other producing properties and undeveloped acreage, including in the Tuscaloosa Marine Shale (“TMS”) in Mississippi and Louisiana, as well as other locations in Louisiana and Texas, which may offer potential future development opportunities. As of September 30, 2019, we held approximately 435,000 gross (233,000 net) leasehold acres in the Eagle Ford Shale, where we plan to invest the majority of our 2019 capital budget. We continually evaluate opportunities to manage our overall portfolio, which may include the acquisition of additional properties in the Eagle Ford Shale or other producing areas and, from time to time, the divestiture of non-core assets. Our successful acquisition or divestiture of such properties will generally depend on the circumstances and market conditions at the time we consider such opportunities. As discussed in “—Note 3. Chapter 11 Cases,” we are currently operating our business as “debtors-in-possession” in accordance with the applicable provisions of the Bankruptcy Code (as defined below). Liquidity At this time, we are primarily focused on lowering cash costs across our business and reducing our financial leverage, with an objective of maximizing our liquidity position and improving our balance sheet. As previously disclosed, the Company substantially reduced its capital expenditures from approximately $593 million in 2018 to a budgeted amount of $100 to $150 million for 2019 in order to preserve capital in the current low and uncertain commodity price environment. As discussed in “Part I, Item 1. Notes to the Condensed Consolidated Financial Statements—Note 17. Commitments and Contingencies,” the Company is party to certain agreements that require it to meet annual drilling and development commitments to maintain undeveloped leasehold positions. To reduce its capital expenditures by this magnitude in 2019, the Company exercised privileges under certain of such agreements (primarily by utilizing well “banks” achieved through drilling and developing wells in excess of the quantity required to maintain the related acreage during prior annual periods) and negotiated deferral arrangements. If the Company is unable to negotiate additional extensions, deferrals, waivers or other similar arrangements to delay or otherwise reduce the activity necessary to maintain such undeveloped leasehold positions, it may be unable to continue to hold capital expenditures at comparable low levels in future years. As a result, the Company may be required to seek additional funding sources in order to pursue development plans which would maintain certain of its undeveloped acreage. In addition, commodity prices remain depressed, and the Company’s oil, natural gas and NGL production has declined in connection with reduced development activity. Lower commodity prices and declining production have adversely impacted the Company’s revenues and cash flow. This has led to a reduction in forecasted liquidity, which has affected the Company’s ability to service the significant obligations associated with its high level of indebtedness. To improve its liquidity and position the Company for future success, Sanchez Energy undertook a review of various strategic alternatives with its advisors and Board of Directors (the “Board”) beginning in 2018. In anticipation of potential liquidity constraints, the Company commenced discussions with its bondholders, other stakeholders and potential third-party investors on a restructuring transaction to reduce the Company’s debt and strengthen its overall financial flexibility. On July 15, 2019, the Company elected to defer making an interest payment of approximately $35.2 million on the Company’s 6.125% Notes (as defined below) for a 30-day grace period, which expired on August 14, 2019, in order to preserve liquidity and continue discussions with stakeholders. The Debtors filed their Bankruptcy Petitions on the Petition Date (as defined below), prior to the expiration of the grace period. Although the Company has not yet reached an agreement with any of its stakeholders on the terms of a comprehensive restructuring transaction, the Company obtained additional financing pursuant to the DIP Facility (as defined below) on an interim basis, as discussed below. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2. Basis of Presentation and Summary of Significant Accounting Policies The accompanying condensed consolidated financial statements are unaudited and were prepared from the Company’s records. The condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Company derived the condensed consolidated balance sheet as of December 31, 2018 from the audited financial statements filed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the “2018 Annual Report”). Because this is an interim period filing presented using a condensed format, it does not include all of the disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in connection with the consolidated financial statements and notes thereto included in the 2018 Annual Report, which contains a summary of the Company’s significant accounting policies and other disclosures. In the opinion of management, these financial statements include the adjustments and accruals, all of which are of a normal recurring nature, which are necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results to be expected for the entire year. As of September 30, 2019, the Company’s significant accounting policies are consistent with those discussed in “—Note 2. Basis of Presentation and Summary of Significant Accounting Policies,” in the notes to the Company’s consolidated financial statements contained in the 2018 Annual Report with the addition of the following: Leases The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in right of use (“ROU”) assets, short term lease liabilities and long term lease liabilities in the condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company’s estimated incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments, and the implicit rate is used when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company gives consideration to various factors, including the terms of the Company’s outstanding debt instruments, publicly available data for instruments with similar characteristics and other information, together with internally generated estimates, assumptions and judgment to determine the Company’s incremental borrowing rate for purposes of making these calculations. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. Bankruptcy Accounting As further discussed in “—Note 3. Chapter 11 Cases,” on August 11, 2019 (the “Petition Date”), Sanchez Energy Corporation, SN Palmetto, LLC, SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC, SN Catarina, LLC, Rockin L Ranch Company, LLC, SN Payables, LLC, SN EF Maverick, LLC (“SN Maverick”) and SN UR Holdings, LLC (“SN UR Holdings”) (each a “Debtor” and collectively, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The condensed consolidated financial statements have been prepared as if the Company is a going concern and reflect the application of Accounting Standards Codification 852 “Reorganizations” (“ASC 852”). ASC 852 requires that the financial statements, for periods subsequent to the filing of the Bankruptcy Petitions, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in “Reorganization items” on the Company’s condensed consolidated statements of operations. In addition, prepetition unsecured and under-secured obligations that may be impacted by the bankruptcy reorganization process have been classified as “Liabilities subject to compromise” on the Company’s condensed consolidated balance sheet at September 30, 2019. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less. The Company has not taken a view with respect to the ultimate recoveries or payments under these agreements or on account of these liabilities in the presentation of such amounts on the financial statements. The accompanying condensed consolidated financial statements do not purport to reflect or provide for the consequences of the Chapter 11 Cases. In particular, the condensed consolidated financial statements do not purport to show: (i) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities; (ii) the amount of prepetition liabilities that may be allowed for claims or contingencies, or the status and priority thereof; (iii) the effect on stockholders’ deficit accounts of any changes that may be made to the Company’s capitalization; or (iv) the effect on operations of any changes that may be made to the Company’s business. While operating as debtors-in-possession under Chapter 11 of the Bankruptcy Code, the Debtors may sell or otherwise dispose of or liquidate assets or settle liabilities in amounts other than those reflected on the Company’s condensed consolidated financial statements, subject to the approval of the Bankruptcy Court or otherwise as permitted in the ordinary course of business. Further, a plan of reorganization could materially change the amounts and classifications on the Company’s historical condensed consolidated financial statements. Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates The accompanying condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. The most significant estimates pertain to proved oil and natural gas reserves and related cash flow estimates used in the depletion and impairment of proved oil and natural gas properties, the evaluation of unproved properties for impairment, the fair value of commodity derivative contracts, embedded derivatives and asset retirement obligations, accrued oil and natural gas revenues and expenses and the allocation of general and administrative (“G&A”) expenses. Actual results could differ materially from those estimates. Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07 “Compensation – Stock Compensation (ASC 718) – Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this ASU effective January 1, 2019, which resulted in our remeasurement of the value of our outstanding unvested awards as of January 1, 2019 and changed the way we value our equity-classified equity awards going forward. Adoption of the standard did not have a material impact on our condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses, if applicable. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019, and earlier adoption is permitted. We are currently in the process of evaluating the impact of adoption of this guidance on our condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 “Leases (ASC 842),” effective for annual and interim periods for public companies beginning after December 15, 2018, with a modified retrospective approach to be used for implementation. The standard updates the previous lease guidance by requiring the recognition of a ROU asset and lease liability on the statement of financial position for all leases with lease terms of more than 12 months. The lease liability represents the discounted obligation to make future minimum lease payments and the corresponding ROU asset represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as an operating or a finance lease. The Company adopted this standard effective January 1, 2019. We elected the package of practical expedients permitting us to not reassess under the new standard our prior conclusions regarding lease identification, lease classification and initial direct costs, the December 31, Adjustments due January 1, 2018 to Topic 842 2019 ROU assets $ — $ 344,472 $ 344,472 Short term lease liabilities — 99,693 99,693 Other current liabilities 75,581 (23,720) 51,861 Long term lease liabilities — 246,746 246,746 Other long term liabilities 21,407 (20,745) 662 Accumulated deficit (1,812,884) 42,499 (1,770,385) No impact was recorded to the condensed consolidated statement of operations related to the adoption of Topic 842. |
Chapter 11 Cases
Chapter 11 Cases | 9 Months Ended |
Sep. 30, 2019 | |
Chapter 11 Cases | |
Chapter 11 Cases | Note 3. Chapter 11 Cases Voluntary Reorganization Under Chapter 11 On the Petition Date, the Debtors filed the Bankruptcy Petitions for reorganization under the Bankruptcy Code in the Bankruptcy Court. The Debtors filed a motion with the Bankruptcy Court seeking to jointly administer the Chapter 11 Cases under the caption In re Sanchez Energy Corporation , Case No. 19-34508. The Debtors also filed various motions with the Bankruptcy Court, which were approved, seeking authorization to continue to operate their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Additionally, the Bankruptcy Court has granted certain other relief requested by the Debtors, including interim relief allowing the Company to use its cash to fund the Chapter 11 Cases and to borrow an initial $50 million pursuant to the DIP Facility (as defined below) and giving the Company the authority to, among other things, continue to pay certain vendors and other third parties. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of the Company’s business require prior approval of the Bankruptcy Court. The Company expects ordinary course operations to continue substantially uninterrupted during the Chapter 11 Cases. SN UnSub (as defined below), its general partner, and certain other unrestricted subsidiaries of the Company are not included in the Chapter 11 Cases and are classified as “non-Debtors”. Subject to certain exceptions, under the Bankruptcy Code, the filing of the Bankruptcy Petitions automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the date of the Bankruptcy Petitions. Accordingly, although the filing of the Bankruptcy Petitions triggered defaults on the Debtors’ debt obligations, creditors are stayed from taking any actions against the Debtors as a result of such defaults, subject to certain limited exceptions permitted by the Bankruptcy Code. Substantially all of the Debtors’ prepetition liabilities are subject to settlement and compromise under the Bankruptcy Code. Under the Bankruptcy Code, unless creditors agree otherwise, prepetition liabilities and postpetition liabilities must be satisfied in full before the Company’s existing stockholders are entitled to receive or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or stockholders, if any, will not be determined until confirmation and implementation of a plan or plans of reorganization. There can be no assurance as to what values, if any, will be ascribed in the Chapter 11 Cases to each of these constituencies or what types or amounts of settlements, if any, they will receive. A plan of reorganization could result in holders of the Debtors’ liabilities and/or stockholders receiving no settlement on account of their interests and cancellation of their holdings. Executory Contracts Subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assign or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves a Debtor of performing its future obligations under such executory contract or unexpired leases but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate(s) for such damages. Generally, the assumption of an executory contract or unexpired lease requires a Debtor to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this quarterly report, including where applicable a quantification of a Debtor’s obligations under any such executory contract or unexpired lease with the Debtor, is qualified by any overriding rejection rights such Debtor has under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto. With limited exceptions, the Debtors have not yet made formal determinations with respect to the assumption or rejection of executory contracts or unexpired leases. Process for Plan of Reorganization Following the Petition Date, the Company has continued to engage with stakeholders in pursuit of a comprehensive restructuring transaction. The Company believes the Chapter 11 Cases provide the most expeditious manner in which to effect a capital structure solution. In order to successfully exit the Chapter 11 Cases, we will need to obtain confirmation by the Bankruptcy Court of a plan (or plans) of reorganization that satisfies the requirements of the Bankruptcy Code. A plan of reorganization would, among other things, resolve the Debtors’ prepetition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance subsequent to exit from the Chapter 11 Cases. However, there can be no assurance that the Company will be able to reorganize its capital structure on terms acceptable to the Company, the other Debtors, their creditors or other stakeholders, or at all. The Debtors have the exclusive right for 120 days after the Petition Date to file a plan of reorganization (the “Exclusive Filing Period”), and if the Debtors’ plan of reorganization is filed within the Exclusive Filing Period, the Debtors also have the exclusive right for 180 days after the Petition Date to solicit acceptances and rejections regarding such plan of reorganization, in each case, subject to extension for cause by the Bankruptcy Court. If the Exclusive Filing Period lapses, any party in interest may file a plan of reorganization for any of the Debtors. In addition to being voted on by holders of impaired claims and equity interests, a plan of reorganization must satisfy certain requirements of the Bankruptcy Code and must be confirmed by the Bankruptcy Court in order to become effective. A plan of reorganization would be accepted by holders of claims against and equity interests in the Company if (i) more than one-half in number and at least two-thirds in dollar amount of allowed claims actually voting in each class of claims impaired by the plan have voted to accept the plan and (ii) at least two-thirds in amount of allowed equity interests actually voting in each class of equity interests impaired by the plan has voted to accept the plan. A class of claims or equity interests that does not receive or retain any property under the plan on account of such claims or interests is deemed to have voted to reject the plan. Under certain circumstances set forth in Section 1129(b) of the Bankruptcy Code, the Bankruptcy Court may confirm a plan even if such plan has not been accepted by all impaired classes of claims and equity interests. The precise requirements and evidentiary showing for confirming a plan notwithstanding its rejection by one or more impaired classes of claims or equity interests depends upon a number of factors, including the status and seniority of the claims or equity interests in the rejecting class (i.e., secured or unsecured claims, subordinated or senior claims, preferred or common stock). Generally, with respect to common stock or preferred stock interests, a plan may be “crammed down” even if the stockholders receive no recovery if the proponent of the plan demonstrates that (1) no class junior to the common stock or class or series of preferred stock, as applicable, is receiving or retaining property under the plan and (2) no class of claims or interests senior to the common stock or class or series of preferred stock, as applicable, is being paid more than in full. The timeline for the Debtors to file a plan of reorganization will depend on the timing and outcome of numerous other ongoing matters in the Chapter 11 Cases. There can be no assurance at this time that the Debtors will be able to successfully develop, confirm and consummate a plan of reorganization or other alternative restructuring transactions that satisfies the conditions of the Bankruptcy Code and is confirmed by the Bankruptcy Court, or that any such plan or transactions will be implemented successfully. DIP Facility In connection with the Bankruptcy Petitions, the Debtors filed a motion seeking, among other things, interim and final approval of debtor-in-possession financing on terms and conditions set forth in a proposed Senior Secured Debtor-in-Possession Term Loan Credit Agreement (as amended, supplemented or otherwise modified, the “DIP Facility”) among Sanchez Energy Corporation, as borrower, the financial institutions or other entities from time to time parties thereto, as lenders (the “DIP Lenders”), and Wilmington Savings Fund Society, FSB (“WSFS”), as administrative agent and collateral agent (the “DIP Agent”). The initial lenders under the DIP Facility are members of an ad hoc group of certain holders of the 7.25% Senior Secured Notes (the “Secured Noteholders”) or affiliates of such Secured Noteholders. The DIP Facility was approved by the Bankruptcy Court on an interim basis and the Company closed and borrowed an initial $50 million of new money loans thereunder on August 19, 2019, following the Bankruptcy Court’s entry of an interim order approving the DIP Facility on August 16, 2019. On September 19, 2019, the Bankruptcy Court declined to grant final approval of the DIP Facility at that time, and the Debtors, the DIP Lenders and certain other stakeholders are in ongoing discussions regarding the terms of the DIP Facility that will be presented to the Bankruptcy Court again for final approval at a subsequent hearing. The Company’s ability to access the remaining additional principal amount of new term loans under the DIP Facility is subject to the final approval of the Bankruptcy Court. On September 24, 2019, the Company, the DIP Agent and the Required Lenders (as defined in the DIP Facility) entered into an amendment to the DIP Facility (the “Amendment”). By its terms, the Amendment was effective as of September 20, 2019. The Amendment provided for, among other things, an extension to October 2, 2019 of the milestone date set forth in the DIP Facility for the entry of a final order of the Bankruptcy Court authorizing the Debtors’ entry into the DIP Facility and the other transactions contemplated by the DIP Facility (the “Final DIP Order”) and provided for the further extension of such milestone date with the consent of the Required Lenders. The milestone date set forth in the Loan Agreement for the entry of the Final DIP Order was subsequently extended, as contemplated and permitted by the Amendment, by the Required Lenders until the earlier of (i) November 15, 2019 and (ii) the date on which any of the Debtors files any material motion with respect to the Debtors’ business operations without the prior written consent of the Required Lenders. The DIP Facility, as it was approved on an interim basis, contains the terms as set forth below (although certain of the below terms are subject to modification prior to final approval of the DIP Facility): · a senior secured priming superpriority debtor-in-possession term loan facility in an aggregate principal amount of up to $350 million, consisting of (i) a new money, multiple draw term loan facility in the amount of $175 million (the “New Money DIP Loans”), backstopped by certain Secured Noteholders (the “Backstop Lenders”), $50 million of which was available on an interim basis upon entry of the Bankruptcy Court’s interim order (the “Interim DIP Order”); and (ii) a refinancing term loan effectuated by way of a conversion of $175 million of 7.25% Senior Secured Notes into obligations under the DIP Facility (the “Roll-Up Loans” and, together with the New Money DIP Loans, the “DIP Loans”); · borrowings under the (i) New Money DIP Loans will bear interest at a rate per annum equal to adjusted LIBOR (subject to a 2% floor) plus 8.00% and (ii) Roll-Up Loans will bear interest at the non-default rate of the 7.25% Senior Secured Notes of 7.25% per annum; · the Company has paid the Backstop Lenders a 5.00% fee in cash in exchange for their commitment to backstop the New Money DIP Loans, and the Company is also required to pay (i) the DIP Lenders a 1.00% fee on the New Money DIP Loans payable upon the Debtors’ emergence from the Chapter 11 Cases and (ii) the DIP Lenders a 0.5% per annum commitment fee on undrawn New Money DIP Loans payable monthly; · the maturity of the DIP Facility is nine months after the Petition Date, subject to earlier termination upon occurrence of customary defaults; · the proceeds of the New Money DIP Loans may be used for: (i) transaction costs, fees and expenses; (ii) working capital and general corporate purposes; (iii) bankruptcy-related costs and expenses (including restructuring fees and adequate protection payments); and (iv) subject to final approval of the Bankruptcy Court, refinancing all amounts existing under the Company’s existing Credit Agreement; · the obligations under the New Money DIP Loans will be secured (subject to the Carve-Out (as defined below) and certain “first-out” obligations as set forth in the Interim DIP Order) on the following bases: (i) a superpriority administrative claim; (ii) a perfected first priority senior security interest and lien on all unencumbered property (subject to certain exceptions set forth in the DIP Facility and/or the Interim DIP Order); (iii) a perfected first priority, senior priming security interest and lien on all property subject to valid, perfected and nonavoidable prepetition liens securing the obligations under the 7.25% Senior Secured Notes (subject to certain exceptions as specified in the DIP Facility and/or the Interim DIP Order); and (iv) a perfected junior lien on certain other property subject to valid, perfected and unavoidable prepetition liens; · the obligations under the Roll-Up Loans will be secured (subject to the Carve-Out and certain “first-out” obligations as set forth in the Interim DIP Order) on the following bases: (i) a superpriority administrative claim and (ii) a perfected first priority, senior priming security interest and lien on all property subject to valid, perfected and nonavoidable prepetition liens securing the obligations under the 7.25% Senior Secured Notes (subject to certain exceptions as specified in the DIP Facility and the Interim DIP Order); · the Debtors’ Chapter 11 Cases are subject to certain milestones, including with respect to the filing and approvals of a disclosure statement and a Chapter 11 plan of reorganization; · the DIP Facility will provide for certain customary covenants applicable to the Company, including covenants requiring (i) minimum liquidity in an amount of $15 million, subject to certain exclusions; (ii) beginning the first four-week period ending after the Petition Date, compliance with an approved operating debtor-in-possession budget (the “DIP Budget”), subject to permitted variance of 15% (with a variance of 25% for midstream-related disbursements for the first four-week test period), tested on a rolling four-week basis on disbursements excluding certain professional fees, DIP Facility interest and fees and adequate protection payments; and (iii) delivery of a rolling 13-week operating cash flow forecast updated every four weeks and a weekly DIP Budget variance report; and · the Debtors’ obligations to the DIP Lenders and the liens and superpriority claims are subject in each case to a In addition, the Interim DIP Order contemplates that under the terms of the Final DIP Order, we will be required to pay the approximately $18.1 million in interest that would have been due on August 15, 2019 under the indenture for the 7.25% Senior Secured Notes, and are required to continue to make the semi-annual interest payments as they come due under the indenture for the 7.25% Senior Secured Notes during the Chapter 11 Cases. There can be no assurance that the DIP Facility will be approved on a final basis, on the terms described above, or at all. We are in ongoing conversations with the DIP Lenders and other stakeholders regarding the terms of the Final DIP Order and the DIP Facility. UnSub Tolling Agreement On August 10, 2019, the Company entered into a tolling agreement (the “Tolling Agreement”) among Sanchez Energy Corporation, SN UR Holdings, SN EF UnSub Holdings, LLC (“SN UnSub Holdings”), SN Maverick (together with Sanchez Energy Corporation, SN UR Holdings and SN UnSub Holdings, the “Sanchez Parties”), GSO ST Holdings Associates LLC (“GSO LLC”) and GSO ST Holdings LP (together with GSO LLC, the “GSO Parties”). Pursuant to the terms of the Tolling Agreement, except for participating in, or filing pleadings in respect of, any matter pending before the applicable bankruptcy court, during the Tolling Period (as defined below), the GSO Parties agreed to not exercise any rights or remedies with respect to any Investor Redemption Event, as defined in the Amended and Restated Limited Liability Company Agreement of SN EF UnSub GP, LLC (“SN UnSub GP”), dated March 1, 2017 (the “LLC Agreement”), or the Amended and Restated Agreement of Limited Partnership of SN EF UnSub, LP, dated March 1, 2017, and all notice or cure periods that may exist with respect to any Investor Redemption Event (as such term defined in the LLC Agreement) will be tolled during the Tolling Period. The Tolling Agreement expires on the calendar day following the occurrence of any of the following events (the “Tolling Period”): (1) the occurrence of any Bankruptcy Event (as defined in the LLC Agreement) with respect to SN UnSub Holdings; provided, however, that unless a notice of termination has been provided by the GSO Parties or there is less than five calendar days before the Order Deadline (as defined below), the Sanchez Parties will be obligated to provide the GSO Parties at least five business days’ written notice prior to commencement of a voluntary chapter 11 proceeding (a “Proceeding”) by SN UnSub Holdings; (2) the failure of Sanchez Energy Corporation, SN Maverick or SN UR Holdings, to the extent such party has commenced a Proceeding (the earliest commencement date of a Proceeding by Sanchez Energy Corporation, SN Maverick or SN UR Holdings, as applicable, the “Initial Petition Date”), to obtain a bankruptcy court order approving the Tolling Agreement by the 20th day after the Initial Petition Date (the “Order Deadline”), unless the parties agree to extend such date by written agreement (the Order Deadline was subsequently extended to September 24, 2019); or (3) the effectiveness of delivery by any party of a written notice of termination of the Tolling Period, with such notice to be effective on the fifth business day following delivery of notice to the other parties. In the event that SN UnSub Holdings commences a Proceeding at any time, the parties have agreed that for all purposes the commencement by SN UnSub Holdings of a Proceeding will be deemed to have occurred on the Initial Petition Date immediately preceding the commencement of the Proceedings with respect to any other Sanchez entity. On September 19, 2019, the Bankruptcy Court authorized the Debtors’ performance of their obligations under the Tolling Agreement. Liabilities Subject to Compromise The Company’s condensed consolidated balance sheet includes amounts classified as “Liabilities subject to compromise,” which represent prepetition liabilities that have been allowed, or that the Company anticipates will be allowed, as claims in its Chapter 11 Cases. The amounts represent the Company’s current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases. The differences between the liabilities the Company has estimated and the claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process. The Company will continue to evaluate these liabilities throughout the Chapter 11 Cases and adjust amounts as necessary. Such adjustments may be material. The following table summarizes the components of liabilities subject to compromise included on the condensed consolidated balance sheet (in thousands): September 30, 2019 7.75% Notes, due June 2021 $ 600,000 6.125% Notes, due January 2023 1,150,000 Credit Agreement (1) 7,922 7.25% Senior Secured Notes, due February 2023 500,000 Accounts payable 22,349 Other payables 18,329 Accrued interest payable 65,371 Other accrued expenses 34,135 Liabilities subject to compromise $ 2,398,106 (1) A standby letter of credit in the amount of approximately $17.1 million was issued under the Credit Agreement on January 10, 2019 and incurred fees at a rate of 3.25% through the Petition Date. The letter of credit remains outstanding and is undrawn as of September 30, 2019 but is currently proposed to be cash collateralized subject to entry of the Final DIP Order . Prepetition Restructuring Charges Any expenses incurred before the Petition Date and in relation to the Chapter 11 Cases are recorded as prepetition restructuring charges on our consolidated statements of operations. Prepetition restructuring charges, which primarily consisted of professional, consulting and legal fees related to the Chapter 11 Cases, were $18.2 million and $41.9 million for the three and nine months ended September 30, 2019, respectively. There were no prepetition restructuring charges for the three or nine months ended September 30, 2018. Reorganization Items The Company has incurred and is expected to continue to incur substantial costs associated with the reorganization. These costs, which are expensed as incurred, are expected to significantly affect the Company’s results of operations. Reorganization items represent costs directly associated with the Chapter 11 Cases since the Petition Date. Such costs include accruals related to the DIP Facility and postpetition fees and expenses of court-approved legal and financial advisors, which are subject to Bankruptcy Court orders and/or oversight. The following table summarizes the components of reorganization items included on the condensed consolidated statements of operations (in thousands): Three and Nine Months Ended September 30, 2019 DIP lender fee on initial borrowing $ 8,814 DIP Facility costs 4,512 Legal and other professional advisory fees 11,571 Unamortized deferred financing fees, discounts and premiums 30,424 Reorganization items (1) $ 55,321 (1) Includes $9.5 million of cash paid for reorganization items. Interest Expense The Debtors have discontinued recording interest on debt instruments classified as subject to compromise as of the Petition Date. The contractual interest on liabilities subject to compromise not reflected in the condensed consolidated statements of operations was approximately $21.1 million, representing interest expense from the Petition Date through September 30, 2019. However, it is currently proposed that under the terms of the Final DIP Order, we will be required to pay the approximately $18.1 million in interest that would have been due on August 15, 2019 under the indenture for the Senior Secured 7.25% Notes and are required to continue making the semi-annual interest payments as they come due under the indenture for the 7.25% Senior Secured Notes during the Chapter 11 Cases. Magnitude of Potential Claims On September 24, 2019, the Debtors filed with the Bankruptcy Court schedules and statements setting forth, among other things, our assets and liabilities, subject to the assumptions filed in connection therewith (the “Schedules and Statements”). The Debtors may subsequently decide to amend or modify the Schedules and Statements. On October 24, 2019, the Debtors filed a motion to set a bar date to assist with the claims reconciliation process, proposing a bar date of December 13, 2019 and a governmental bar date of February 7, 2020. Through the claims resolution process, differences in amounts scheduled by the Debtors and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court where appropriate. In light of the potential number and amount of claims filed, the claims resolution process may take considerable time to complete, and we expect that it will continue after our emergence from bankruptcy. Accordingly, the ultimate number and amount of allowed claims is not presently known, nor can the ultimate recovery with respect to allowed claims presently be ascertained. Effect of Filing on Creditors and Stockholders Under the priority scheme established by the Bankruptcy Code, unless creditors agree otherwise, prepetition liabilities and postpetition liabilities must be satisfied in full or consensual agreement reached between parties before the holders of our existing common stock or preferred stock are entitled to receive or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or stockholders, if any, will not be determined until confirmation and implementation of a plan or plans of reorganization. There can be no assurance as to what values, if any, will be ascribed in the Chapter 11 Cases to each of these constituencies or what types or amounts of distributions, if any, they would receive. A plan of reorganization could result in holders of our liabilities and/or securities, including our common stock and preferred stock, receiving no distribution on account of their interests and cancellation of their holdings. As discussed above, if certain requirements of the Bankruptcy Code are met, a plan of reorganization can be confirmed notwithstanding its rejection by the holders of our common stock or preferred stock and notwithstanding the fact that such holders do not receive or retain any property on account of their equity interests under the plan. Because of such possibilities, the value of the Debtors’ securities is highly speculative. Appointment of Creditors’ Committee On August 26, 2019, the Bankruptcy Court appointed the official committee of unsecured creditors (the “Creditors’ Committee”). The Creditors’ Committee and its legal representatives have a right to be heard on all matters that come before the Bankruptcy Court with respect to the Debtors. Debtor Financial Statements Condensed consolidated financial statements of the Debtors are set forth below. These condensed consolidated financial statements exclude the financial statements of the non-Debtors. Transactions and balances of receivables and payables between Debtors are eliminated in consolidation. However, the Debtors’ condensed consolidated balance sheet includes receivables from and payables to related non-Debtors. Debtors (1) Condensed Consolidated Balance Sheets (Unaudited) (in thousands) September 30, December 31, 2019 2018 ASSETS Current assets: Cash and cash equivalents $ 173,959 $ 194,723 Oil and natural gas receivables 42,778 55,083 Joint interest billings receivables 10,969 33,261 Fair value of derivative instruments 367 5,154 Other current assets 20,978 28,617 Total current assets 249,051 316,838 Oil and natural gas properties, on the basis of successful efforts accounting: Proved oil and natural gas properties 2,947,641 2,890,471 Unproved oil and natural gas properties 205,121 236,931 Total oil and natural gas properties 3,152,762 3,127,402 Less: Accumulated depreciation, depletion, amortization and impairment (1,651,441) (1,526,988) Total oil and natural gas properties, net 1,501,321 1,600,414 Other assets: Right of use assets, net 280,139 — Investments 4,921 9,384 Investments in subsidiaries 338,097 337,475 Other assets 31,631 45,524 Total assets $ 2,405,160 $ 2,309,635 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Debtor-in-possession financing $ 50,000 $ — Accounts payable 14,372 32,382 Accounts payable - related entities 7,745 8,707 Other payables 16,230 74,595 Accrued liabilities: Capital expenditures 5,194 54,317 Other 46,909 87,656 Fair value of derivative instruments 700 307 Short term lease liabilities 109,494 — Other current liabilities 31,962 75,581 Total current liabilities 282,606 333,545 Long term debt, net of premium, discount and debt issuance costs — 2,213,223 Asset retirement obligations 34,456 32,432 Long term lease liabilities 173,990 — Liabilities subject to compromise 2,398,106 — Other liabilities 1 21,407 Total liabilities 2,889,159 2,600,607 Stockholders' deficit: Preferred stock 31 53 Common stock 1,014 881 Additional paid-in capital 1,371,698 1,367,427 Accumulated deficit (1,856,742) (1,659,333) Total stockholders' deficit (483,999) (290,972) Total liabilities and stockholders' deficit $ 2,405,160 $ 2,309,635 (1) Sanchez Energy Corporation, SN Palmetto, LLC, SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC, SN Catarina, LLC, Rockin L Ranch Company, LLC, SN Payables, LLC, SN EF Maverick, LLC and SN UR Holdings, LLC. Debtors (1) Condensed Consolidated Statements of Operations (Unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 REVENUES: Oil sales $ 69,597 $ 113,183 $ 242,064 $ 323,019 Natural gas liquid sales 15,506 49,332 65,170 119,961 Natural gas sales 17,941 27,674 69,713 83,640 Sales and marketing revenues 7,283 7,012 18,103 16,910 Total revenues 110,327 197,201 395,050 543,530 OPERATING COSTS AND EXPENSES: Oil and natural gas production expenses 51,196 47,262 154,064 138,322 Exploration expenses 146 2,668 4,724 3,171 Sales and marketing expenses 6,672 7,239 16,591 16,498 Production and ad valorem taxes 6,424 10,683 23,332 29,162 Depreciation, depletion, amortization and accretion 39,211 47,799 128,976 128,812 Impairment of oil and natural gas properties 9,597 3,103 18,206 3,543 General and administrative expenses 21,424 19,386 60,854 66,522 Prepetition restructuring charges 18,231 — 41,855 — Total operating costs and expenses 152,901 138,140 448,602 386,030 Operating income (loss) (42,574) 59,061 (53,552) 157,500 Other income (expense): Interest income 220 1,129 1,442 3,397 Other income (expense) (12,814) (8,217) (13,527) 1,186 Gain on sale of oil and natural gas properties — — — 1,528 Interest expense (19,591) (40,659) (101,693) (121,856) Equity in net earnings of subsidiaries 14,025 8,273 621 12,470 Net (gains) losses on commodity derivatives 2,774 (13,989) (10,748) (88,429) Total other expense (15,386) (53,463) (123,905) (191,704) Reorganization items 55,321 — 55,321 — Net income (loss) before taxes (113,281) 5,598 (232,778) (34,204) Income tax benefit (833) — (23) — Net income (loss) $ (112,448) $ 5,598 $ (232,755) $ (34,204) (1) Sanchez Energy Corporation, SN Palmetto, LLC, SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC, SN Catarina, LLC, Rockin L Ranch Company, LLC, SN Payables, LLC, SN EF Maverick, LLC and SN UR Holdings, LLC. Debtors (1) Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (232,755) $ (34,204) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion, amortization and accretion 128,976 128,812 Impairment of oil and natural gas properties 18,206 3,543 Gain on sale of oil and natural gas properties — (1,528) Stock-based compensation expense 355 4,344 Net losses on commodity derivative contracts 10,748 88,429 Net cash settlements paid on commodity derivative contracts (3,559) (55,147) (Gain) loss on other derivatives (308) 7,141 Loss on investments 4,464 3,361 Loss (gain) on sale of inventory 143 (571) Loss on other assets 858 — Loss on prepaid asset impairment 11,755 — Amortization of deferred gain on Western Catarina Midstream Divestiture — (17,790) Equity in net earnings of subsidiaries (621) (12,470) Amortization of debt issuance costs 5,386 9,859 Accretion of debt discount, net 1,019 1,112 Reorganization |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition | |
Revenue Recognition | Note 4. Revenue Recognition Revenue from Contracts with Customers We account for revenue from contracts with customers in accordance with ASC 606. The unit of account in ASC 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied. Disaggregation of Revenue We recognized revenue of $162.5 million and $277.7 million for the three months ended September 30, 2019 and 2018, respectively, and revenue of $574.4 million and $788.3 million for the nine months ended September 30, 2019 and 2018, respectively. We disaggregate revenue in our income statement based on product type, and we further disaggregate our revenue related to sales and marketing activities. Oil, Natural Gas and NGL Revenues We recognize revenue from the sale of oil, natural gas and NGLs in the period that the performance obligations are satisfied. Our performance obligations are primarily comprised of the delivery of oil, natural gas or NGLs at a delivery point. Each barrel of oil, MMBtu of natural gas, barrel of NGL or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer through delivery of oil, natural gas and NGLs. Sales and Marketing Revenue Beginning in 2018, we entered into commodity purchase transactions with certain third parties and then subsequently sold the purchased commodity as separate revenue streams. We believe an opportunity exists, from time to time, to participate in additional economic benefits and operational efficiencies in support of our upstream activities by purchasing and reselling production from others, to a limited extent, in order to utilize existing firm transportation arrangements. We retain control of the purchased hydrocarbons prior to delivery to the purchaser. The Company has concluded that we are the principal in these arrangements and therefore we recognize revenue on a gross basis as Sales and Marketing Revenues, with costs to purchase and transport the commodity presented as Sales and Marketing Expenses, in each case within our consolidated statement of operations. Contracts to sell the third-party hydrocarbons are the same contracts as those for which we sell our produced hydrocarbons, and as such, we do not recognize this revenue any differently than our oil, natural gas and NGL revenue discussed previously. Remaining Performance Obligations Several of our sales contracts contain multiple performance obligations as each barrel of oil, MMBtu of natural gas, barrel of NGL or other unit of measure is separately identifiable. For these contracts, we have taken the optional exception under ASC 606-10-50-14A(b) which is available only for wholly unsatisfied performance obligations for which the criteria in ASC 606-10-32-40 have been met. Under this exception, neither estimation of variable consideration nor disclosure of the transaction price allocated to the remaining performance obligations is required. Revenue is alternatively recognized in the period that control of the commodity is transferred to the customer and the respective variable component of the total transaction price is resolved. For forms of variable consideration that are not associated with a specific volume and thus do not meet the allocation exception, estimation is required. Examples of such variable consideration consist of deficiency payments, late payment fees, truck rejection charges, inflation adjustments and imbalance penalties; however, these items are immaterial to our condensed consolidated financial statements and/or have a low probability of occurrence. As significant reversals of revenue due to this variability are not probable, no estimation is required. Contract Balances Under our sales contracts, we invoice customers after our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. At September 30, 2019 and December 31, 2018, our receivables from contracts with customers were $69.3 million and $87.2 million, respectively. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 9 Months Ended |
Sep. 30, 2019 | |
Cash and Cash Equivalents | |
Cash and Cash Equivalents | Note 5. Cash and Cash Equivalents As of September 30, 2019 and December 31, 2018, cash and cash equivalents consisted of the following (in thousands): September 30, December 31, 2019 2018 Cash at banks $ 179,265 $ 66,426 Money market funds 273 131,187 Total cash and cash equivalents $ 179,538 $ 197,613 Our cash includes funds held in deposit accounts with highly rated banks, and our cash equivalents include funds held in stable and highly liquid money market accounts with major financial institutions. |
Oil and Natural Gas Properties
Oil and Natural Gas Properties | 9 Months Ended |
Sep. 30, 2019 | |
Oil and Natural Gas Properties | |
Oil and Natural Gas Properties | Note 6. Oil and Natural Gas Properties Impairment of Oil and Natural Gas Properties —The Company recorded a proved property impairment of $4.3 million during the nine months ended September 30, 2019. The Company did not record proved property impairments during the three months ended September 30, 2019 or the three and nine months ended September 30, 2018. Changes in production rates, levels of reserves, future development costs, and other factors will impact the Company’s actual impairment analyses in future periods. Unproved Properties —The Company recorded impairment to our unproved oil and natural gas properties of $9.8 million and $18.6 million for the three and nine months ended September 30, 2019, respectively, and $3.1 million and $4.3 million for the three and nine months ended September 30, 2018, respectively, due to acreage expirations from changes in the development plan. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt | |
Debt | Note 7. Debt As of September 30, 2019 and December 31, 2018, the Company’s outstanding debt consisted of the following (in thousands): September 30, December 31, Interest Rate Maturity Date 2019 2018 Short Term Debt: Debtor-in-possession financing (1) Variable June 11, 2020 $ 50,000 $ — SR Credit Agreement (2)(3) Variable - $ — $ 304 Total short term debt $ 50,000 $ 304 Long Term Debt: 7.75% Notes 7.75% June 15, 2021 $ 600,000 $ 600,000 SN UnSub Credit Agreement (2) Variable March 1, 2022 150,000 167,500 4.59% Non-Recourse Subsidiary Term Loan (2) 4.59% August 31, 2022 3,527 3,803 SR Credit Agreement (2) Variable October 31, 2022 22,941 23,187 6.125% Notes 6.125% January 15, 2023 1,150,000 1,150,000 Credit Agreement (4) Variable February 14, 2023 (5) 7,922 — 7.25% Senior Secured Notes 7.25% February 15, 2023 (6) 500,000 500,000 2,434,390 2,444,490 Unamortized discount on Additional 7.75% Notes (7) — (2,222) Unamortized premium on Additional 6.125% Notes (7) — 1,090 Unamortized discount on 7.25% Senior Secured Notes (7) — (4,241) Unamortized debt issuance costs (7) (9,512) (43,709) Total long term debt 2,424,878 2,395,408 Less liabilities subject to compromise (8) (2,257,922) — Total long term debt not subject to compromise $ 166,956 $ 2,395,408 (1) Incurred interest at a weighted-average rate of approximately 10.1% for the postpetition period ended September 30, 2019. (2) Represents debt instruments which are non-recourse to Sanchez Energy Corporation and its restricted subsidiaries. (3) Incurred interest at a weighted-average rate of approximately 5.9% and 6.9% for the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively. (4) A standby letter of credit in the amount of approximately $17.1 million was issued under the Credit Agreement on January 10, 2019 and incurred fees at a rate of 3.25% through the Petition Date. The letter of credit remains outstanding and is undrawn as of September 30, 2019 but is currently proposed to be cash collateralized subject to entry of the Final DIP Order . (5) The Credit Agreement would mature on the earlier of (i) February 14, 2023 or (ii) the 91st day prior to the scheduled maturity of any “material indebtedness,” which is defined to include, without limitation, any indebtedness arising in connection with the 7.75% Notes, 6.125% Notes or the 7.25% Senior Secured Notes. The 7.75% Notes would mature on June 15, 2021; therefore, the Credit Agreement would, as of September 30, 2019, mature on March 15, 2021. (6) The 7.25% Senior Secured Notes would mature on February 15, 2023, unless on October 10, 2022 either (i) some or all of the 6.125% Notes are still outstanding and have not been defeased or (ii) there is outstanding indebtedness of Sanchez Energy Corporation or any of its restricted subsidiaries that was used to purchase, repurchase, redeem, defease or otherwise acquire or retire for value the 6.125% Notes, and such indebtedness under this clause (ii) has a final maturity date that is earlier than May 17, 2023, in which case of either clause (i) or clause (ii), the 7.25% Senior Secured Notes would mature on October 14, 2022. (7) Approximately $30.4 million in net discounts, premiums and debt issuance costs were reclassified as reorganization items in connection with the filing of the Bankruptcy Petitions. (8) The Company’s 7.75% Notes, 6.125% Notes, Credit Agreement, and 7.25% Senior Secured Notes were classified as liabilities subject to compromise at September 30, 2019. The components of interest expense are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Interest on SR Credit Agreement $ (342) $ (360) $ (917) $ (1,188) Interest on Senior Notes (17,704) (38,296) (94,299) (110,158) Interest and commitment fees on SN UnSub Credit Agreement (1,952) (2,131) (6,383) (6,634) Interest on Non-Recourse Subsidiary Term Loan (31) (46) (116) (140) Interest, commitment fees and letter of credit fees on Credit Agreement (106) (32) (389) (726) Interest on DIP Facility (600) — (600) — Amortization of debt issuance costs (1,961) (2,873) (8,275) (12,706) Amortization of discounts and premium on Senior Notes (188) (416) (1,019) (1,112) Total interest expense $ (22,884) $ (44,154) $ (111,998) $ (132,664) On July 15, 2019, the Company elected to defer making an interest payment of approximately $35.2 million on the Company’s 6.125% Notes to continue ongoing discussions with certain of its bondholders and other stakeholders regarding a restructuring transaction. The indenture governing the 6.125% Notes provided for a 30-day grace period, which expired on August 14, 2019, to make the scheduled interest payment before such non-payment constituted an event of default under the indenture, which would have entitled the trustee under such indenture or the holders of at least 25% in aggregate principal amount of the outstanding 6.125% Notes to accelerate the maturity thereof. Such event of default would have triggered events of default under the Company’s indentures governing the 7.75% Notes, the 7.25% Senior Secured Notes and the Credit Agreement. The Debtors filed the Bankruptcy Petitions prior to expiration of the grace period. Further, the Debtors have discontinued recording interest on debt instruments classified as subject to compromise as of the Petition Date. Credit Facilities DIP Facility “—Note 3. Chapter 11 Cases” for information on the Company’s DIP Facility. Third On February 14, 2018, the Company entered into a revolving credit facility, providing for a $25 million first-out senior secured working capital and letter of credit facility (the “Credit Agreement”), which amended and restated the Company’s previous credit facility in its entirety. On July 10, 2019, the Company borrowed the remaining $7.9 million available under the Credit Agreement. Additionally, on January 10, 2019, a standby letter of credit was issued on our behalf by the lender under the Credit Agreement in the amount of approximately $17.1 million. This letter of credit, as of September 30, 2019, remains outstanding and is undrawn but is currently proposed to be cash collateralized subject to entry of the Final DIP Order. Further, subject to entry of the Final DIP Order, a portion of the proceeds from the DIP Facility will be used to pay off all $7.9 million of borrowings outstanding under the Credit Agreement and cash collateralize the approximate $17.1 million letter of credit issued under our Credit Agreement. The automatic stay under the Bankruptcy Code does not apply to letters of credit issued under the Credit Agreement and third-party beneficiaries may draw on the letter of credit if permitted by its terms. The filing of the Bankruptcy Petitions also constituted an event of default which automatically accelerated the Company’s obligations under the Credit Agreement. However, under the Bankruptcy Code, the lenders under the Credit Agreement are stayed from taking any action against the Company as a result of these defaults. During the existence of an event of default and the Chapter 11 Cases, we have no borrowing capacity under the Credit Agreement, even if any available borrowing capacity remained under the Credit Agreement. In addition, as discussed above, subject to entry of the Final DIP Order, we anticipate paying off the borrowings outstanding under the Credit Agreement in full. SN UnSub Credit Agreement On March 1, 2017, SN UnSub entered into a credit agreement for a $500 million revolving credit facility with a maturity date of March 1, 2022 (the “SN UnSub Credit Agreement”). On May 23, 2019, as part of the most recent semi-annual redetermination, the borrowing base under the SN UnSub Credit Agreement was decreased from $315 million to $240 million. As of September 30, 2019, there were approximately $150.0 million of borrowings and no letters of credit outstanding under the SN UnSub Credit Agreement. The next regularly scheduled borrowing base redetermination is expected in the fourth quarter 2019. Based upon current commodity prices and other factors, we believe that the borrowing base under the SN UnSub Credit Agreement will likely be decreased at the next redetermination and may be decreased at future redeterminations, and any or all such decreases may be material. Were the lenders under the SN UnSub Credit Agreement to reduce the borrowing base to an amount below the current outstanding borrowings of SN UnSub, and provided no waiver is granted by those lenders, SN UnSub would be required at its election to repay the deficiency within As of September 30, 2019, SN UnSub was in compliance with the covenants of the SN UnSub Credit Agreement. SR Credit Agreement In 2017, we acquired SR Acquisition I, LLC (“SRAI”). On November 16, 2018, SRAI’s credit facility was amended and restated to convert the outstanding revolving loan to a term loan and extend the maturity date to October 31, 2022 (the “SR Credit Agreement”). As of September 30, 2019, there was approximately $22.9 million outstanding under the SR Credit Agreement, and SRAI was in compliance with the financial covenants of the SR Credit Agreement. Senior Notes 7.75% Senior Notes Due 2021 On June 13, 2013, the Company completed a private offering of $400 million in aggregate principal amount of the 7.75% senior notes that would mature on June 15, 2021 (the “Original 7.75% Notes”). On September 18, 2013, we issued an additional $200 million in aggregate principal amount of our 7.75% senior notes due 2021 (the “Additional 7.75% Notes,” and together with the Original 7.75% Notes, the “7.75% Notes”) in a private offering at an issue price of 96.5% of the principal amount of the Additional 7.75% Notes. The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the 7.75% Notes. However, under the Bankruptcy Code, holders of the 7.75% Notes are stayed from taking any action against the Company as a result of the default. 6.125% Senior Notes Due 2023 On June 27, 2014, the Company completed a private offering of $850 million in aggregate principal amount of the 6.125% senior notes that would mature on January 15, 2023 (the “Original 6.125% Notes”). On September 12, 2014, we issued an additional $300 million in aggregate principal amount of our 6.125% senior notes due 2023 (the “Additional 6.125% Notes,” and together with the Original 6.125% Notes, the “6.125% Notes,” and together with the 7.75% Notes and the 7.25% Senior Secured Notes, the “Senior Notes”) in a private offering at an issue price of 100.75% of the principal amount of the Additional 6.125% Notes. The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the 6.125% Notes. However, under the Bankruptcy Code, holders of the 6.125% Notes are stayed from taking any action against the Company as a result of the default. 7.25% Senior Secured First Lien Notes due 2023 On February 14, 2018, the Company completed a private offering to eligible purchasers of $500 million in aggregate principal amount of 7.25% senior secured first lien notes due 2023 (the “7.25% Senior Secured Notes”) at an issue price of 99.0% of the principal amount. The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the 7.25% Senior Secured Notes. However, under the Bankruptcy Code, holders of the 7.25% Senior Secured Notes are stayed from taking any action against the Company as a result of the default. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments | |
Derivative Instruments | Note 8. Derivative Instruments Hedging activities, which, as of September 30, 2019 are regulated by, as applicable, the terms of the DIP Facility, the Credit Agreement, the SN UnSub Credit Agreement and SN UnSub’s organizational documents, are intended to manage exposure to oil and natural gas price fluctuations. It is our policy to enter into derivative contracts only with counterparties that are creditworthy and competitive market participants. As of September 30, 2019, any derivatives that are, as applicable, with (a) lenders, or affiliates of lenders, to the SN UnSub Credit Agreement or (b) counterparties designated as secured under the DIP Facility or Credit Agreement are, in each case, collateralized by the assets securing the applicable facility, and, therefore, did not as of September 30, 2019 require the posting of cash collateral. As of September 30, 2019, any derivatives that are, as applicable, with (x) non-lenders (or non-lender affiliates) under the SN UnSub Credit Agreement or (y) counterparties that are not designated as secured under the DIP Facility and Credit Agreement are, in each case, unsecured and do not require the posting of cash or other collateral. As of September 30, 2019, all of our derivative contracts were with lenders, affiliates of lenders or other secured counterparties. It is never the Company’s intention to enter into derivative contracts for speculative trading purposes. Following the filing of the Bankruptcy Petitions, our ability to enter into derivatives is limited. The following table presents open derivative positions for the periods indicated as of September 30, 2019: October 1 - December 31, 2019 2020 2021 Oil positions: Fixed price swaps (NYMEX WTI): Hedged volume (Bbls) 580,000 1,105,860 650,400 Average price ($/Bbl) $ 52.41 $ 55.29 $ 54.23 Natural gas positions: Fixed price swaps (NYMEX Henry Hub): Hedged volume (MMBtu) 3,362,000 6,934,150 4,212,000 Average price ($/MMBtu) $ 2.87 $ 2.67 $ 2.56 The following table sets forth a reconciliation of the changes in fair value of the Company’s commodity derivatives for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Fair value of commodity derivatives, beginning of period $ 21,194 $ (54,255) Net losses on oil derivatives (28,167) (9,878) Net gains (losses) on natural gas derivatives 6,266 (17,897) Net settlements paid (received) on commodity derivative contracts: Oil 13,479 100,120 Natural gas (3,689) 3,104 Fair value of commodity derivatives, end of period $ 9,083 $ 21,194 Embedded Derivatives: In 2017, the Company entered into certain contracts for the purchase of sand and fractionation services that contain provisions that must be bifurcated from the contract and valued as derivatives. In the fourth quarter 2018, the Company amended certain of these contracts, removing the respective embedded derivative components, and as of September 30, 2019, all remaining embedded derivative contracts expired or had been terminated. The embedded derivatives were historically valued using a Monte Carlo simulation model which utilizes observable inputs, including the NYMEX WTI oil price and NYMEX Henry Hub natural gas price at various points in time. The Company marked these derivatives to market and, as a result, recorded a loss of approximately $1.1 million for the three months ended September 30, 2018. The Company did not record any gains or losses for the three months ended September 30, 2019 as the contracts had expired or terminated. For the nine months ended September 30, 2019 and 2018, the Company recorded a gain of approximately $0.3 million and a loss of $7.1 million, respectively. Any gains or losses related to embedded derivatives are recorded as a component of other income (expense) in the consolidated statement of operations. Earnout Derivative: We are entitled to receive earnout payments from SNMP based on natural gas delivered above a threshold volume and a tariff at certain pipeline delivery points. These payments were deemed to be a derivative. The resulting earnout derivative was valued through the use of a Monte Carlo simulation model which utilized observable inputs, such as the earnout price and volume commitment, as well as unobservable inputs related to the weighted probabilities of various throughput scenarios. For the nine months ended September 30, 2019, the Company recorded an immaterial net gain due to settlement gains, which were partially offset by mark-to-market losses. The Company did not record any gains or losses for the three months ended September 30, 2019. For the three and nine months ended September 30, 2018, the Company recorded approximate net gains of $0.4 million and $1.9 million, respectively, primarily related to mark-to-market gains. Any gains or losses related to the earnout derivative are recorded as a component of other income (expense) in the condensed consolidated statement of operations. The following table sets forth a reconciliation of the changes in fair value of the Company’s embedded and earnout derivatives for the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Fair value of other derivatives, beginning of period $ 5,550 $ (1,551) Gain on embedded derivatives 308 1,243 Initial fair value of earnout derivative — 6,401 Loss on earnout derivatives (32) (543) Fair value of other derivatives, end of period $ 5,826 $ 5,550 Balance Sheet Presentation The Company nets derivative assets and liabilities by commodity for counterparties where a legal right to such netting exists. Therefore, the Company’s derivatives are presented on a net basis as “Fair value of derivative instruments” on the condensed consolidated balance sheets. The following information summarizes the gross fair values of derivative instruments, presenting the impact of offsetting derivative assets and liabilities on the Company’s consolidated balance sheets (in thousands): September 30, 2019 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 6,389 $ (126) $ 6,263 Long term asset 9,361 (15) 9,346 Total asset $ 15,750 $ (141) $ 15,609 Offsetting Derivative Liabilities: Current liability $ 826 $ (126) $ 700 Long term liability 15 (15) — Total liability $ 841 $ (141) $ 700 December 31, 2018 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 16,302 $ (588) $ 15,714 Long term asset 12,178 (76) 12,102 Total asset $ 28,480 $ (664) $ 27,816 Offsetting Derivative Liabilities: Current liability $ 1,294 $ (588) $ 706 Long term liability 442 (76) 366 Total liability $ 1,736 $ (664) $ 1,072 The filing of Bankruptcy Petitions described above constituted an event of default that generally allows counterparties to certain of the Company’s derivative contracts (excluding the counterparties to SN UnSub’s derivative contracts) to unilaterally terminate contracts to their scheduled settlement date(s) and pursue remedies, which are not subject to the automatic stay. In August 2019, as a result of the Chapter 11 Cases, one of our counterparties terminated its derivative contracts with the Company (excluding SN UnSub’s derivative contracts), resulting in a net payable of approximately $1.1 million due to the counterparty. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2019 | |
Investments | |
Investments | Note 9. Investments A subsidiary of the Company owns 1,500,000 shares of Class A Common Stock of Lonestar Resources US Inc. (“Lonestar”). As of September 30, 2019, we believe this ownership represents approximately 6% of Lonestar’s outstanding shares of common stock. The Company accounts for the investment in Lonestar as an investment in equity securities measured at fair value in the condensed consolidated balance sheets at the end of each reporting period. The Company recorded a gain of $0.6 million and a loss of $1.4 million related to the investment in Lonestar for the three and nine months ended September 30, 2019, respectively, and the Company recorded a loss of $1.0 million and a gain of $5.7 million related to the investment in Lonestar for the three and nine months ended September 30, 2018, respectively. Any gains or losses related to the investment in Lonestar are recorded as a component of other income (expense) in the condensed consolidated statement of operations. A subsidiary of the Company owns 100 Class A Units of Gavilan Resources Holdco, LLC (“GRHL”). Tranches representing 20% of the Class A Units vest on each of the first five anniversaries from March 1, 2017. The Class A Units are entitled to distributions from Available Cash, as defined in and subject to the provisions of the GRHL amended and restated limited liability company agreement. The Company accounts for the investment in GRHL as a cost method investment. As of September 30, 2019, the carrying value of the investment in GRHL was $7.3 million. The Company did not record any earnings or distributions from its ownership of the Class A Units for the period from January 1, 2018 through September 30, 2019. A subsidiary of the Company owns 2,272,727 common units of SNMP. As of September 30, 2019, we believe this ownership represents approximately 11.3% of SNMP’s outstanding common units. The Company elected the fair value option to account for its interest in SNMP and records the equity investment at fair value at the end of each reporting period. For the three and nine months ended September 30, 2019, the Company recorded losses of $4.3 million and $3.1 million, respectively, related to the investment in SNMP. In addition, for the nine months ended September 30, 2019, the Company recorded dividend income of approximately $0.7 million from quarterly distributions on the SNMP common units. The Company did not record any dividend income from quarterly distributions on the SNMP common units for the three months ended September 30, 2019. For the three and nine months ended September 30, 2018, the Company recorded losses related to the investment in SNMP of approximately $10.7 million and $9.1 million, respectively. Further, for the three and nine months ended September 30, 2018, we recorded dividend income of approximately $1.0 million and $3.2 million, respectively. Any gains or losses and dividend income related to the investment in SNMP are recorded as a component of other income (expense) in the condensed consolidated statement of operations. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 10. Fair Value of Financial Instruments Measurements of fair value of derivative instruments are classified according to the fair value hierarchy, which prioritizes the inputs to the valuation techniques used to measure fair value. Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. Fair Value on a Recurring Basis The following tables set forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands): As of September 30, 2019 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash equivalents: Cash equivalents $ 273 $ — $ — $ 273 Equity investments: Investment in SNMP 841 — — 841 Investment in Lonestar 4,080 — — 4,080 Oil derivative instruments: Swaps — 5,919 — 5,919 Natural gas derivative instruments: Swaps — 3,164 — 3,164 Other: Earnout derivative asset — — 5,826 5,826 Total $ 5,194 $ 9,083 $ 5,826 $ 20,103 As of December 31, 2018 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash equivalents: Cash equivalents $ 131,187 $ — $ — $ 131,187 Equity investments: Investment in SNMP 3,909 — — 3,909 Investment in Lonestar 5,475 — — 5,475 Oil derivative instruments: Swaps — 20,608 — 20,608 Natural gas derivative instruments: Swaps — 586 — 586 Other: Embedded derivative instruments — (308) — (308) Earnout derivative asset — — 5,858 5,858 Total $ 140,571 $ 20,886 $ 5,858 $ 167,315 (1) Level 1 measurements are fair value measurements which use quoted market prices (unadjusted) in active markets for identical assets or liabilities. We use Level 1 inputs when available, as Level 1 inputs generally provide the most reliable evidence of fair value. (2) Level 2 measurements are fair value measurements which use inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. (3) Level 3 measurements are fair value measurements which use unobservable inputs and require management to make certain assumptions in the determination of value. Financial Instruments : The Level 1 instruments presented in the tables above consist of money market funds and time deposits included in cash and cash equivalents on the Company’s condensed consolidated balance sheets at September 30, 2019 and December 31, 2018. The Company’s money market funds and time deposits represent cash equivalents held with banks and financial institutions. The Company identified the money market funds and time deposits as Level 1 instruments, as money market funds have daily liquidity, there are active markets for the underlying investments and quoted prices for the underlying investments can be obtained. In addition, the Level 1 instruments include the Company’s equity investments in SNMP and Lonestar which are publicly traded companies. The Company’s commodity derivative instruments consist of swaps as of September 30, 2019 and December 31, 2018 as shown in the table above. The fair values of the Company’s derivatives are based on third-party pricing models which utilize inputs that are either readily available in the public market, such as forward curves, or can be corroborated from active markets of broker quotes, and therefore are classified as Level 2. Derivative instruments are also subject to the risk that counterparties will be unable to meet their obligations. Such non-performance risk is considered in the valuation of the Company’s derivative instruments, but to date has not had a material impact on estimates of fair values. Significant changes in the quoted forward prices for commodities and changes in market volatility generally lead to corresponding changes in the fair value measurement of the Company’s derivative instruments. There were no commodity derivative instruments classified as Level 3 as of September 30, 2019 or December 31, 2018. Embedded Derivatives: The Company believes that substantially all of the inputs required to calculate the embedded derivatives are observable in the marketplace throughout the term of these derivative instruments or supported by observable levels at which transactions are executed in the marketplace, and are, therefore, classified as Level 2 inputs. Earnout Derivative: These payments were deemed to be a derivative which utilize observable inputs such as the earnout price and volume commitment, as well as unobservable inputs related to the weighted probabilities of various throughput scenarios. The following table sets forth a reconciliation of changes in the fair value of the Company’s earnout derivative instruments classified as Level 3 in the fair value hierarchy (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Beginning balance $ 5,858 $ — Initial fair value of earnout derivative — 6,401 Loss on earnout derivatives (32) (543) Ending balance $ 5,826 $ 5,858 Fair Value on a Non‑Recurring Basis In connection with the voluntary conversions by certain holders of shares of the Company’s 4.875% Convertible Perpetual Preferred Stock, Series A (the “Series A Preferred Stock”) and 6.500% Convertible Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”) into shares of the Company’s common stock in February, March, June, July and September 2019, the Company issued common stock according to the conversion rate established by the Certificates of Designations for the Series A Preferred Stock and Series B Preferred Stock, as applicable. The fair value of the common stock issued is based on the price of the Company’s common stock on the date of issuance. There were no conversions of Series A Preferred Stock or Series B Preferred Stock into shares of the Company’s common stock during the nine months ended September 30, 2018. As there is an active market for the Company’s common stock, the Company has designated this fair value measurement as Level 1. For further information, see “—Note 14. Stockholders’ and Mezzanine Equity.” The Company recorded proved property impairments of $4.3 million and $6.6 million during the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively, related to oil and natural gas properties in the TMS. The carrying value of the impaired proved properties was reduced to a fair value of $11.0 million and $10.5 million for the nine months ended September 30, 2019 and year ended December 31, 2018, respectively, estimated using inputs characteristic of a Level 3 fair value measurement. Fair Value of Other Financial Instruments The carrying amounts of our oil and natural gas receivables, accounts payable not subject to compromise and accrued liabilities approximate fair value due to their highly liquid nature. The registered 7.75% Notes and 6.125% Notes are traded in an active market, and as such, are classified as Level 1 financial instruments. As of September 30, 2019, the estimated fair values of the 7.75% Notes and 6.125% Notes were $37.8 million and $74.1 million, respectively, and were calculated using quoted market prices based on trades of such debt as of that date. The 7.25% Senior Secured Notes are traded in an active market under Rule 144A by institutional investors, and as such, are classified as Level 1 financial instruments. As of September 30, 2019, the estimated fair value of the 7.25% Senior Secured Notes was $369.3 million and was calculated using quoted market prices based on observed trades of such debt as of that date. We believe that the carrying values of long term debt for the Credit Agreement, SN UnSub Credit Agreement and SR Credit Agreement approximate their fair values because the interest rates on the debt approximate market interest rates for debt with similar terms. These debts are classified as Level 2 inputs in the fair value hierarchy and represent the amounts at which the instruments could be valued in an exchange during a current transaction between willing parties. |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Sep. 30, 2019 | |
Asset Retirement Obligations | |
Asset Retirement Obligations | Note 11. Asset Retirement Obligations The changes in the asset retirement obligation for the nine months ended September 30, 2019 and the year ended December 31, 2018 were as follows (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Abandonment liability, beginning of period $ 46,175 $ 36,098 Liabilities incurred during period 275 1,965 Divestitures (147) (158) Revisions — 5,077 Accretion expense 2,879 3,193 Abandonment liability, end of period $ 49,183 $ 46,175 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | Note 12. Related Party Transactions Sanchez Oil and Gas Corporation Expenses allocated to the Company from SOG for G&A expenses and oil and natural gas production expenses for the three months ended September 30, 2019 and 2018 were $17.3 million and $15.3 million, respectively, and expenses allocated to the Company for G&A expenses and oil and natural gas production expenses for the nine months ended September 30, 2019 and 2018 were $52.6 million and $48.8 million, respectively. As of September 30, 2019 and December 31, 2018, the Company had a net receivable from SOG and its affiliates of $10.2 million and $6.1 million, respectively, which is reflected as “Accounts receivable—related entities” in the condensed consolidated balance sheets. The net receivable as of September 30, 2019 and December 31, 2018 consists primarily of advances related to G&A expenses and other costs paid to SOG in the ordinary course. Sanchez Midstream Partners As of September 30, 2019 and December 31, 2018, the Company had a net payable to SNMP of approximately $3.8 million and $6.1 million, respectively, that consists primarily of fees associated with oil and natural gas gathering and transportation services. |
Accrued Liabilities and Other C
Accrued Liabilities and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities and Other Current Liabilities. | |
Accrued Liabilities and Other Current Liabilities | Note 13. Accrued Liabilities and Other Current Liabilities The following information summarizes accrued liabilities as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Capital expenditures $ 7,232 $ 61,970 Other: General and administrative expenses 20,635 19,460 Production taxes 2,483 5,157 Ad valorem taxes 6,655 445 Lease operating expenses 34,782 24,138 Interest payable 376 47,866 Other accrued liabilities 1,367 5,662 Total accrued liabilities $ 73,530 $ 164,698 The following information summarizes other payables as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Revenue payable $ 14,963 $ 71,296 Production tax payable 448 3,443 Other 1,328 (111) Total other payables $ 16,739 $ 74,628 The following information summarizes other current liabilities as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Operated prepayment liability $ 31,921 $ 51,844 Deferred gain on Western Catarina Midstream Divestiture - short term — 23,720 Phantom compensation payable - short term 40 17 Total other current liabilities $ 31,961 $ 75,581 |
Stockholders' and Mezzanine Equ
Stockholders' and Mezzanine Equity | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' and Mezzanine Equity | |
Stockholders' and Mezzanine Equity | Note 14. Stockholders’ and Mezzanine Equity Series A Preferred Stock Each share of Series A Preferred Stock is convertible at any time at the option of the holder thereof at an initial conversion rate of 2.325 shares of common stock per share of Series A Preferred Stock (which is equal to an initial conversion price of $21.51 per share of common stock) and is subject to specified adjustments. As of September 30, 2019, based on the initial conversion price, approximately 1,440,343 shares of common stock would be issuable upon conversion of all of the outstanding shares of the Series A Preferred Stock. The annual dividend on each share of Series A Preferred Stock is 4.875% on the liquidation preference of $50.00 per share and is payable quarterly, in arrears, on each January 1, April 1, July 1 and October 1, when, as and if declared by the Board. Subject to certain conditions, the Company may, at its option, pay dividends in cash and, subject to certain additional conditions, common stock or any combination thereof. Dividends are cumulative and, beginning with the three month period ended March 31, 2019, the Board determined to suspend the dividend on our Series A Preferred Stock. Dividends accumulated through September 30, 2019 have been accrued. Pursuant to the terms of the DIP Facility, the Company may not pay any dividends on, make any distribution or payment on account of, redeem or acquire any shares of Series A Preferred Stock. Series B Preferred Stock Each share of Series B Preferred Stock is convertible at any time at the option of the holder thereof at an initial conversion rate of 2.337 shares of common stock per share of Series B Preferred Stock (which is equal to an initial conversion price of $21.40 per share of common stock) and is subject to specified adjustments. As of September 30, 2019, based on the initial conversion price, approximately 5,763,071 shares of common stock would be issuable upon conversion of all of the outstanding shares of the Series B Preferred Stock. The annual dividend on each share of Series B Preferred Stock is 6.500% on the liquidation preference of $50.00 per share and is payable quarterly, in arrears, on each January 1, April 1, July 1 and October 1, when, as and if declared by the Board. Subject to certain conditions, the Company may, at its option, pay dividends in cash and, subject to certain additional conditions, common stock or any combination thereof. Dividends are cumulative and, beginning with the three month period ended March 31, 2019, the Board determined to suspend the dividend on our Series B Preferred Stock. Dividends accumulated through September 30, 2019 have been accrued. Pursuant to the terms of the DIP Facility, the Company may not pay any dividends on, make any distribution or payment on account of, redeem or acquire any shares of Series B Preferred Stock. Preferred Stock Conversions On February 12, 2019, 72,500 shares of Series A Preferred Stock converted into 168,563 shares of our common stock and 245,832 shares of Series B Preferred Stock converted into 574,510 shares of our common stock at the election of the holders thereof. From March 6 to March 8, 2019, 563,832 shares of Series A Preferred Stock converted into 1,310,914 shares of our common stock and 770,986 shares of Series B Preferred Stock converted into 1,801,798 shares of our common stock, at the election of the holders thereof. On March 26, 2019, 422,222 shares of Series A Preferred Stock converted into 981,667 shares of our common stock, at the election of the holders thereof. As of June 14, 2019, 155,929 shares of Series A Preferred Stock converted into 362,535 shares of our common stock, at the election of the holders thereof. On July 29, 2019, 5,000 shares of Series A Preferred Stock converted into 11,625 shares of our common stock, at the election of the holder thereof. On September 30, 2019, 45,000 shares of Series B Preferred Stock converted into 105,165 shares of our common stock, at the election of the holder thereof. Through the conversions, each of the holders effectively waived their rights to any accrued and unpaid dividends thereon under the conversion terms set forth in Certificates of Designations for the Series A Preferred Stock and Series B Preferred Stock, as applicable. As a result, the Company has reduced its quarterly dividend accruals on its Series A Preferred Stock and Series B Preferred Stock by approximately $1.6 million as compared to the amount that would have been payable based on the number of shares outstanding prior to these conversions. SN UnSub Preferred Unit Issuance On March 1, 2017, the Company, through two of its subsidiaries, SN UnSub and SN Maverick, along with Gavilan Resources, LLC (“Gavilan”) , an entity controlled by The Blackstone Group Inc., completed the acquisition of approximately 318,000 gross (155,000 net) acres comprised of 252,000 gross (122,000 net) Eagle Ford Shale acres and 66,000 gross (33,000 net) acres of deep rights only, which includes the Pearsall Shale, representing an approximate 49% average working interest therein (the “Comanche Assets,” with such acquisition, the “Comanche Acquisition”). At the closing of the Comanche Acquisition, certain funds managed or advised by GSO Capital Partners L.P. (“GSO”) purchased 485,000 preferred units of SN UnSub and Intrepid Private Equity V-A LLC purchased 15,000 preferred units of SN UnSub (in aggregate, the “SN UnSub Preferred Units”). The SN UnSub Preferred Units are accounted for as mezzanine equity in the condensed consolidated balance sheet consisting of the following as of September 30, 2019 and December 31, 2018, respectively, (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Mezzanine equity, beginning balance $ 452,828 $ 427,512 Accretion of discount 22,029 25,316 Dividends accrued 37,500 50,000 Dividends prepaid (1) — (2,592) Dividends/distributions paid (1) (37,500) (47,408) Mezzanine equity, ending balance $ 474,857 $ 452,828 (1) In 2017, tax distributions of approximately $2.6 million were paid in excess of the accrued dividend. The excess distribution was offset against a portion of the dividend accrued during the three months ended March 31, 2018. Earnings (Loss) Per Share— The following table shows the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2019 and 2018 (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income (loss) $ (112,448) $ 5,598 $ (232,755) $ (34,204) Less: Preferred stock dividends (2,312) (3,987) (7,153) (11,961) Preferred unit dividends and distributions (12,500) (12,500) (37,500) (34,908) Preferred unit amortization (7,638) (6,458) (22,029) (18,577) Net loss attributable to common stockholders $ (134,898) $ (17,347) $ (299,437) $ (99,650) Weighted average number of unrestricted outstanding common shares used to calculate basic and dilutive net loss per share (1)(2) 97,395 82,073 95,272 81,597 Net loss per common share - basic and diluted $ (1.39) $ (0.21) $ (3.14) $ (1.22) (1) The three and nine months ended September 30, 2018 exclude 1,840,007 and 2,591,553 shares, respectively, of weighted average restricted stock and 12,520,179 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. (2) The three and nine months ended September 30, 2019 exclude 433,369 and 942,551 shares, respectively, of weighted average restricted stock and 7,306,402 and 8,757,574 shares, respectively, of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 15. Stock‑Based Compensation The Company’s Third Amended and Restated Long Term Incentive Plan (the “LTIP”) allows for grants of stock options, stock appreciation rights, restricted shares, phantom stock, other stock based awards or stock awards, or any combination thereof. Effective January 1, 2019, the Company records stock-based compensation expense for awards granted in accordance with the provisions of ASU 2018-07 “Compensation - Stock Compensation (ASC 718) - Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718, “Compensation – Stock Compensation,” to include share-based payment transactions for acquiring goods and services from nonemployees. Pursuant to this standard, stock-based compensation expense is based on the grant-date fair value of our stock awards and is recognized over the vesting period using the straight-line method. As a result of our adoption of ASU 2018-07, the Company remeasured the value of our outstanding unvested awards as of January 1, 2019. This did not have a material impact on our financial statements. During the three and nine months ended September 30, 2019, the Company did not issue any shares of restricted common stock pursuant to the LTIP. During the three months ended September 30, 2019, the Company did not issue any shares of phantom stock pursuant to the LTIP. During the nine months ended September 30, 2019, the Company issued an immaterial number of shares of phantom stock pursuant to the LTIP to certain employees of SOG, with whom the Company has a services agreement. These shares of phantom stock vest in equal annual amounts over a three year period. For the 2018 performance period applicable to our performance phantom stock awards granted in 2017 (the “Performance Awards”), 0% of the target shares were awarded. For the 2018 performance period applicable to our cash-settled performance-based phantom stock awards and stock-settled performance-based phantom stock awards granted in 2018 (together, the “PBPS Awards”), 71% of the target shares were awarded, equating to 419,430 cash-settled awards and 419,430 stock-settled awards. Stock-based compensation expense for these awards was calculated in accordance with ASC 718 and is being amortized over the vesting period. The Company recognized the following stock-based compensation expense (in thousands) which is included in general and administrative expense in the condensed consolidated statements of operations: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Restricted stock awards, directors $ — $ 305 $ 42 $ 932 Restricted stock awards, non-employees 45 (862) 270 1,957 Performance awards 51 (842) 83 (12) Phantom stock awards (101) (2,652) (40) 1,467 Total stock-based compensation expense $ (5) $ (4,051) $ 355 $ 4,344 Based on the $0.03 per share closing price of the Company’s common stock on September 30, 2019, there was approximately $0.3 million of unrecognized compensation cost related to the non‑vested restricted shares outstanding. The cost is expected to be recognized over an average period of approximately 1.7 years. Based on the $0.03 per share closing price of the Company’s common stock on September 30, 2019, there was less than $0.1 million of unrecognized compensation cost related to the non‑vested performance accelerated restricted stock outstanding. The cost is expected to be recognized over an average period of approximately 1.5 years. Based on the $0.03 per share closing price of the Company’s common stock on September 30, 2019, there was less than $0.1 million of unrecognized compensation cost related to the non‑vested performance accelerated phantom stock (“PAPS”) and phantom stock outstanding. The cost is expected to be recognized over an average period of approximately 1.7 years. Based on the estimated per share price of the common stock underlying the Performance Awards on September 30, 2019, there was less than $0.1 million of unrecognized compensation cost related to the Performance Awards. The cost is estimated to be recognized over a weighted average period of approximately 2.3 years. Based on the estimated per share price of the common stock underlying the PBPS Awards on September 30, 2019, there was less than $0.1 million of unrecognized compensation cost related to the PBPS Awards. The cost is estimated to be recognized over a weighted average period of approximately 1.1 years. A summary of the status of the non-vested restricted shares for the three and nine months ended September 30, 2019 and 2018 is presented below (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Non-vested common stock, beginning of period 2,714 5,767 5,024 4,897 Granted — 146 — 3,303 Vested (51) (59) (2,164) (2,218) Forfeited (24) (414) (221) (542) Non-vested common stock, end of period 2,639 5,440 2,639 5,440 As of September 30, 2019, approximately 8.4 million shares remained available for future issuance to participants under the LTIP. A summary of the status of the non‑vested phantom stock and PAPS for the three and nine months ended September 30, 2019 and 2018 is presented below (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Non-vested phantom stock and PAPS, beginning of period 2,857 5,888 5,125 3,589 Granted — 253 7 3,905 Vested (60) (46) (1,874) (1,197) Forfeited (58) (465) (519) (667) Non-vested phantom stock and PAPS, end of period 2,739 5,630 2,739 5,630 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | Note 16. Income Taxes The Company used a year-to-date effective tax rate method for recording income taxes for the nine month periods ended September 30, 2019 and 2018. This method is based on our determination at September 30, 2019 and 2018 that due to our valuation allowance position, the income tax provision does not materially change by using a year-to-date effective tax rate method as compared to an estimated full year annual effective tax rate method. Further, for the period ended September 30, 2018, a small change in our estimated ordinary income could have resulted in a large change in the estimated annual effective tax rate. We will use this year-to-date effective tax rate method each quarter until such time a return to the annualized effective tax rate method is deemed material or appropriate. The Company's effective tax rate for the nine months ended September 30, 2019 and 2018 was approximately 0% and 0%, respectively. The difference between the statutory federal income taxes calculated using a U.S. Federal statutory corporate income tax rate of 21% and the Company’s effective tax rates is related to the valuation allowance on deferred tax assets. The Company provides for deferred income taxes on the difference between the tax basis of an asset or liability and its carrying amount in the financial statements in accordance with authoritative guidance for accounting for income taxes. This difference will result in taxable income or deductions in future years when the reported amount of the asset or liability is recovered or settled, respectively. In recording deferred income tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those deferred income tax assets would be deductible. The Company believes that after considering all the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, management is not able to determine that it is more likely than not that the deferred tax assets will be realized and, therefore, has established a valuation allowance to reduce the deferred tax assets as of September 30, 2019. The Company will continue to assess the valuation allowance against deferred tax assets considering all available information obtained in future reporting periods. At September 30, 2019, the Company had no material uncertain tax positions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 17. Commitments and Contingencies Stockholder Derivative Litigation On August 29, 2018, a derivative action was filed in the Court of Chancery of the State of Delaware against certain of the Company’s directors (Armato et al. v. A.R. Sanchez, Jr. et al., No. 2018-0642, the “Derivative Action”). The complaint alleges breach of fiduciary duty, unjust enrichment and waste of corporate assets against directors of the Company based on purportedly excessive compensation of the Company’s non-employee directors. On October 22, 2018, the Company and defendant directors filed an answer to the Derivative Action. In their answer, the defendant directors denied any wrongdoing or liability in response to the allegations in the complaint. On August 16, 2019 a suggestion of bankruptcy was filed in the Derivative Action by the Company, and there has been no activity in the case since that time. Given the status and the preliminary state of the Derivative Action, the Company is unable to reasonably predict an outcome of the Derivative Action or a timeframe for its resolution. The complaint does not specify damages sought. From time to time, the Company may be involved in lawsuits or other legal proceedings that arise in the normal course of its business. M anagement cannot predict the ultimate outcome of such lawsuits or claims. Management does not currently expect the outcome of any of the known claims or proceedings to individually or in the aggregate have a material adverse effect on our results of operations or financial condition. We are not aware of any material governmental proceedings against us or contemplated to be brought against us. Catarina Drilling Commitment In the Catarina area, we have a drilling commitment that requires us to drill (i) 50 wells in each 12-month period commencing July 1, 2014 and (ii) at least one well in any consecutive 120‑day period, in order to maintain rights to any future undeveloped acreage. Up to 30 wells drilled in excess of the minimum 50 wells in a given annual period can be carried over to satisfy part of the 50-well requirement in the subsequent 12-month period on a well-for-well basis. The lease also creates a customary security interest in the production therefrom in order to secure royalty payments to the lessor and other lease obligations. During the commitment period ending June 30, 2019, the Company drilled 13 wells that may be counted toward the next annual drilling commitment period, which began on July 1, 2019. Furthermore, our 2019 capital budget and current plans include the additional activity needed to fulfill the commitment to drill at least one well in any 120-day period and the activity needed, when combined with expected activity in the first half of 2020, to comply with the 50-well annual drilling commitment for the period July 1, 2019 to June 30, 2020. Comanche Drilling Commitment In the Comanche area, we have a development commitment that, in addition to other requirements in the leases that must be met in order to maintain our acreage position, requires us to complete and equip 60 wells in each annual period commencing September 1, 2017 and continuing thereafter until September 1, 2022 or pay a penalty for the failure to do so. Up to 30 wells completed and equipped in excess of the annual 60-well requirement can be carried over to satisfy part of the 60-well requirement in subsequent annual periods on a well-for-well basis. I f we fail to complete and equip the required number of wells in a given year (after applying any qualifying additional wells from previous years), we and Gavilan are jointly and severally liable for a default fee of $0.2 million for each well we do not timely complete and equip We currently intend to drill at least the minimum number of wells required to satisfy the development agreement and to comply with applicable lease requirements necessary to maintain our Comanche acreage position. Palmetto Drilling Commitment Marathon Oil EF LLC (“Marathon”) is the operator and other lessee of our Palmetto acreage position. In the Palmetto area, we have a development commitment that, in addition to other requirements in the leases that must be met in order to maintain our acreage position, requires the lessees thereof to (i) complete six gross (three net) wells and drill and complete an additional four gross (two net) wells during the 2019 calendar year and (ii) drill and complete up to 10 gross (five net) wells, depending on commodity pricing in each calendar year beginning in 2020. If the lessees under such leases fail to complete and equip the required number of wells in a given year (after applying any qualifying additional wells from previous years and any required additional wells drilled and completed prior to the applicable extension cutoff date in the following year), the leases terminate as to all lands and depths not included within a retained tract at the end of the applicable calendar year, as further described in, and pursuant to the terms and conditions of, each such lease. For the 2019 commitment, Marathon has completed six gross wells and drilled four gross wells that are currently in the process of completion, thereby satisfying the 2019 development commitment and complying with applicable lease requirements necessary to maintain our Palmetto acreage position if timely completed. Volume Commitments As is common in our industry, the Company is party to certain oil and natural gas gathering and transportation and natural gas processing agreements that obligate us to deliver a specified volume of production over a defined time horizon. If not fulfilled, the Company is subject to deficiency payments to our midstream counterparties. As of September 30, 2019, the Company had approximately $406.3 million in future commitments related to oil and natural gas gathering and transportation agreements ($140.6 million for 2019 through 2021, $128.8 million from 2022 through 2024, and $136.9 million under commitments expiring after December 31, 2024, in the aggregate) and approximately $40.5 million in future commitments related to natural gas processing agreements ($39.8 million for 2019 through 2021, and $0.7 million from 2022 through 2024, in the aggregate) that are not recorded in the accompanying condensed consolidated balance sheets. For the three and nine months ended September 30, 2019, the Company incurred expenses related to deficiency fees of approximately $3.6 million and $7.5 million, respectively, and for the three and nine months ended September 30, 2018, the Company incurred expenses related to deficiency fees of approximately $1.6 million and $3.8 million, respectively. These expenses are reported on the condensed consolidated statements of operations in the “Oil and natural gas production expenses” line item. Loss Contingencies To the extent we are able to assess the likelihood of a negative outcome for a contingency, whether it be the loss or impairment of an asset or the incurrence of a liability, our assessments of such likelihood range from remote to probable. If we determine that a negative outcome is probable and the amount of loss is reasonably estimable, we accrue an undiscounted liability equal to the estimated amount. If a range of probable loss amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then we accrue an undiscounted liability equal to the minimum amount in the range. In addition, we estimate legal fees that we expect to incur associated with loss contingencies and accrue those costs when they are material and probable of being incurred. We do not record a contingent liability when the likelihood of loss is probable but the amount cannot be reasonably estimated or when the likelihood of loss is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and the impact would be material to our consolidated financial statements, we disclose the nature of the contingency and, where feasible, an estimate of the possible loss or range of loss. For the three and nine months ended September 30, 2019, we recorded a loss on impairment of a prepaid asset of $11.8 million. Other Commitments and Contingencies The filing of the Bankruptcy Petitions automatically stayed certain actions against the Company, including actions to collect prepetition liabilities or to exercise control over the property of the Company’s bankruptcy estates. The Company sought and obtained authorization from the Bankruptcy Court to pay certain prepetition claims. The Company is paying all of its postpetition obligations in the ordinary course of business, notwithstanding the filing of the Bankruptcy Petitions. In addition, the filing of the Bankruptcy Petitions may allow the Company to assume, assign or reject certain commitments as executory contracts. See “—Note 3. Chapter 11 Cases” for additional information. |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 9 Months Ended |
Sep. 30, 2019 | |
Condensed Consolidating Financial Information | |
Condensed Consolidating Financial Information | Note 18. Condensed Consolidating Financial Information The Company’s 7.75% Notes and 6.125% Notes have been registered with the SEC and are guaranteed by all of the Company’s subsidiaries, except for SN UR Holdings, SN Services, LLC, SN Terminal, LLC, SN Midstream, LLC, SN Comanche Manager, LLC, SN UnSub GP, SN UnSub Holdings, SN UnSub, SN Capital, LLC, Sanchez Resources, LLC, SR Acquisition I, LLC, SR Acquisition III, LLC and SR TMS, LLC which are unrestricted subsidiaries of the Company. As of September 30, 2019 such guarantor subsidiaries were 100% owned by the Company and the guarantees by these subsidiaries are full and unconditional (except for customary release provisions) and are joint and several. Rule 3-10 of Regulation S-X requires that, in lieu of providing separate financial statements for subsidiary guarantors, condensed consolidating financial information be provided where the subsidiaries have guaranteed the debt of a registered security, where the guarantees are full, unconditional and joint and several and where the voting interest of the subsidiaries are 100% owned by the registrant. The Company has no assets or operations independent of its subsidiaries and there are no significant restrictions upon the ability of its subsidiary guarantors to distribute funds to the Company by dividends or loans. The following is a presentation of condensed consolidating financial information on a parent company, combined guarantor subsidiaries, combined non-guarantor subsidiaries and consolidated basis (in thousands) in accordance with Rule 3-10 of Regulation S-X and should be read in conjunction with the condensed consolidated financial statements. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had such guarantor subsidiaries operated as independent entities. Investments in subsidiaries are accounted for by the respective parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are, therefore, reflected in the parent company’s investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions. Typically in a condensed consolidating financial statement, the net income and equity of the parent company equals the net income and equity of the consolidated entity. The guarantor subsidiaries, along with non-guarantor subsidiary SN UR Holdings, LLC in addition to Sanchez Energy Corporation, constitute Debtors in the Chapter 11 Cases. Although the filing of the Bankruptcy Petitions triggered defaults on the Debtors’ debt obligations, creditors are stayed from taking any actions against the Debtors as a result of such defaults, subject to certain limited exceptions permitted by the Bankruptcy Code. Substantially all of the Debtors’ prepetition liabilities are subject to settlement and compromise under the Bankruptcy Code. See “—Note 3. Chapter 11 Cases” and “—Note 7. Debt” for additional information. A summary of the condensed consolidated guarantor balance sheets as of September 30, 2019 and December 31, 2018 is presented below (in thousands): September 30, 2019 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 243,889 $ 122,817 $ 106,561 $ (172,357) $ 300,910 Total oil and natural gas properties, net 60 1,498,844 717,321 — 2,216,225 Investment in subsidiaries 1,609,093 — (7,278) (1,601,815) — Other assets 52,146 259,623 33,906 — 345,675 Total Assets $ 1,905,188 $ 1,881,284 $ 850,510 $ (1,774,172) $ 2,862,810 Liabilities and Stockholders' Equity Current liabilities $ 77,254 $ 202,889 $ 189,010 $ (172,357) $ 296,796 Long term liabilities 2,370,695 235,861 181,680 — 2,788,236 Mezzanine equity — — 474,857 — 474,857 Total stockholders' equity (deficit) (542,761) 1,442,534 4,963 (1,601,815) (697,079) Total Liabilities and Stockholders' Equity (Deficit) $ 1,905,188 $ 1,881,284 $ 850,510 $ (1,774,172) $ 2,862,810 December 31, 2018 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 473,062 $ 69,934 $ 146,765 $ (316,780) $ 372,981 Total oil and natural gas properties, net 36 1,600,378 758,711 — 2,359,125 Investment in subsidiaries 1,577,054 — (7,280) (1,569,774) — Other assets 22,917 10,307 54,630 — 87,854 Total Assets $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 Liabilities and Stockholders' Equity Current liabilities $ 155,396 $ 282,719 $ 226,964 $ (316,780) $ 348,299 Long term liabilities 2,203,546 51,211 208,599 — 2,463,356 Mezzanine equity — — 452,828 — 452,828 Total stockholders' equity (deficit) (285,873) 1,346,689 64,435 (1,569,774) (444,523) Total Liabilities and Stockholders' Equity (Deficit) $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 A summary of the condensed consolidated guarantor statements of operations for the three and nine months ended September 30, 2019 and 2018 is presented below (in thousands): Three Months Ended September 30, 2019 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 110,327 $ 52,219 $ — $ 162,546 Total operating costs and expenses (35,928) (116,966) (45,410) 90 (198,214) Other income (expense) (27,494) 1,533 3,759 (90) (22,292) Reorganization items (55,321) — — — (55,321) Income (loss) before income taxes (118,743) (5,106) 10,568 — (113,281) Income tax benefit (833) — — — (833) Equity in income (loss) of subsidiaries 5,462 — — (5,462) — Net income (loss) $ (112,448) $ (5,106) $ 10,568 $ (5,462) $ (112,448) Three Months Ended September 30, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 197,203 $ 80,507 $ — $ 277,710 Total operating costs and expenses (16,717) (126,573) (49,969) 134 (193,125) Other income (expense) (52,165) 794 (27,482) (134) (78,987) Income (loss) before income taxes (68,882) 71,424 3,056 — 5,598 Equity in income (loss) of subsidiaries 74,480 — — (74,480) — Net income (loss) $ 5,598 $ 71,424 $ 3,056 $ (74,480) $ 5,598 Nine Months Ended September 30, 2019 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 395,050 $ 179,300 $ — $ 574,350 Total operating costs and expenses (90,587) (358,005) (158,412) 360 (606,644) Other income (expense) (123,907) 2,188 (23,084) (360) (145,163) Reorganization items (55,321) — — — (55,321) Income (loss) before income taxes (269,815) 39,233 (2,196) — (232,778) Income tax benefit (23) — — — (23) Equity in income (loss) of subsidiaries 37,037 — — (37,037) — Net income (loss) $ (232,755) $ 39,233 $ (2,196) $ (37,037) $ (232,755) Nine Months Ended September 30, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 543,529 $ 244,722 $ — $ 788,251 Total operating costs and expenses (56,967) (334,408) (163,833) 406 (554,802) Other income (expense) (200,124) (4,469) (62,654) (406) (267,653) Income (loss) before income taxes (257,091) 204,652 18,235 — (34,204) Equity in income (loss) of subsidiaries 222,887 — — (222,887) — Net income (loss) $ (34,204) $ 204,652 $ 18,235 $ (222,887) $ (34,204) A summary of the condensed consolidated guarantor statements of cash flows for the nine months ended September 30, 2019 and 2018 is presented below (in thousands): Nine Months Ended September 30, 2019 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (166,502) $ 233,600 $ 32,652 $ — $ 99,750 Net cash provided by (used in) investing activities 109,510 (81,169) (34,665) (103,893) (110,217) Net cash provided by (used in) financing activities 48,315 (159,599) (217) 103,893 (7,608) Net increase (decrease) in cash and cash equivalents (8,677) (7,168) (2,230) — (18,075) Cash and cash equivalents, beginning of period 68,762 58,429 70,422 — 197,613 Cash and cash equivalents, end of period $ 60,085 $ 51,261 $ 68,192 $ — $ 179,538 Nine Months Ended September 30, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (175,586) $ 326,068 $ 99,044 $ — $ 249,526 Net cash provided by (used in) investing activities (136,290) (396,492) (58,365) 137,325 (453,822) Net cash provided by (used in) financing activities 419,714 128,026 (21,881) (137,325) 388,534 Net increase (decrease) in cash and cash equivalents 107,838 57,602 18,798 — 184,238 Cash and cash equivalents, beginning of period 86,937 29,046 68,451 — 184,434 Cash and cash equivalents, end of period $ 194,775 $ 86,648 $ 87,249 $ — $ 368,672 |
Variable Interest Entities ("VI
Variable Interest Entities ("VIE") | 9 Months Ended |
Sep. 30, 2019 | |
Variable Interest Entities ("VIE") | |
Variable Interest Entities ("VIE") | Note 19. Variable Interest Entities (“VIE”) The Company’s investment in GRHL represents a VIE that could expose the Company to losses limited to the estimated fair value of the investment. The carrying amounts of the investment in GRHL, and the Company’s maximum exposure to loss as of September 30, 2019 and December 31, 2018, was in each case approximately $7.3 million. The Company did not record any earnings from its ownership of the Class A Units for the period from January 1, 2018 through September 30, 2019. The Company determined that Blackstone is the primary beneficiary of the VIE as the Company has no significant voting rights in GRHL under the LLC Agreement and no power over decisions related to the business activities of GRHL, other than operation of the properties. The Company’s investment in SNMP represents a VIE that could expose the Company to losses limited to the equity in the investment at any point in time. The carrying amounts of the investment in SNMP, and the Company’s maximum exposure to loss as of September 30, 2019 and December 31, 2018, was approximately $0.8 million and $3.9 million, respectively. Below is a comparison of the carrying amounts of the assets and liabilities of the VIE and the Company’s maximum exposure to loss as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Beginning balance $ 11,189 $ 32,507 Gain (loss) from change in fair value of investment in SNMP (3,068) (21,318) Maximum exposure to loss $ 8,121 $ 11,189 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Leases | Note 20. Leases We determine if an arrangement is a lease at inception. To the extent that we determine an arrangement represents a lease, we classify that lease as an operating lease or a finance lease. We currently do not have any finance leases. We capitalize our operating leases on our consolidated balance sheet through a ROU asset and a corresponding lease liability. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Short term leases that have an initial term of one year or less are not capitalized but are disclosed below. Short term lease costs exclude expenses related to leases with a lease term of one month or less. Our operating leases are reflected as operating lease ROU assets, short term operating lease liabilities and long term operating lease liabilities on our consolidated balance sheet. Operating lease ROU assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term. In addition to the present value of lease payments, the operating lease ROU asset also includes any lease payments made to the lessor prior to lease commencement less any lease incentives and initial direct costs incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Nature of Leases We lease property including corporate and field offices and facilities, vehicles, field equipment, and midstream gathering and processing facilities to support our operations. A more detailed description of our significant lease types is included below. Midstream Gathering and Processing Facilities We engage in various types of transactions with midstream entities to gather and/or process our products, leveraging integrated systems and facilities wholly owned by the midstream counterparty. Under certain of these arrangements, we utilize substantially all of the underlying gathering system or processing facility capacity and we have, therefore, concluded that those underlying assets meet the definition of an identified asset. These contracts have non-cancellable lease terms of approximately four to 17 years and continue thereafter on a renewable basis subject to termination by either party with notice. Consequently, certain of our gathering and/or processing contracts represent an operating lease of the underlying midstream system or facilities with a lease term that equals the primary non-cancellable contract term. Real Estate We rent space from third parties for our corporate and field office locations and lease acreage for general corporate purposes. Our office and acreage lease agreements are structured with non-cancellable lease terms of three to 10 years. We have concluded that these agreements represent operating leases with a lease term that equals the primary non-cancellable contract term. Generally upon completion of the primary term, both parties have the right to terminate the lease. Field Equipment and Vehicles We enter into daywork contracts for drilling rigs with third parties to support our drilling activities. Our drilling rig arrangements are typically structured with a term that is in effect until drilling operations are completed on a specified well or well pad in accordance with the development plan. Upon mutual agreement with the contractor, we typically have the option to extend the contract term for additional wells or well pads by providing thirty days’ notice prior to the end of the original contract term. We have concluded that our drilling rig arrangements represent operating leases with lease terms of six to 18 months. For those arrangements with terms of less than one year, we have determined those arrangements to be short term operating leases. Due to the continuously evolving nature of our drilling schedules and the potential volatility in commodity prices in an annual period, our strategy to enter into shorter term drilling rig arrangements allows us the flexibility to respond to changes in our operating and economic environment. We exercise our discretion in choosing to extend or not extend contracts on a rig-by-rig basis depending on the conditions present at the time the contract expires. At the time of contract commencement, we have determined we cannot conclude with reasonable certainty if we will choose to extend the contract beyond its original term. Pursuant to the successful efforts method of accounting, our net share of these costs is capitalized as part of oil and natural gas properties on the balance sheet as incurred. We rent compressors from third parties to facilitate the downstream movement of our production from our drilling operations to market. Our compressor arrangements typically have non-cancellable lease terms of 12 to 24 months and continue thereafter on a month-to-month basis subject to termination by either party with thirty days’ notice. We have concluded that our compressor arrangements represent operating leases with a lease term that equals the primary non-cancellable contract term. Generally upon completion of the primary term, both parties have the right to terminate the lease. We rent our vehicle fleet for our drilling and operations personnel. Our vehicle agreements have non-cancellable lease terms of 18 months. We have concluded that our vehicle agreements represent operating leases with a lease term that equals the primary non-cancellable contract term. Generally upon completion of the primary term, both parties have the right to terminate the lease. Significant Judgments Discount Rate Our leases typically do not provide an implicit rate. Accordingly, we are required to use our estimated incremental borrowing rate in determining the present value of lease payments based on the information available at commencement date. Our estimated incremental borrowing rate reflects a reasonable projection of the interest that we would expect to pay to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. The Company gives consideration to various factors, including the terms of the Company’s outstanding debt instruments, publicly available data for instruments with similar characteristics and other information, together with internally generated estimates, assumptions and judgment to determine the Company’s incremental borrowing rate for purposes of making these calculations. Practical Expedients and Accounting Policy Elections Certain of our lease arrangements include lease and non-lease components. For all existing asset classes with multiple component types, we have utilized the practical expedient to not separate lease and non-lease components. Accordingly, we account for the lease and non-lease components in an arrangement as a single lease component. In addition, for all existing asset classes, we have elected an accounting policy to not apply the recognition requirements of Topic 842 to our short term leases. Accordingly, we recognize lease payments related to our short term leases in our statement of operations, which has not changed from our prior recognition. The following are components of our lease expense for the three and nine months ended September 30, 2019, the majority of which are included in oil and natural gas production expenses on the condensed consolidated statement of operations (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Operating lease expense $ 25,069 $ 74,997 Short term and variable lease expense 4,688 20,657 Total lease expense $ 29,757 $ 95,654 Operating lease cost (1) $ 3,118 $ 6,175 Short term lease cost (1) 191 1,187 Variable lease cost (1) — 65 Total lease cost $ 3,309 $ 7,427 (1) Represents capital expenditures related to the use of drilling rigs for the three and nine months ended September 30, 2019 which are capitalized as part of oil and natural gas properties on our condensed consolidated balance sheets. Other information related to our operating leases are as follows (in thousands, except lease term and discount rate): Nine Months Ended September 30, 2019 Operating cash flows from operating leases $ 95,654 Investing cash flows from operating leases 7,427 ROU assets obtained in exchange for operating lease obligations 361,648 Amortization of ROU assets (81,509) Weighted average remaining lease term (years) Weighted average discount rate As of September 30, 2019, minimum future payments, including imputed interest, for our long term operating leases under ASC 842 are as follows (in thousands): October 1, 2019 through December 31, 2019 $ 34,228 2020 119,293 2021 80,513 2022 60,269 2023 26,847 Thereafter 9,797 Total lease payments 330,947 Less: Imputed interest 47,463 Total lease liabilities $ 283,484 As of December 31, 2018, undiscounted minimum future payments for our long term operating leases under ASC 840 were as follows (in thousands): 2019 $ 100,640 2020 84,472 2021 52,499 2022 31,682 2023 11,631 Thereafter 8,467 Total lease payments $ 289,391 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events. | |
Subsequent Events | Note 21. Subsequent Events On October 22, 2019, the Debtors filed a motion for entry of an order authorizing rejection of an office sublease. The Bankruptcy Court has not yet ruled on the motion. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Leases | Leases The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in right of use (“ROU”) assets, short term lease liabilities and long term lease liabilities in the condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company’s estimated incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments, and the implicit rate is used when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company gives consideration to various factors, including the terms of the Company’s outstanding debt instruments, publicly available data for instruments with similar characteristics and other information, together with internally generated estimates, assumptions and judgment to determine the Company’s incremental borrowing rate for purposes of making these calculations. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. |
Bankruptcy Accounting | Bankruptcy Accounting As further discussed in “—Note 3. Chapter 11 Cases,” on August 11, 2019 (the “Petition Date”), Sanchez Energy Corporation, SN Palmetto, LLC, SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC, SN Catarina, LLC, Rockin L Ranch Company, LLC, SN Payables, LLC, SN EF Maverick, LLC (“SN Maverick”) and SN UR Holdings, LLC (“SN UR Holdings”) (each a “Debtor” and collectively, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The condensed consolidated financial statements have been prepared as if the Company is a going concern and reflect the application of Accounting Standards Codification 852 “Reorganizations” (“ASC 852”). ASC 852 requires that the financial statements, for periods subsequent to the filing of the Bankruptcy Petitions, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in “Reorganization items” on the Company’s condensed consolidated statements of operations. In addition, prepetition unsecured and under-secured obligations that may be impacted by the bankruptcy reorganization process have been classified as “Liabilities subject to compromise” on the Company’s condensed consolidated balance sheet at September 30, 2019. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less. The Company has not taken a view with respect to the ultimate recoveries or payments under these agreements or on account of these liabilities in the presentation of such amounts on the financial statements. The accompanying condensed consolidated financial statements do not purport to reflect or provide for the consequences of the Chapter 11 Cases. In particular, the condensed consolidated financial statements do not purport to show: (i) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities; (ii) the amount of prepetition liabilities that may be allowed for claims or contingencies, or the status and priority thereof; (iii) the effect on stockholders’ deficit accounts of any changes that may be made to the Company’s capitalization; or (iv) the effect on operations of any changes that may be made to the Company’s business. While operating as debtors-in-possession under Chapter 11 of the Bankruptcy Code, the Debtors may sell or otherwise dispose of or liquidate assets or settle liabilities in amounts other than those reflected on the Company’s condensed consolidated financial statements, subject to the approval of the Bankruptcy Court or otherwise as permitted in the ordinary course of business. Further, a plan of reorganization could materially change the amounts and classifications on the Company’s historical condensed consolidated financial statements. |
Principles of Consolidation | Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The accompanying condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. The most significant estimates pertain to proved oil and natural gas reserves and related cash flow estimates used in the depletion and impairment of proved oil and natural gas properties, the evaluation of unproved properties for impairment, the fair value of commodity derivative contracts, embedded derivatives and asset retirement obligations, accrued oil and natural gas revenues and expenses and the allocation of general and administrative (“G&A”) expenses. Actual results could differ materially from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07 “Compensation – Stock Compensation (ASC 718) – Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this ASU effective January 1, 2019, which resulted in our remeasurement of the value of our outstanding unvested awards as of January 1, 2019 and changed the way we value our equity-classified equity awards going forward. Adoption of the standard did not have a material impact on our condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses, if applicable. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019, and earlier adoption is permitted. We are currently in the process of evaluating the impact of adoption of this guidance on our condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 “Leases (ASC 842),” effective for annual and interim periods for public companies beginning after December 15, 2018, with a modified retrospective approach to be used for implementation. The standard updates the previous lease guidance by requiring the recognition of a ROU asset and lease liability on the statement of financial position for all leases with lease terms of more than 12 months. The lease liability represents the discounted obligation to make future minimum lease payments and the corresponding ROU asset represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as an operating or a finance lease. The Company adopted this standard effective January 1, 2019. We elected the package of practical expedients permitting us to not reassess under the new standard our prior conclusions regarding lease identification, lease classification and initial direct costs, the December 31, Adjustments due January 1, 2018 to Topic 842 2019 ROU assets $ — $ 344,472 $ 344,472 Short term lease liabilities — 99,693 99,693 Other current liabilities 75,581 (23,720) 51,861 Long term lease liabilities — 246,746 246,746 Other long term liabilities 21,407 (20,745) 662 Accumulated deficit (1,812,884) 42,499 (1,770,385) No impact was recorded to the condensed consolidated statement of operations related to the adoption of Topic 842 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Schedule of amounts recognized for operating leases | Amounts recognized at January 1, 2019 for operating leases were as follows (in thousands): December 31, Adjustments due January 1, 2018 to Topic 842 2019 ROU assets $ — $ 344,472 $ 344,472 Short term lease liabilities — 99,693 99,693 Other current liabilities 75,581 (23,720) 51,861 Long term lease liabilities — 246,746 246,746 Other long term liabilities 21,407 (20,745) 662 Accumulated deficit (1,812,884) 42,499 (1,770,385) |
Chapter 11 Cases (Tables)
Chapter 11 Cases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Chapter 11 Cases | |
Schedule of liabilities subject to compromise | The following table summarizes the components of liabilities subject to compromise included on the condensed consolidated balance sheet (in thousands): September 30, 2019 7.75% Notes, due June 2021 $ 600,000 6.125% Notes, due January 2023 1,150,000 Credit Agreement (1) 7,922 7.25% Senior Secured Notes, due February 2023 500,000 Accounts payable 22,349 Other payables 18,329 Accrued interest payable 65,371 Other accrued expenses 34,135 Liabilities subject to compromise $ 2,398,106 (1) A standby letter of credit in the amount of approximately $17.1 million was issued under the Credit Agreement on January 10, 2019 and incurred fees at a rate of 3.25% through the Petition Date. The letter of credit remains outstanding and is undrawn as of September 30, 2019 but is currently proposed to be cash collateralized subject to entry of the Final DIP Order . |
Schedule of reorganization items | The following table summarizes the components of reorganization items included on the condensed consolidated statements of operations (in thousands): Three and Nine Months Ended September 30, 2019 DIP lender fee on initial borrowing $ 8,814 DIP Facility costs 4,512 Legal and other professional advisory fees 11,571 Unamortized deferred financing fees, discounts and premiums 30,424 Reorganization items (1) $ 55,321 (1) Includes $9.5 million of cash paid for reorganization items. |
Schedule of condensed financial statements | Debtors (1) Condensed Consolidated Balance Sheets (Unaudited) (in thousands) September 30, December 31, 2019 2018 ASSETS Current assets: Cash and cash equivalents $ 173,959 $ 194,723 Oil and natural gas receivables 42,778 55,083 Joint interest billings receivables 10,969 33,261 Fair value of derivative instruments 367 5,154 Other current assets 20,978 28,617 Total current assets 249,051 316,838 Oil and natural gas properties, on the basis of successful efforts accounting: Proved oil and natural gas properties 2,947,641 2,890,471 Unproved oil and natural gas properties 205,121 236,931 Total oil and natural gas properties 3,152,762 3,127,402 Less: Accumulated depreciation, depletion, amortization and impairment (1,651,441) (1,526,988) Total oil and natural gas properties, net 1,501,321 1,600,414 Other assets: Right of use assets, net 280,139 — Investments 4,921 9,384 Investments in subsidiaries 338,097 337,475 Other assets 31,631 45,524 Total assets $ 2,405,160 $ 2,309,635 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Debtor-in-possession financing $ 50,000 $ — Accounts payable 14,372 32,382 Accounts payable - related entities 7,745 8,707 Other payables 16,230 74,595 Accrued liabilities: Capital expenditures 5,194 54,317 Other 46,909 87,656 Fair value of derivative instruments 700 307 Short term lease liabilities 109,494 — Other current liabilities 31,962 75,581 Total current liabilities 282,606 333,545 Long term debt, net of premium, discount and debt issuance costs — 2,213,223 Asset retirement obligations 34,456 32,432 Long term lease liabilities 173,990 — Liabilities subject to compromise 2,398,106 — Other liabilities 1 21,407 Total liabilities 2,889,159 2,600,607 Stockholders' deficit: Preferred stock 31 53 Common stock 1,014 881 Additional paid-in capital 1,371,698 1,367,427 Accumulated deficit (1,856,742) (1,659,333) Total stockholders' deficit (483,999) (290,972) Total liabilities and stockholders' deficit $ 2,405,160 $ 2,309,635 (1) Sanchez Energy Corporation, SN Palmetto, LLC, SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC, SN Catarina, LLC, Rockin L Ranch Company, LLC, SN Payables, LLC, SN EF Maverick, LLC and SN UR Holdings, LLC. Debtors (1) Condensed Consolidated Statements of Operations (Unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 REVENUES: Oil sales $ 69,597 $ 113,183 $ 242,064 $ 323,019 Natural gas liquid sales 15,506 49,332 65,170 119,961 Natural gas sales 17,941 27,674 69,713 83,640 Sales and marketing revenues 7,283 7,012 18,103 16,910 Total revenues 110,327 197,201 395,050 543,530 OPERATING COSTS AND EXPENSES: Oil and natural gas production expenses 51,196 47,262 154,064 138,322 Exploration expenses 146 2,668 4,724 3,171 Sales and marketing expenses 6,672 7,239 16,591 16,498 Production and ad valorem taxes 6,424 10,683 23,332 29,162 Depreciation, depletion, amortization and accretion 39,211 47,799 128,976 128,812 Impairment of oil and natural gas properties 9,597 3,103 18,206 3,543 General and administrative expenses 21,424 19,386 60,854 66,522 Prepetition restructuring charges 18,231 — 41,855 — Total operating costs and expenses 152,901 138,140 448,602 386,030 Operating income (loss) (42,574) 59,061 (53,552) 157,500 Other income (expense): Interest income 220 1,129 1,442 3,397 Other income (expense) (12,814) (8,217) (13,527) 1,186 Gain on sale of oil and natural gas properties — — — 1,528 Interest expense (19,591) (40,659) (101,693) (121,856) Equity in net earnings of subsidiaries 14,025 8,273 621 12,470 Net (gains) losses on commodity derivatives 2,774 (13,989) (10,748) (88,429) Total other expense (15,386) (53,463) (123,905) (191,704) Reorganization items 55,321 — 55,321 — Net income (loss) before taxes (113,281) 5,598 (232,778) (34,204) Income tax benefit (833) — (23) — Net income (loss) $ (112,448) $ 5,598 $ (232,755) $ (34,204) (1) Sanchez Energy Corporation, SN Palmetto, LLC, SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC, SN Catarina, LLC, Rockin L Ranch Company, LLC, SN Payables, LLC, SN EF Maverick, LLC and SN UR Holdings, LLC. Debtors (1) Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (232,755) $ (34,204) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion, amortization and accretion 128,976 128,812 Impairment of oil and natural gas properties 18,206 3,543 Gain on sale of oil and natural gas properties — (1,528) Stock-based compensation expense 355 4,344 Net losses on commodity derivative contracts 10,748 88,429 Net cash settlements paid on commodity derivative contracts (3,559) (55,147) (Gain) loss on other derivatives (308) 7,141 Loss on investments 4,464 3,361 Loss (gain) on sale of inventory 143 (571) Loss on other assets 858 — Loss on prepaid asset impairment 11,755 — Amortization of deferred gain on Western Catarina Midstream Divestiture — (17,790) Equity in net earnings of subsidiaries (621) (12,470) Amortization of debt issuance costs 5,386 9,859 Accretion of debt discount, net 1,019 1,112 Reorganization items 39,238 — Changes in operating assets and liabilities: Accounts receivable 35,686 75 Accounts receivable - related entities (962) 9,259 Other payables (40,452) 8,537 Accrued liabilities 54,915 12,980 Other current liabilities (20,518) (12,532) Other assets and liabilities, net 5,260 (2,390) Net cash provided by operating activities 17,834 140,820 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures for the development of oil and natural gas properties (91,375) (379,321) Proceeds from the sale of oil and natural gas properties — 1,425 Payments for purchases of other assets (736) (9,573) Proceeds from the sale of other assets 5,199 3,642 Net cash used in investing activities (86,912) (383,827) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings, including borrowings under DIP Facility 57,922 539,865 Repayment of borrowings — (95,000) Financing costs, including borrowings under DIP Facility (9,410) (12,484) Cash paid to tax authority for employee stock-based compensation awards (198) (705) Preferred dividends paid — (11,961) Net cash provided by (used in) financing activities 48,314 419,715 (Decrease) increase in cash and cash equivalents (20,764) 176,708 Cash and cash equivalents, beginning of period 194,723 171,052 Cash and cash equivalents, end of period $ 173,959 $ 347,760 (1) Sanchez Energy Corporation, SN Palmetto, LLC, SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC, SN Catarina, LLC, Rockin L Ranch Company, LLC, SN Payables, LLC, SN EF Maverick, LLC and SN UR Holdings, LLC. |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Cash and Cash Equivalents | |
Schedule of cash and cash equivalents | As of September 30, 2019 and December 31, 2018, cash and cash equivalents consisted of the following (in thousands): September 30, December 31, 2019 2018 Cash at banks $ 179,265 $ 66,426 Money market funds 273 131,187 Total cash and cash equivalents $ 179,538 $ 197,613 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt | |
Schedule of long-term debt | As of September 30, 2019 and December 31, 2018, the Company’s outstanding debt consisted of the following (in thousands): September 30, December 31, Interest Rate Maturity Date 2019 2018 Short Term Debt: Debtor-in-possession financing (1) Variable June 11, 2020 $ 50,000 $ — SR Credit Agreement (2)(3) Variable - $ — $ 304 Total short term debt $ 50,000 $ 304 Long Term Debt: 7.75% Notes 7.75% June 15, 2021 $ 600,000 $ 600,000 SN UnSub Credit Agreement (2) Variable March 1, 2022 150,000 167,500 4.59% Non-Recourse Subsidiary Term Loan (2) 4.59% August 31, 2022 3,527 3,803 SR Credit Agreement (2) Variable October 31, 2022 22,941 23,187 6.125% Notes 6.125% January 15, 2023 1,150,000 1,150,000 Credit Agreement (4) Variable February 14, 2023 (5) 7,922 — 7.25% Senior Secured Notes 7.25% February 15, 2023 (6) 500,000 500,000 2,434,390 2,444,490 Unamortized discount on Additional 7.75% Notes (7) — (2,222) Unamortized premium on Additional 6.125% Notes (7) — 1,090 Unamortized discount on 7.25% Senior Secured Notes (7) — (4,241) Unamortized debt issuance costs (7) (9,512) (43,709) Total long term debt 2,424,878 2,395,408 Less liabilities subject to compromise (8) (2,257,922) — Total long term debt not subject to compromise $ 166,956 $ 2,395,408 (1) Incurred interest at a weighted-average rate of approximately 10.1% for the postpetition period ended September 30, 2019. (2) Represents debt instruments which are non-recourse to Sanchez Energy Corporation and its restricted subsidiaries. (3) Incurred interest at a weighted-average rate of approximately 5.9% and 6.9% for the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively. (4) A standby letter of credit in the amount of approximately $17.1 million was issued under the Credit Agreement on January 10, 2019 and incurred fees at a rate of 3.25% through the Petition Date. The letter of credit remains outstanding and is undrawn as of September 30, 2019 but is currently proposed to be cash collateralized subject to entry of the Final DIP Order . (5) The Credit Agreement would mature on the earlier of (i) February 14, 2023 or (ii) the 91st day prior to the scheduled maturity of any “material indebtedness,” which is defined to include, without limitation, any indebtedness arising in connection with the 7.75% Notes, 6.125% Notes or the 7.25% Senior Secured Notes. The 7.75% Notes would mature on June 15, 2021; therefore, the Credit Agreement would, as of September 30, 2019, mature on March 15, 2021. (6) The 7.25% Senior Secured Notes would mature on February 15, 2023, unless on October 10, 2022 either (i) some or all of the 6.125% Notes are still outstanding and have not been defeased or (ii) there is outstanding indebtedness of Sanchez Energy Corporation or any of its restricted subsidiaries that was used to purchase, repurchase, redeem, defease or otherwise acquire or retire for value the 6.125% Notes, and such indebtedness under this clause (ii) has a final maturity date that is earlier than May 17, 2023, in which case of either clause (i) or clause (ii), the 7.25% Senior Secured Notes would mature on October 14, 2022. (7) Approximately $30.4 million in net discounts, premiums and debt issuance costs were reclassified as reorganization items in connection with the filing of the Bankruptcy Petitions. (8) The Company’s 7.75% Notes, 6.125% Notes, Credit Agreement, and 7.25% Senior Secured Notes were classified as liabilities subject to compromise at September 30, 2019. |
Schedule of interest expense | The components of interest expense are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Interest on SR Credit Agreement $ (342) $ (360) $ (917) $ (1,188) Interest on Senior Notes (17,704) (38,296) (94,299) (110,158) Interest and commitment fees on SN UnSub Credit Agreement (1,952) (2,131) (6,383) (6,634) Interest on Non-Recourse Subsidiary Term Loan (31) (46) (116) (140) Interest, commitment fees and letter of credit fees on Credit Agreement (106) (32) (389) (726) Interest on DIP Facility (600) — (600) — Amortization of debt issuance costs (1,961) (2,873) (8,275) (12,706) Amortization of discounts and premium on Senior Notes (188) (416) (1,019) (1,112) Total interest expense $ (22,884) $ (44,154) $ (111,998) $ (132,664) |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivatives Fair Value [Line Items] | |
Schedule of derivative positions | October 1 - December 31, 2019 2020 2021 Oil positions: Fixed price swaps (NYMEX WTI): Hedged volume (Bbls) 580,000 1,105,860 650,400 Average price ($/Bbl) $ 52.41 $ 55.29 $ 54.23 Natural gas positions: Fixed price swaps (NYMEX Henry Hub): Hedged volume (MMBtu) 3,362,000 6,934,150 4,212,000 Average price ($/MMBtu) $ 2.87 $ 2.67 $ 2.56 |
Schedule of reconciliation of the changes in fair value of the Company's commodity derivatives | The following table sets forth a reconciliation of the changes in fair value of the Company’s embedded and earnout derivatives for the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Fair value of other derivatives, beginning of period $ 5,550 $ (1,551) Gain on embedded derivatives 308 1,243 Initial fair value of earnout derivative — 6,401 Loss on earnout derivatives (32) (543) Fair value of other derivatives, end of period $ 5,826 $ 5,550 |
Summary of balance sheet presentation of the Company's commodity derivatives | The Company nets derivative assets and liabilities by commodity for counterparties where a legal right to such netting exists. Therefore, the Company’s derivatives are presented on a net basis as “Fair value of derivative instruments” on the condensed consolidated balance sheets. The following information summarizes the gross fair values of derivative instruments, presenting the impact of offsetting derivative assets and liabilities on the Company’s consolidated balance sheets (in thousands): September 30, 2019 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 6,389 $ (126) $ 6,263 Long term asset 9,361 (15) 9,346 Total asset $ 15,750 $ (141) $ 15,609 Offsetting Derivative Liabilities: Current liability $ 826 $ (126) $ 700 Long term liability 15 (15) — Total liability $ 841 $ (141) $ 700 December 31, 2018 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 16,302 $ (588) $ 15,714 Long term asset 12,178 (76) 12,102 Total asset $ 28,480 $ (664) $ 27,816 Offsetting Derivative Liabilities: Current liability $ 1,294 $ (588) $ 706 Long term liability 442 (76) 366 Total liability $ 1,736 $ (664) $ 1,072 |
Commodity derivatives | |
Derivatives Fair Value [Line Items] | |
Schedule of reconciliation of changes in fair value of commodity derivatives | The following table sets forth a reconciliation of the changes in fair value of the Company’s commodity derivatives for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Fair value of commodity derivatives, beginning of period $ 21,194 $ (54,255) Net losses on oil derivatives (28,167) (9,878) Net gains (losses) on natural gas derivatives 6,266 (17,897) Net settlements paid (received) on commodity derivative contracts: Oil 13,479 100,120 Natural gas (3,689) 3,104 Fair value of commodity derivatives, end of period $ 9,083 $ 21,194 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The following tables set forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands): As of September 30, 2019 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash equivalents: Cash equivalents $ 273 $ — $ — $ 273 Equity investments: Investment in SNMP 841 — — 841 Investment in Lonestar 4,080 — — 4,080 Oil derivative instruments: Swaps — 5,919 — 5,919 Natural gas derivative instruments: Swaps — 3,164 — 3,164 Other: Earnout derivative asset — — 5,826 5,826 Total $ 5,194 $ 9,083 $ 5,826 $ 20,103 As of December 31, 2018 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash equivalents: Cash equivalents $ 131,187 $ — $ — $ 131,187 Equity investments: Investment in SNMP 3,909 — — 3,909 Investment in Lonestar 5,475 — — 5,475 Oil derivative instruments: Swaps — 20,608 — 20,608 Natural gas derivative instruments: Swaps — 586 — 586 Other: Embedded derivative instruments — (308) — (308) Earnout derivative asset — — 5,858 5,858 Total $ 140,571 $ 20,886 $ 5,858 $ 167,315 (1) Level 1 measurements are fair value measurements which use quoted market prices (unadjusted) in active markets for identical assets or liabilities. We use Level 1 inputs when available, as Level 1 inputs generally provide the most reliable evidence of fair value. (2) Level 2 measurements are fair value measurements which use inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. Level 3 measurements are fair value measurements which use unobservable inputs and require management to make certain assumptions in the determination of value. |
Reconciliation of changes in the fair value of derivative instruments classified as Level 3 in the fair value hierarchy | The following table sets forth a reconciliation of changes in the fair value of the Company’s earnout derivative instruments classified as Level 3 in the fair value hierarchy (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Beginning balance $ 5,858 $ — Initial fair value of earnout derivative — 6,401 Loss on earnout derivatives (32) (543) Ending balance $ 5,826 $ 5,858 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Asset Retirement Obligations | |
Schedule of changes in asset retirement obligation | The changes in the asset retirement obligation for the nine months ended September 30, 2019 and the year ended December 31, 2018 were as follows (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Abandonment liability, beginning of period $ 46,175 $ 36,098 Liabilities incurred during period 275 1,965 Divestitures (147) (158) Revisions — 5,077 Accretion expense 2,879 3,193 Abandonment liability, end of period $ 49,183 $ 46,175 |
Accrued Liabilities and Other_2
Accrued Liabilities and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities and Other Current Liabilities | |
Summary of accrued liabilities | The following information summarizes accrued liabilities as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Capital expenditures $ 7,232 $ 61,970 Other: General and administrative expenses 20,635 19,460 Production taxes 2,483 5,157 Ad valorem taxes 6,655 445 Lease operating expenses 34,782 24,138 Interest payable 376 47,866 Other accrued liabilities 1,367 5,662 Total accrued liabilities $ 73,530 $ 164,698 |
Summary of other payables | The following information summarizes other payables as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Revenue payable $ 14,963 $ 71,296 Production tax payable 448 3,443 Other 1,328 (111) Total other payables $ 16,739 $ 74,628 |
Summary of other current liabilities | The following information summarizes other current liabilities as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Operated prepayment liability $ 31,921 $ 51,844 Deferred gain on Western Catarina Midstream Divestiture - short term — 23,720 Phantom compensation payable - short term 40 17 Total other current liabilities $ 31,961 $ 75,581 |
Stockholders' and Mezzanine E_2
Stockholders' and Mezzanine Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' and Mezzanine Equity | |
Preferred Units accounted for as mezzanine equity | The SN UnSub Preferred Units are accounted for as mezzanine equity in the condensed consolidated balance sheet consisting of the following as of September 30, 2019 and December 31, 2018, respectively, (in thousands): Nine Months Ended Year Ended September 30, December 31, 2019 2018 Mezzanine equity, beginning balance $ 452,828 $ 427,512 Accretion of discount 22,029 25,316 Dividends accrued 37,500 50,000 Dividends prepaid (1) — (2,592) Dividends/distributions paid (1) (37,500) (47,408) Mezzanine equity, ending balance $ 474,857 $ 452,828 In 2017, tax distributions of approximately $2.6 million were paid in excess of the accrued dividend. The excess distribution was offset against a portion of the dividend accrued during the three months ended March 31, 2018. |
Schedule of computation of basic and diluted net income (loss) per share | Earnings (Loss) Per Share— The following table shows the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2019 and 2018 (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income (loss) $ (112,448) $ 5,598 $ (232,755) $ (34,204) Less: Preferred stock dividends (2,312) (3,987) (7,153) (11,961) Preferred unit dividends and distributions (12,500) (12,500) (37,500) (34,908) Preferred unit amortization (7,638) (6,458) (22,029) (18,577) Net loss attributable to common stockholders $ (134,898) $ (17,347) $ (299,437) $ (99,650) Weighted average number of unrestricted outstanding common shares used to calculate basic and dilutive net loss per share (1)(2) 97,395 82,073 95,272 81,597 Net loss per common share - basic and diluted $ (1.39) $ (0.21) $ (3.14) $ (1.22) (1) The three and nine months ended September 30, 2018 exclude 1,840,007 and 2,591,553 shares, respectively, of weighted average restricted stock and 12,520,179 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. The three and nine months ended September 30, 2019 exclude 433,369 and 942,551 shares, respectively, of weighted average restricted stock and 7,306,402 and 8,757,574 shares, respectively, of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of stock-based compensation expense | The Company recognized the following stock-based compensation expense (in thousands) which is included in general and administrative expense in the condensed consolidated statements of operations: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Restricted stock awards, directors $ — $ 305 $ 42 $ 932 Restricted stock awards, non-employees 45 (862) 270 1,957 Performance awards 51 (842) 83 (12) Phantom stock awards (101) (2,652) (40) 1,467 Total stock-based compensation expense $ (5) $ (4,051) $ 355 $ 4,344 |
Restricted shares and PARS | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of the activity of the non-vested shares | Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Non-vested common stock, beginning of period 2,714 5,767 5,024 4,897 Granted — 146 — 3,303 Vested (51) (59) (2,164) (2,218) Forfeited (24) (414) (221) (542) Non-vested common stock, end of period 2,639 5,440 2,639 5,440 |
Phantom stock shares and PAPS | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of the activity of the non-vested shares | Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Non-vested phantom stock and PAPS, beginning of period 2,857 5,888 5,125 3,589 Granted — 253 7 3,905 Vested (60) (46) (1,874) (1,197) Forfeited (58) (465) (519) (667) Non-vested phantom stock and PAPS, end of period 2,739 5,630 2,739 5,630 |
Condensed Consolidating Finan_2
Condensed Consolidating Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Condensed Consolidating Financial Information | |
Condensed balance sheets | A summary of the condensed consolidated guarantor balance sheets as of September 30, 2019 and December 31, 2018 is presented below (in thousands): September 30, 2019 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 243,889 $ 122,817 $ 106,561 $ (172,357) $ 300,910 Total oil and natural gas properties, net 60 1,498,844 717,321 — 2,216,225 Investment in subsidiaries 1,609,093 — (7,278) (1,601,815) — Other assets 52,146 259,623 33,906 — 345,675 Total Assets $ 1,905,188 $ 1,881,284 $ 850,510 $ (1,774,172) $ 2,862,810 Liabilities and Stockholders' Equity Current liabilities $ 77,254 $ 202,889 $ 189,010 $ (172,357) $ 296,796 Long term liabilities 2,370,695 235,861 181,680 — 2,788,236 Mezzanine equity — — 474,857 — 474,857 Total stockholders' equity (deficit) (542,761) 1,442,534 4,963 (1,601,815) (697,079) Total Liabilities and Stockholders' Equity (Deficit) $ 1,905,188 $ 1,881,284 $ 850,510 $ (1,774,172) $ 2,862,810 December 31, 2018 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 473,062 $ 69,934 $ 146,765 $ (316,780) $ 372,981 Total oil and natural gas properties, net 36 1,600,378 758,711 — 2,359,125 Investment in subsidiaries 1,577,054 — (7,280) (1,569,774) — Other assets 22,917 10,307 54,630 — 87,854 Total Assets $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 Liabilities and Stockholders' Equity Current liabilities $ 155,396 $ 282,719 $ 226,964 $ (316,780) $ 348,299 Long term liabilities 2,203,546 51,211 208,599 — 2,463,356 Mezzanine equity — — 452,828 — 452,828 Total stockholders' equity (deficit) (285,873) 1,346,689 64,435 (1,569,774) (444,523) Total Liabilities and Stockholders' Equity (Deficit) $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 |
Condensed statements of operations | A summary of the condensed consolidated guarantor statements of operations for the three and nine months ended September 30, 2019 and 2018 is presented below (in thousands): Three Months Ended September 30, 2019 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 110,327 $ 52,219 $ — $ 162,546 Total operating costs and expenses (35,928) (116,966) (45,410) 90 (198,214) Other income (expense) (27,494) 1,533 3,759 (90) (22,292) Reorganization items (55,321) — — — (55,321) Income (loss) before income taxes (118,743) (5,106) 10,568 — (113,281) Income tax benefit (833) — — — (833) Equity in income (loss) of subsidiaries 5,462 — — (5,462) — Net income (loss) $ (112,448) $ (5,106) $ 10,568 $ (5,462) $ (112,448) Three Months Ended September 30, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 197,203 $ 80,507 $ — $ 277,710 Total operating costs and expenses (16,717) (126,573) (49,969) 134 (193,125) Other income (expense) (52,165) 794 (27,482) (134) (78,987) Income (loss) before income taxes (68,882) 71,424 3,056 — 5,598 Equity in income (loss) of subsidiaries 74,480 — — (74,480) — Net income (loss) $ 5,598 $ 71,424 $ 3,056 $ (74,480) $ 5,598 Nine Months Ended September 30, 2019 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 395,050 $ 179,300 $ — $ 574,350 Total operating costs and expenses (90,587) (358,005) (158,412) 360 (606,644) Other income (expense) (123,907) 2,188 (23,084) (360) (145,163) Reorganization items (55,321) — — — (55,321) Income (loss) before income taxes (269,815) 39,233 (2,196) — (232,778) Income tax benefit (23) — — — (23) Equity in income (loss) of subsidiaries 37,037 — — (37,037) — Net income (loss) $ (232,755) $ 39,233 $ (2,196) $ (37,037) $ (232,755) Nine Months Ended September 30, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 543,529 $ 244,722 $ — $ 788,251 Total operating costs and expenses (56,967) (334,408) (163,833) 406 (554,802) Other income (expense) (200,124) (4,469) (62,654) (406) (267,653) Income (loss) before income taxes (257,091) 204,652 18,235 — (34,204) Equity in income (loss) of subsidiaries 222,887 — — (222,887) — Net income (loss) $ (34,204) $ 204,652 $ 18,235 $ (222,887) $ (34,204) |
Condensed cash flows statements | A summary of the condensed consolidated guarantor statements of cash flows for the nine months ended September 30, 2019 and 2018 is presented below (in thousands): Nine Months Ended September 30, 2019 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (166,502) $ 233,600 $ 32,652 $ — $ 99,750 Net cash provided by (used in) investing activities 109,510 (81,169) (34,665) (103,893) (110,217) Net cash provided by (used in) financing activities 48,315 (159,599) (217) 103,893 (7,608) Net increase (decrease) in cash and cash equivalents (8,677) (7,168) (2,230) — (18,075) Cash and cash equivalents, beginning of period 68,762 58,429 70,422 — 197,613 Cash and cash equivalents, end of period $ 60,085 $ 51,261 $ 68,192 $ — $ 179,538 Nine Months Ended September 30, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (175,586) $ 326,068 $ 99,044 $ — $ 249,526 Net cash provided by (used in) investing activities (136,290) (396,492) (58,365) 137,325 (453,822) Net cash provided by (used in) financing activities 419,714 128,026 (21,881) (137,325) 388,534 Net increase (decrease) in cash and cash equivalents 107,838 57,602 18,798 — 184,238 Cash and cash equivalents, beginning of period 86,937 29,046 68,451 — 184,434 Cash and cash equivalents, end of period $ 194,775 $ 86,648 $ 87,249 $ — $ 368,672 |
Variable Interest Entities ("_2
Variable Interest Entities ("VIE") (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Variable Interest Entities ("VIE") | |
Schedule of carrying amounts of assets and liabilities of VIE | Below is a comparison of the carrying amounts of the assets and liabilities of the VIE and the Company’s maximum exposure to loss as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Beginning balance $ 11,189 $ 32,507 Gain (loss) from change in fair value of investment in SNMP (3,068) (21,318) Maximum exposure to loss $ 8,121 $ 11,189 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Schedule of components of lease expense and other information related to leases | The following are components of our lease expense for the three and nine months ended September 30, 2019, the majority of which are included in oil and natural gas production expenses on the condensed consolidated statement of operations (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Operating lease expense $ 25,069 $ 74,997 Short term and variable lease expense 4,688 20,657 Total lease expense $ 29,757 $ 95,654 Operating lease cost (1) $ 3,118 $ 6,175 Short term lease cost (1) 191 1,187 Variable lease cost (1) — 65 Total lease cost $ 3,309 $ 7,427 (1) Represents capital expenditures related to the use of drilling rigs for the three and nine months ended September 30, 2019 which are capitalized as part of oil and natural gas properties on our condensed consolidated balance sheets. Other information related to our operating leases are as follows (in thousands, except lease term and discount rate): Nine Months Ended September 30, 2019 Operating cash flows from operating leases $ 95,654 Investing cash flows from operating leases 7,427 ROU assets obtained in exchange for operating lease obligations 361,648 Amortization of ROU assets (81,509) Weighted average remaining lease term (years) Weighted average discount rate |
Schedule of future payments | As of September 30, 2019, minimum future payments, including imputed interest, for our long term operating leases under ASC 842 are as follows (in thousands): October 1, 2019 through December 31, 2019 $ 34,228 2020 119,293 2021 80,513 2022 60,269 2023 26,847 Thereafter 9,797 Total lease payments 330,947 Less: Imputed interest 47,463 Total lease liabilities $ 283,484 As of December 31, 2018, undiscounted minimum future payments for our long term operating leases under ASC 840 were as follows (in thousands): 2019 $ 100,640 2020 84,472 2021 52,499 2022 31,682 2023 11,631 Thereafter 8,467 Total lease payments $ 289,391 |
Organization and Business (Deta
Organization and Business (Details) - Eagle Ford Shale | Sep. 30, 2019a |
Area under agreement, gross (in acres) | 435,000 |
Area under agreement, net (in acres) | 233,000 |
Organization and Business - Liq
Organization and Business - Liquidity (Details) - USD ($) $ in Thousands | Jul. 15, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 |
Capital expenditures | $ 593,000 | |||
Debtor-in-Possession financing, borrowings | $ 50,000 | |||
Forecast | Minimum | ||||
Capital expenditures | $ 100,000 | |||
Forecast | Maximum | ||||
Capital expenditures | $ 150,000 | |||
7.75% Notes | ||||
Interest rate (as a percent) | 7.75% | |||
6.125% Notes | ||||
Periodic payment of interest deferred | $ 35,200 | |||
Interest rate (as a percent) | 6.125% | |||
Payment grace period | 30 days | |||
7.25% Senior Secured Notes | ||||
Interest rate (as a percent) | 7.25% |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
ROU assets | $ 280,139 | ||||||||
Short-term lease liabilities | 109,494 | ||||||||
Other current liabilities | 31,961 | $ 75,581 | |||||||
Long-tern lease liabilities | 173,990 | ||||||||
Other long-term liabilities | 1 | 21,407 | |||||||
Accumulated deficit | $ (697,079) | $ (562,277) | $ (487,287) | (444,523) | $ (538,620) | $ (519,875) | $ (466,863) | $ (469,140) | |
ASC 842 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
ROU assets | $ 344,472 | ||||||||
Short-term lease liabilities | 99,693 | ||||||||
Other current liabilities | 51,861 | ||||||||
Long-tern lease liabilities | 246,746 | ||||||||
Other long-term liabilities | 662 | ||||||||
Accumulated deficit | $ (1,770,385) | ||||||||
ASC 842 | Previously reported | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Other current liabilities | 75,581 | ||||||||
Other long-term liabilities | 21,407 | ||||||||
Accumulated deficit | (1,812,884) | ||||||||
ASC 842 | Adjustments due to Topic 842 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
ROU assets | 344,472 | ||||||||
Short-term lease liabilities | 99,693 | ||||||||
Other current liabilities | (23,720) | ||||||||
Long-tern lease liabilities | 246,746 | ||||||||
Other long-term liabilities | (20,745) | ||||||||
Accumulated deficit | $ 42,499 |
Chapter 11 Cases - Reorganizati
Chapter 11 Cases - Reorganization (Details) - USD ($) $ in Thousands | Jul. 15, 2019 | Aug. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Aug. 15, 2019 |
Capital expenditures | $ 593,000 | |||||
Debtor-in-Possession financing, borrowings | $ 50,000 | |||||
Interest payable | $ 18,100 | |||||
Net payable | $ 1,100 | |||||
Forecast | Minimum | ||||||
Capital expenditures | $ 100,000 | |||||
Forecast | Maximum | ||||||
Capital expenditures | $ 150,000 | |||||
7.75% Notes | ||||||
Interest rate (as a percent) | 7.75% | |||||
6.125% Notes | ||||||
Periodic payment of interest deferred | $ 35,200 | |||||
Interest rate (as a percent) | 6.125% | |||||
Payment grace period | 30 days | |||||
7.25% Senior Secured Notes | ||||||
Interest rate (as a percent) | 7.25% | |||||
Debtor-in-Possession Facility | ||||||
Debtor-in-possession, budget, permitted variance percentage | 15.00% | |||||
Debtor-in-Possession financing, borrowings | $ 50,000 | |||||
Debtor-in-Possession Facility | Minimum | ||||||
Debtor-in-possession, covenant amount of liquidity required | $ 15,000 | |||||
Debtor-in-Possession Facility | Roll-Up Loans | ||||||
Debtor-in-Possession financing, interest rate | 7.25% | |||||
Debtor-in-Possession Facility | First four-week test period | ||||||
Debtor-in-possession, budget, permitted variance percentage | 25.00% | |||||
Debtor-in-Possession Facility | LIBOR | New Money DIP Loans | ||||||
Floor rate percentage | 2.00% | |||||
Variable rate basis, spread percentage | 8.00% | |||||
Debtor-in-Possession Facility | 7.25% Senior Secured Notes | ||||||
Debtor-in-Possession financing, amount arranged | $ 175,000 | |||||
Debtor-in-Possession Facility | Term loan facility | ||||||
Debtor-in-Possession financing, amount arranged | 350,000 | |||||
Debtor-in-Possession Facility | Term loan facility | New Money DIP Loans | ||||||
Debtor-in-Possession financing, amount arranged | 175,000 | |||||
Debtor-in-Possession Facility | Term loan facility | Interim DIP Order | ||||||
Debtor-in-Possession financing, amount arranged | $ 50,000 | |||||
Debtor-in-Possession Facility | Backstop Lenders | New Money DIP Loans | ||||||
Commitment fee percentage | 5.00% | |||||
Debtor-in-Possession Facility | Backstop Lenders | New Money DIP Loans upon emergence from Chapter 11 Cases | ||||||
Commitment fee percentage | 1.00% | |||||
Debtor-in-Possession Facility | Backstop Lenders | New Money DIP Loans payable monthly | ||||||
Commitment fee percentage | 0.50% |
Chapter 11 Cases - Liabilities
Chapter 11 Cases - Liabilities Subject to Compromise (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||||
Sep. 30, 2019 | Jan. 10, 2019 | Feb. 14, 2018 | Sep. 12, 2014 | Jun. 27, 2014 | Sep. 18, 2013 | Jun. 13, 2013 | |
Liabilities subject to compromise | |||||||
Accounts payable | $ 22,349 | ||||||
Other payables | 18,329 | ||||||
Accrued interest payable | 65,371 | ||||||
Other accrued expenses | 34,135 | ||||||
Liabilities subject to compromise | 2,398,106 | ||||||
Contractual interest on liabilities subject to compromise not reflected in condensed consolidated statements of operations | 21,100 | ||||||
Second Amended And Restated Credit Agreement | |||||||
Liabilities subject to compromise | |||||||
Debt | 7,922 | ||||||
7.75% Notes | |||||||
Liabilities subject to compromise | |||||||
Debt | $ 600,000 | ||||||
Face value of debt | $ 200,000 | $ 400,000 | |||||
Interest rate (as a percent) | 7.75% | ||||||
6.125% Notes | |||||||
Liabilities subject to compromise | |||||||
Debt | $ 1,150,000 | ||||||
Face value of debt | $ 300,000 | $ 850,000 | |||||
Interest rate (as a percent) | 6.125% | ||||||
7.25% Senior Notes | |||||||
Liabilities subject to compromise | |||||||
Debt | $ 500,000 | ||||||
Face value of debt | $ 500,000 | ||||||
Standby letter of credit | |||||||
Liabilities subject to compromise | |||||||
Face value of debt | $ 17,100 | ||||||
Interest rate (as a percent) | 3.25% |
Chapter 11 Cases - Restructurin
Chapter 11 Cases - Restructuring Charges and Reorganization Items (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Reorganization Items | ||
Prepetition restructuring charges | $ 18,231 | $ 41,855 |
DIP lender fee on initial borrowing | 8,814 | |
DIP Facility costs | 4,512 | |
Legal and other professional advisory fees | 11,571 | |
Unamortized deferred financing fees, discounts and premiums | 30,424 | |
Reorganization items | $ 55,321 | 55,321 |
Cash paid for reorganization items | $ 9,521 |
Chapter 11 Cases - Debtor Balan
Chapter 11 Cases - Debtor Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||||||||
Cash and cash equivalents | $ 179,538 | $ 197,613 | $ 368,672 | $ 184,434 | ||||
Oil and natural gas receivables | 69,290 | 87,222 | ||||||
Joint interest billings receivables | 10,979 | 33,263 | ||||||
Fair value of derivative instruments | 6,263 | 15,714 | ||||||
Other current assets | 24,679 | 33,070 | ||||||
Total current assets | 300,910 | 372,981 | ||||||
Oil and natural gas properties, on the basis of successful efforts accounting: | ||||||||
Proved oil and natural gas properties | 3,864,327 | 3,792,431 | ||||||
Unproved oil and natural gas properties | 299,456 | 328,643 | ||||||
Total oil and natural gas properties | 4,163,783 | 4,121,074 | ||||||
Less: Accumulated depreciation, depletion, amortization and impairment | (1,947,558) | (1,761,949) | ||||||
Total oil and natural gas properties, net | 2,216,225 | 2,359,125 | ||||||
Other assets: | ||||||||
Right of use assets, net | 280,139 | |||||||
Investments | 12,200 | 16,664 | ||||||
Other assets | 43,990 | 59,088 | ||||||
Total assets | 2,862,810 | 2,819,960 | ||||||
Current liabilities: | ||||||||
Debtor in possession financing | 50,000 | |||||||
Accounts payable | 14,372 | 32,382 | ||||||
Other payables | 16,739 | 74,628 | ||||||
Accrued liabilities: | ||||||||
Capital expenditures | 7,232 | 61,970 | ||||||
Other | 66,298 | 102,728 | ||||||
Fair value of derivative instruments | 700 | 706 | ||||||
Short-term lease liabilities | 109,494 | |||||||
Other current liabilities | 31,961 | 75,581 | ||||||
Total current liabilities | 296,796 | 348,299 | ||||||
Long term debt, net of premium, discount and debt issuance costs | 2,424,878 | 2,395,408 | ||||||
Asset retirement obligations | 49,183 | 46,175 | 36,098 | |||||
Long-tern lease liabilities | 173,990 | |||||||
Liabilities subject to compromise | 2,398,106 | |||||||
Other liabilities | 1 | 21,407 | ||||||
Total liabilities | 3,085,032 | 2,811,655 | ||||||
Stockholders' deficit: | ||||||||
Preferred stock | 31 | 53 | ||||||
Common stock | 1,014 | 881 | ||||||
Additional paid-in capital | 1,371,698 | 1,367,427 | ||||||
Accumulated deficit | (2,069,822) | (1,812,884) | ||||||
Total stockholders' deficit | (697,079) | $ (562,277) | $ (487,287) | (444,523) | (538,620) | $ (519,875) | $ (466,863) | (469,140) |
Total liabilities and stockholders' equity deficit | 2,862,810 | 2,819,960 | ||||||
Debtor | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 173,959 | 194,723 | $ 347,760 | $ 171,052 | ||||
Oil and natural gas receivables | 42,778 | 55,083 | ||||||
Joint interest billings receivables | 10,969 | 33,261 | ||||||
Fair value of derivative instruments | 367 | 5,154 | ||||||
Other current assets | 20,978 | 28,617 | ||||||
Total current assets | 249,051 | 316,838 | ||||||
Oil and natural gas properties, on the basis of successful efforts accounting: | ||||||||
Proved oil and natural gas properties | 2,947,641 | 2,890,471 | ||||||
Unproved oil and natural gas properties | 205,121 | 236,931 | ||||||
Total oil and natural gas properties | 3,152,762 | 3,127,402 | ||||||
Less: Accumulated depreciation, depletion, amortization and impairment | (1,651,441) | (1,526,988) | ||||||
Total oil and natural gas properties, net | 1,501,321 | 1,600,414 | ||||||
Other assets: | ||||||||
Right of use assets, net | 280,139 | |||||||
Investments | 4,921 | 9,384 | ||||||
Investments in subsidiaries | 338,097 | 337,475 | ||||||
Other assets | 31,631 | 45,524 | ||||||
Total assets | 2,405,160 | 2,309,635 | ||||||
Current liabilities: | ||||||||
Debtor in possession financing | 50,000 | |||||||
Accounts payable | 14,372 | 32,382 | ||||||
Accounts payable - related entities | 7,745 | 8,707 | ||||||
Other payables | 16,230 | 74,595 | ||||||
Accrued liabilities: | ||||||||
Capital expenditures | 5,194 | 54,317 | ||||||
Other | 46,909 | 87,656 | ||||||
Fair value of derivative instruments | 700 | 307 | ||||||
Short-term lease liabilities | 109,494 | |||||||
Other current liabilities | 31,962 | 75,581 | ||||||
Total current liabilities | 282,606 | 333,545 | ||||||
Long term debt, net of premium, discount and debt issuance costs | 2,213,223 | |||||||
Asset retirement obligations | 34,456 | 32,432 | ||||||
Long-tern lease liabilities | 173,990 | |||||||
Liabilities subject to compromise | 2,398,106 | |||||||
Other liabilities | 1 | 21,407 | ||||||
Total liabilities | 2,889,159 | 2,600,607 | ||||||
Stockholders' deficit: | ||||||||
Preferred stock | 31 | 53 | ||||||
Common stock | 1,014 | 881 | ||||||
Additional paid-in capital | 1,371,698 | 1,367,427 | ||||||
Accumulated deficit | (1,856,742) | (1,659,333) | ||||||
Total stockholders' deficit | (483,999) | (290,972) | ||||||
Total liabilities and stockholders' equity deficit | $ 2,405,160 | $ 2,309,635 |
Chapter 11 Cases - Debtor State
Chapter 11 Cases - Debtor Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
REVENUES: | ||||||||
Sales and marketing revenues | $ 7,283 | $ 7,012 | $ 18,103 | $ 16,910 | ||||
Total revenues | 162,546 | 277,710 | 574,350 | 788,251 | ||||
OPERATING COSTS AND EXPENSES: | ||||||||
Oil and natural gas production expenses | 74,740 | 75,594 | 231,441 | 225,186 | ||||
Exploration expenses | 164 | 2,698 | 4,983 | 3,247 | ||||
Sales and marketing expenses | 6,672 | 7,239 | 16,591 | 16,498 | ||||
Production and ad valorem taxes | 9,867 | 15,221 | 34,682 | 42,898 | ||||
Depreciation, depletion, amortization and accretion | 57,864 | 67,944 | 187,920 | 189,515 | ||||
Impairment of oil and natural gas properties | 9,761 | 3,117 | 22,906 | 4,259 | ||||
General and administrative expense | 20,915 | 21,312 | 66,266 | 73,199 | ||||
Prepetition restructuring charges | 18,231 | 41,855 | ||||||
Total operating costs and expenses | 198,214 | 193,125 | 606,644 | 554,802 | ||||
Operating income (loss) | (35,668) | 84,585 | (32,294) | 233,449 | ||||
Other income (expense): | ||||||||
Interest income | 221 | 1,130 | 1,447 | 3,400 | ||||
Other income (expense) | (12,829) | (7,677) | (13,785) | 2,467 | ||||
Gain on sale of oil and natural gas properties | 1,528 | |||||||
Interest expense | (22,884) | (44,154) | (111,998) | (132,664) | ||||
Net gains (losses) on commodity derivatives | 13,200 | (28,286) | (20,827) | (142,384) | ||||
Total other expense | (22,292) | (78,987) | (145,163) | (267,653) | ||||
Reorganization items | 55,321 | 55,321 | ||||||
Income (loss) before income taxes | (113,281) | 5,598 | (232,778) | (34,204) | ||||
Income tax benefit | (833) | (23) | ||||||
Net income (loss) | (112,448) | $ (52,965) | $ (67,342) | 5,598 | $ (34,987) | $ (4,815) | (232,755) | (34,204) |
Oil sales | ||||||||
REVENUES: | ||||||||
Revenues | 106,016 | 161,243 | 362,424 | 473,178 | ||||
Natural gas liquid sales | ||||||||
REVENUES: | ||||||||
Revenues | 22,675 | 69,995 | 92,891 | 175,833 | ||||
Natural gas sales | ||||||||
REVENUES: | ||||||||
Revenues | 26,572 | 39,460 | 100,932 | 122,330 | ||||
Debtor | ||||||||
REVENUES: | ||||||||
Sales and marketing revenues | 7,283 | 7,012 | 18,103 | 16,910 | ||||
Total revenues | 110,327 | 197,201 | 395,050 | 543,530 | ||||
OPERATING COSTS AND EXPENSES: | ||||||||
Oil and natural gas production expenses | 51,196 | 47,262 | 154,064 | 138,322 | ||||
Exploration expenses | 146 | 2,668 | 4,724 | 3,171 | ||||
Sales and marketing expenses | 6,672 | 7,239 | 16,591 | 16,498 | ||||
Production and ad valorem taxes | 6,424 | 10,683 | 23,332 | 29,162 | ||||
Depreciation, depletion, amortization and accretion | 39,211 | 47,799 | 128,976 | 128,812 | ||||
Impairment of oil and natural gas properties | 9,597 | 3,103 | 18,206 | 3,543 | ||||
General and administrative expense | 21,424 | 19,386 | 60,854 | 66,522 | ||||
Prepetition restructuring charges | 18,231 | 41,855 | ||||||
Total operating costs and expenses | 152,901 | 138,140 | 448,602 | 386,030 | ||||
Operating income (loss) | (42,574) | 59,061 | (53,552) | 157,500 | ||||
Other income (expense): | ||||||||
Interest income | 220 | 1,129 | 1,442 | 3,397 | ||||
Other income (expense) | (12,814) | (8,217) | (13,527) | 1,186 | ||||
Gain on sale of oil and natural gas properties | 1,528 | |||||||
Interest expense | (19,591) | (40,659) | (101,693) | (121,856) | ||||
Equity in net earnings of subsidiariess | 14,025 | 8,273 | 621 | 12,470 | ||||
Net gains (losses) on commodity derivatives | 2,774 | (13,989) | (10,748) | (88,429) | ||||
Total other expense | (15,386) | (53,463) | (123,905) | (191,704) | ||||
Reorganization items | 55,321 | 55,321 | ||||||
Income (loss) before income taxes | (113,281) | 5,598 | (232,778) | (34,204) | ||||
Income tax benefit | (833) | (23) | ||||||
Net income (loss) | (112,448) | 5,598 | (232,755) | (34,204) | ||||
Debtor | Oil sales | ||||||||
REVENUES: | ||||||||
Revenues | 69,597 | 113,183 | 242,064 | 323,019 | ||||
Debtor | Natural gas liquid sales | ||||||||
REVENUES: | ||||||||
Revenues | 15,506 | 49,332 | 65,170 | 119,961 | ||||
Debtor | Natural gas sales | ||||||||
REVENUES: | ||||||||
Revenues | $ 17,941 | $ 27,674 | $ 69,713 | $ 83,640 |
Chapter 11 Cases - Debtor Sta_2
Chapter 11 Cases - Debtor Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net loss | $ (232,755) | $ (34,204) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Depreciation, depletion, amortization and accretion | $ 57,864 | $ 67,944 | 187,920 | 189,515 | |
Impairment of oil and natural gas properties | 9,761 | 3,117 | 22,906 | 4,259 | |
Gain on sale of oil and natural gas properties | (1,528) | ||||
Stock-based compensation expense | 355 | 4,344 | |||
Net losses on commodity derivative contracts | (13,200) | 28,286 | 20,827 | 142,384 | |
Net cash settlements paid on commodity derivative contracts | (5,799) | (69,317) | |||
(Gain) loss on other derivatives | (276) | 5,262 | |||
Loss on investments | 4,464 | 3,361 | |||
Loss (gain) on sale of inventory | 143 | (571) | |||
Loss on other assets | 858 | ||||
Loss on prepaid asset impairment | 11,755 | ||||
Amortization of deferred gain on Western Catarina Midstream Divestiture | (17,790) | ||||
Loss on contingency | 11,800 | 11,800 | |||
Accretion of debt discount, net | 1,019 | 1,112 | |||
Reorganization items | 39,238 | ||||
Accounts receivable | 41,305 | 1,982 | |||
Accounts receivable - related entities | (4,062) | (3,365) | |||
Other payables | (40,452) | 8,537 | |||
Accrued liabilities | 59,218 | 17,595 | |||
Other current liabilities | (20,519) | (12,531) | |||
Other assets and liabilities, net | 5,330 | (2,225) | |||
Net cash provided by operating activities | 99,750 | 249,526 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Capital expenditures for the development of oil and natural gas properties | (114,655) | (452,296) | |||
Proceeds from the sale of oil and natural gas properties | 1,425 | ||||
Payments for purchases of other assets | (761) | (9,573) | |||
Proceeds from the sale of other assets | 5,199 | 3,788 | |||
Net cash used in investing activities | (110,217) | (453,822) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings, including borrowings under DIP Facility | 57,922 | 539,865 | |||
Repayment of borrowings | (18,327) | (103,262) | |||
Financing costs, including costs related to DIP Facility | (9,505) | (12,995) | |||
Cash paid to tax authority for employee stock-based compensation awards | (198) | (705) | |||
Preferred dividends paid | (37,500) | (22,408) | |||
Net cash (used in) provided by financing activities | (7,608) | 388,534 | |||
(Decrease) increase in cash and cash equivalents | (18,075) | 184,238 | |||
Cash and cash equivalents, beginning of period | 197,613 | 184,434 | $ 184,434 | ||
Cash and cash equivalents, end of period | 179,538 | 368,672 | 179,538 | 368,672 | 197,613 |
SUPPLEMENTAL DISCLOSURE: | |||||
Cash paid for interest | 84,803 | 120,775 | |||
Debtor | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net loss | (232,755) | (34,204) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Depreciation, depletion, amortization and accretion | 39,211 | 47,799 | 128,976 | 128,812 | |
Impairment of oil and natural gas properties | 9,597 | 3,103 | 18,206 | 3,543 | |
Gain on sale of oil and natural gas properties | (1,528) | ||||
Stock-based compensation expense | 355 | 4,344 | |||
Net losses on commodity derivative contracts | (2,774) | 13,989 | 10,748 | 88,429 | |
Net cash settlements paid on commodity derivative contracts | (3,559) | (55,147) | |||
(Gain) loss on other derivatives | (308) | 7,141 | |||
Loss on investments | 4,464 | 3,361 | |||
Loss (gain) on sale of inventory | 143 | (571) | |||
Loss on other assets | 858 | ||||
Loss on prepaid asset impairment | 11,755 | ||||
Amortization of deferred gain on Western Catarina Midstream Divestiture | (17,790) | ||||
Equity in net earnings of subsidiaries | (621) | (12,470) | |||
Amortization of debt issuance costs | 5,386 | 9,859 | |||
Accretion of debt discount, net | 1,019 | 1,112 | |||
Accounts receivable | 35,686 | 75 | |||
Accounts receivable - related entities | (962) | 9,259 | |||
Other payables | (40,452) | 8,537 | |||
Accrued liabilities | 54,915 | 12,980 | |||
Other current liabilities | (20,518) | (12,532) | |||
Other assets and liabilities, net | 5,260 | (2,390) | |||
Net cash provided by operating activities | 17,834 | 140,820 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Capital expenditures for the development of oil and natural gas properties | (91,375) | (379,321) | |||
Proceeds from the sale of oil and natural gas properties | 1,425 | ||||
Payments for purchases of other assets | (736) | (9,573) | |||
Proceeds from the sale of other assets | 5,199 | 3,642 | |||
Net cash used in investing activities | (86,912) | (383,827) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings, including borrowings under DIP Facility | 57,922 | 539,865 | |||
Repayment of borrowings | (95,000) | ||||
Financing costs, including costs related to DIP Facility | (9,410) | (12,484) | |||
Cash paid to tax authority for employee stock-based compensation awards | (198) | (705) | |||
Preferred dividends paid | (11,961) | ||||
Net cash (used in) provided by financing activities | 48,314 | 419,715 | |||
(Decrease) increase in cash and cash equivalents | (20,764) | 176,708 | |||
Cash and cash equivalents, beginning of period | 194,723 | 171,052 | 171,052 | ||
Cash and cash equivalents, end of period | $ 173,959 | $ 347,760 | $ 173,959 | $ 347,760 | $ 194,723 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenue Recognition | |||||
Revenues | $ 162,546 | $ 277,710 | $ 574,350 | $ 788,251 | |
Receivables | $ 69,290 | $ 69,290 | $ 87,222 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Cash and cash equivalents | ||||
Total cash and cash equivalents | $ 179,538 | $ 197,613 | $ 368,672 | $ 184,434 |
Cash at banks | ||||
Cash and cash equivalents | ||||
Total cash and cash equivalents | 179,265 | 66,426 | ||
Money market funds | ||||
Cash and cash equivalents | ||||
Total cash and cash equivalents | $ 273 | $ 131,187 |
Oil and Natural Gas Properties
Oil and Natural Gas Properties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Impairment of oil and natural gas properties | $ 9,761 | $ 3,117 | $ 22,906 | $ 4,259 | |
Proved oil and gas properties | |||||
Impairment of oil and natural gas properties | 4,300 | 0 | 4,300 | 0 | $ 6,600 |
Unproved oil and gas properties | |||||
Impairment of oil and natural gas properties | $ 9,800 | $ 3,100 | $ 18,600 | $ 4,300 |
Debt (Summary) (Details)
Debt (Summary) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||||||
Sep. 30, 2019 | Jan. 10, 2019 | Dec. 31, 2018 | Mar. 01, 2017 | Sep. 12, 2014 | Jun. 27, 2014 | Sep. 18, 2013 | Jun. 13, 2013 | |
Long-Term Debt | ||||||||
Total short term debt | $ 50,000 | $ 304 | ||||||
Long term debt before unamortized discount | 2,434,390 | 2,444,490 | ||||||
Unamortized debt issuance costs | (9,512) | (43,709) | ||||||
Total long-term debt | 2,424,878 | 2,395,408 | ||||||
Less liabilities subject to compromise | (2,257,922) | |||||||
Total long term debt not subject to compromise | 166,956 | 2,395,408 | ||||||
Net discounts, premiums and debt issuance costs written off | $ 30,400 | |||||||
7.75% Notes | ||||||||
Long-Term Debt | ||||||||
Face value of debt | $ 200,000 | $ 400,000 | ||||||
Interest rate (as a percent) | 7.75% | |||||||
Long term debt before unamortized discount | $ 600,000 | 600,000 | ||||||
Unamortized discount on Additional Notes | (2,222) | |||||||
4.59% Non-Recourse Subsidiary Term Loan | ||||||||
Long-Term Debt | ||||||||
Interest rate (as a percent) | 4.59% | |||||||
Long term debt before unamortized discount | $ 3,527 | 3,803 | ||||||
6.125% Notes | ||||||||
Long-Term Debt | ||||||||
Face value of debt | $ 300,000 | $ 850,000 | ||||||
Interest rate (as a percent) | 6.125% | |||||||
Long term debt before unamortized discount | $ 1,150,000 | 1,150,000 | ||||||
Unamortized premium on Additional 6.125% Notes | 1,090 | |||||||
7.25% Senior Secured Notes | ||||||||
Long-Term Debt | ||||||||
Interest rate (as a percent) | 7.25% | |||||||
Long term debt before unamortized discount | $ 500,000 | 500,000 | ||||||
Unamortized discount on Additional Notes | (4,241) | |||||||
Debtor-in-Possession Facility | ||||||||
Long-Term Debt | ||||||||
Total short term debt | $ 50,000 | |||||||
Weighted average interest rate | 10.10% | |||||||
Second Amended And Restated Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Long term debt before unamortized discount | $ 7,922 | |||||||
SN UnSub Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Face value of debt | $ 500,000 | |||||||
Long term debt before unamortized discount | $ 150,000 | $ 167,500 | ||||||
Weighted average interest rate | 5.90% | 6.90% | ||||||
Borrowings | $ 150,000 | |||||||
SR Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Total short term debt | $ 304 | |||||||
Long term debt before unamortized discount | 22,941 | $ 23,187 | ||||||
Borrowings | $ 22,900 | |||||||
Standby letter of credit | ||||||||
Long-Term Debt | ||||||||
Face value of debt | $ 17,100 | |||||||
Interest rate (as a percent) | 3.25% |
Debt (Interest Expense Componen
Debt (Interest Expense Components) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest expense | ||||
Amortization of debt issuance costs | $ (1,961) | $ (2,873) | $ (8,275) | $ (12,706) |
Amortization of (discount) premium | (1,019) | (1,112) | ||
Total interest expense | (22,884) | (44,154) | (111,998) | (132,664) |
4.59% Non-Recourse Subsidiary Term Loan | ||||
Interest expense | ||||
Interest | (31) | (46) | (116) | (140) |
Senior Notes | ||||
Interest expense | ||||
Interest | (17,704) | (38,296) | (94,299) | (110,158) |
7.75% Notes | ||||
Interest expense | ||||
Amortization of (discount) premium | (188) | (416) | (1,019) | (1,112) |
Second Amended And Restated Credit Agreement | ||||
Interest expense | ||||
Interest | (106) | (32) | (389) | (726) |
SN UnSub Credit Agreement | ||||
Interest expense | ||||
Interest | (1,952) | (2,131) | (6,383) | (6,634) |
SR Credit Agreement | ||||
Interest expense | ||||
Interest | (342) | $ (360) | (917) | $ (1,188) |
Debtor-in-Possession Facility | ||||
Interest expense | ||||
Interest | $ (600) | $ (600) |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Jul. 15, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jul. 10, 2019 | May 23, 2019 | May 22, 2019 | Dec. 31, 2018 | Feb. 14, 2018 | Mar. 01, 2017 | Sep. 12, 2014 | Jun. 27, 2014 | Sep. 18, 2013 | Jun. 13, 2013 |
Long-Term Debt | |||||||||||||||
Proceeds from issuance of debt | $ 57,922 | $ 539,865 | |||||||||||||
Debt issuance costs | $ 1,961 | $ 2,873 | 8,275 | $ 12,706 | |||||||||||
Write off of deferred debt issuance cost | $ 30,400 | ||||||||||||||
7.25% Senior Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Face value of debt | $ 500,000 | ||||||||||||||
Percentage of principal for notes offered in private offering | 99.00% | ||||||||||||||
7.75% Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Face value of debt | $ 200,000 | $ 400,000 | |||||||||||||
Interest rate (as a percent) | 7.75% | 7.75% | |||||||||||||
Percentage of principal for notes offered in private offering | 96.50% | ||||||||||||||
6.125% Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Face value of debt | $ 300,000 | $ 850,000 | |||||||||||||
Interest rate (as a percent) | 6.125% | 6.125% | |||||||||||||
Periodic payment of interest deferred | $ 35,200 | ||||||||||||||
Payment grace period | 30 days | ||||||||||||||
Debt default, acceleration option by percentage of indenture holders | 25.00% | ||||||||||||||
Percentage of principal for notes offered in private offering | 100.75% | ||||||||||||||
Premium on face value of debt | $ 1,090 | ||||||||||||||
Third Amended and Restated Credit Agreement | |||||||||||||||
Long-Term Debt | |||||||||||||||
Maximum borrowing capacity | $ 25,000 | ||||||||||||||
Borrowings | $ 7,900 | ||||||||||||||
Letters of credit outstanding | $ 17,100 | ||||||||||||||
Debtor-in-Possession Facility | |||||||||||||||
Long-Term Debt | |||||||||||||||
Weighted average interest rate | 10.10% | 10.10% | |||||||||||||
Debtor-in-Possession Facility | Term loan facility | |||||||||||||||
Long-Term Debt | |||||||||||||||
Debtor-in-Possession financing, amount arranged | $ 350,000 | $ 350,000 | |||||||||||||
SN UnSub Credit Agreement | |||||||||||||||
Long-Term Debt | |||||||||||||||
Maximum borrowing capacity | $ 240,000 | $ 315,000 | |||||||||||||
Weighted average interest rate | 5.90% | 5.90% | 6.90% | ||||||||||||
Face value of debt | $ 500,000 | ||||||||||||||
Borrowings | $ 150,000 | $ 150,000 | |||||||||||||
Letters of credit outstanding | 0 | $ 0 | |||||||||||||
Borrowing base, single installment repayment period | 30 days | ||||||||||||||
Borrowing base, six equal installments repayment period | 180 days | ||||||||||||||
SR Credit Agreement | |||||||||||||||
Long-Term Debt | |||||||||||||||
Borrowings | $ 22,900 | $ 22,900 |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Aug. 31, 2019USD ($) | Sep. 30, 2019USD ($)$ / bbl$ / MMBTU | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)MMBTU$ / bbl$ / MMBTUbbl | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Derivatives Fair Value [Line Items] | ||||||
Embedded derivative, loss | $ 1,100 | $ 7,100 | ||||
Reconciliation of the changes in fair value of the commodity derivatives | ||||||
Fair value of commodity derivatives, beginning of period | $ 5,550 | (1,551) | $ (1,551) | |||
Gain (loss) on embedded derivatives | $ 0 | |||||
Embedded derivative, loss | 1,100 | 7,100 | ||||
Gain on embedded derivatives | 308 | 1,243 | ||||
Initial fair value of earnout derivatives | 6,401 | |||||
Losses on derivatives | (32) | (543) | ||||
Fair value of commodity derivatives, end of period | 5,826 | $ 5,550 | 5,826 | 5,550 | 5,550 | |
Net payable | $ 1,100 | |||||
Commodity derivatives | ||||||
Reconciliation of the changes in fair value of the commodity derivatives | ||||||
Fair value of commodity derivatives, beginning of period | 21,194 | $ (54,255) | (54,255) | |||
Fair value of commodity derivatives, end of period | 9,083 | 9,083 | 21,194 | |||
Commodity derivatives | Oil Reserves | ||||||
Reconciliation of the changes in fair value of the commodity derivatives | ||||||
Losses on derivatives | (28,167) | (9,878) | ||||
Net settlements paid (received) on commodity derivative contracts: | 13,479 | 100,120 | ||||
Commodity derivatives | Natural gas | ||||||
Reconciliation of the changes in fair value of the commodity derivatives | ||||||
Losses on derivatives | 6,266 | (17,897) | ||||
Net settlements paid (received) on commodity derivative contracts: | (3,689) | $ 3,104 | ||||
Earnout derivative | ||||||
Reconciliation of the changes in fair value of the commodity derivatives | ||||||
Gains on derivatives | $ 400 | $ 1,900 | ||||
Not designated as hedges | Swaps | October 1 - December 31, 2019 | Oil Reserves | ||||||
Derivatives Fair Value [Line Items] | ||||||
Notional amount (in barrels) | bbl | 580,000 | |||||
Average swap price per unit | $ / bbl | 52.41 | 52.41 | ||||
Not designated as hedges | Swaps | October 1 - December 31, 2019 | Natural gas | ||||||
Derivatives Fair Value [Line Items] | ||||||
Notional amount (in MMBtu) | MMBTU | 3,362,000 | |||||
Average swap price per unit | $ / MMBTU | 2.87 | 2.87 | ||||
Not designated as hedges | Swaps | 2020 | Oil Reserves | ||||||
Derivatives Fair Value [Line Items] | ||||||
Notional amount (in barrels) | bbl | 1,105,860 | |||||
Average swap price per unit | $ / bbl | 55.29 | 55.29 | ||||
Not designated as hedges | Swaps | 2020 | Natural gas | ||||||
Derivatives Fair Value [Line Items] | ||||||
Notional amount (in MMBtu) | MMBTU | 6,934,150 | |||||
Average swap price per unit | $ / MMBTU | 2.67 | 2.67 | ||||
Not designated as hedges | Swaps | 2021 | Oil Reserves | ||||||
Derivatives Fair Value [Line Items] | ||||||
Notional amount (in barrels) | bbl | 650,400 | |||||
Average swap price per unit | $ / bbl | 54.23 | 54.23 | ||||
Not designated as hedges | Swaps | 2021 | Natural gas | ||||||
Derivatives Fair Value [Line Items] | ||||||
Notional amount (in MMBtu) | MMBTU | 4,212,000 | |||||
Average swap price per unit | $ / MMBTU | 2.56 | 2.56 |
Derivative Instruments (Balance
Derivative Instruments (BalanceSheet) (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Offsetting Derivative Assets: | ||
Gross Amount of Recognized Assets | $ 15,750 | $ 28,480 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (141) | (664) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 15,609 | 27,816 |
Offsetting Derivative Liabilities: | ||
Gross Amount of Recognized Liabilities | 841 | 1,736 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (141) | (664) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 700 | 1,072 |
Current asset | ||
Offsetting Derivative Assets: | ||
Gross Amount of Recognized Assets | 6,389 | 16,302 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (126) | (588) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 6,263 | 15,714 |
Long-term asset | ||
Offsetting Derivative Assets: | ||
Gross Amount of Recognized Assets | 9,361 | 12,178 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (15) | (76) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 9,346 | 12,102 |
Current liability | ||
Offsetting Derivative Liabilities: | ||
Gross Amount of Recognized Liabilities | 826 | 1,294 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (126) | (588) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 700 | 706 |
Long-term liability | ||
Offsetting Derivative Liabilities: | ||
Gross Amount of Recognized Liabilities | 15 | 442 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | $ (15) | (76) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | $ 366 |
Investments (Details)
Investments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)itemshares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Debt Securities, Available-for-sale [Line Items] | |||||
Investment gains (losses) recorded | $ (3,068) | $ (21,318) | |||
Earnout derivative | $ 6,401 | ||||
Lonestar | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Gain (loss) on investments | $ 600 | $ (1,000) | $ (1,400) | 5,700 | |
Class A Units | GRHL | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Investments (in shares or units) | shares | 100 | 100 | |||
Recognized investment gains (losses) | $ 0 | ||||
Annual vesting percentage | 20.00% | ||||
Number of vesting anniversaries | item | 5 | ||||
Initial investment in GRHL | $ 7,300 | $ 7,300 | |||
Common Stock | SNMP | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Investments (in shares or units) | shares | 2,272,727 | 2,272,727 | |||
Recognized investment gains (losses) | $ 4,300 | 10,700 | $ 3,100 | 9,100 | |
Ownership of investment (as a percent) | 11.30% | 11.30% | |||
Dividend income | $ 0 | $ 1,000 | $ 700 | $ 3,200 | |
Class A Common Stock | Lonestar | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Investments (in shares or units) | shares | 1,500,000 | 1,500,000 | |||
Ownership of investment (as a percent) | 6.00% | 6.00% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Fair Value of Financial Instruments | |||
Investments | $ 800 | $ 3,900 | |
Gain on embedded derivatives | 308 | $ 1,243 | |
Level 3 | |||
Fair Value of Financial Instruments | |||
Derivative instruments | 0 | 0 | |
Recurring basis | |||
Fair Value of Financial Instruments | |||
Cash and cash equivalents | 273 | 131,187 | |
Embedded derivative instruments | (308) | ||
Earnout derivative asset | 5,826 | 5,858 | |
Total | 20,103 | 167,315 | |
Recurring basis | SNMP | |||
Fair Value of Financial Instruments | |||
Investments | 841 | 3,909 | |
Recurring basis | Lonestar | |||
Fair Value of Financial Instruments | |||
Investments | 4,080 | 5,475 | |
Recurring basis | Active Market for Identical Assets (Level 1) | |||
Fair Value of Financial Instruments | |||
Cash and cash equivalents | 273 | 131,187 | |
Total | 5,194 | 140,571 | |
Recurring basis | Active Market for Identical Assets (Level 1) | SNMP | |||
Fair Value of Financial Instruments | |||
Investments | 841 | 3,909 | |
Recurring basis | Active Market for Identical Assets (Level 1) | Lonestar | |||
Fair Value of Financial Instruments | |||
Investments | 4,080 | 5,475 | |
Recurring basis | Observable Inputs (Level 2) | |||
Fair Value of Financial Instruments | |||
Embedded derivative instruments | (308) | ||
Total | 9,083 | 20,886 | |
Recurring basis | Level 3 | |||
Fair Value of Financial Instruments | |||
Earnout derivative asset | 5,826 | 5,858 | |
Total | 5,826 | 5,858 | |
Swaps | Oil Reserves | Recurring basis | |||
Fair Value of Financial Instruments | |||
Derivative instruments | 5,919 | 20,608 | |
Swaps | Oil Reserves | Recurring basis | Observable Inputs (Level 2) | |||
Fair Value of Financial Instruments | |||
Derivative instruments | 5,919 | 20,608 | |
Swaps | Natural gas | Recurring basis | |||
Fair Value of Financial Instruments | |||
Derivative instruments | 3,164 | 586 | |
Swaps | Natural gas | Recurring basis | Observable Inputs (Level 2) | |||
Fair Value of Financial Instruments | |||
Derivative instruments | $ 3,164 | $ 586 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments (Other) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Beginning balance | $ 5,858 | ||||
Initial fair value of earnout derivative | 6,401 | ||||
Loss on earnout derivative | (32) | (543) | |||
Ending balance | $ 5,826 | 5,826 | 5,858 | ||
Impairment of oil and natural gas properties | $ 9,761 | $ 3,117 | $ 22,906 | 4,259 | |
7.75% Notes | |||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Interest rate (as a percent) | 7.75% | 7.75% | |||
7.75% Notes | Active Market for Identical Assets (Level 1) | Estimated Fair Value | |||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Debt fair value | $ 37,800 | $ 37,800 | |||
6.125% Notes | |||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Interest rate (as a percent) | 6.125% | 6.125% | |||
6.125% Notes | Active Market for Identical Assets (Level 1) | Estimated Fair Value | |||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Debt fair value | $ 74,100 | $ 74,100 | |||
7.25% Senior Secured Notes | |||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Interest rate (as a percent) | 7.25% | 7.25% | |||
7.25% Senior Secured Notes | Active Market for Identical Assets (Level 1) | Estimated Fair Value | |||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Debt fair value | $ 369,300 | $ 369,300 | |||
Proved oil and gas properties | |||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | |||||
Impairment of oil and natural gas properties | 4,300 | $ 0 | 4,300 | $ 0 | 6,600 |
Carrying value of impaired proved properties | $ 11,000 | $ 11,000 | $ 10,500 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Changes in the asset retirement obligation | ||
Abandonment liability, beginning of period | $ 46,175 | $ 36,098 |
Liabilities incurred during period | 275 | 1,965 |
Divestitures | (147) | (158) |
Revisions | 5,077 | |
Accretion expense | 2,879 | 3,193 |
Abandonment liability, end of period | $ 49,183 | $ 46,175 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Related Party Transactions | |||||
Accounts receivable - related entities | $ 10,161 | $ 10,161 | $ 6,099 | ||
Earnout derivative asset | 6,401 | ||||
General and administrative expenses | 20,915 | $ 21,312 | 66,266 | $ 73,199 | |
SOG | |||||
Related Party Transactions | |||||
General and administrative expenses and oil and natural gas production expenses | 17,300 | $ 15,300 | 52,600 | $ 48,800 | |
Accounts receivable - related entities | 10,200 | 10,200 | 6,100 | ||
SNMP | |||||
Related Party Transactions | |||||
Accounts payable - related entities | $ 3,800 | $ 3,800 | $ 6,100 |
Accrued Liabilities and Other_3
Accrued Liabilities and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities and Other Current Liabilities. | ||
Capital expenditures | $ 7,232 | $ 61,970 |
General and administrative expenses | 20,635 | 19,460 |
Production taxes | 2,483 | 5,157 |
Ad valorem taxes | 6,655 | 445 |
Lease operating expenses | 34,782 | 24,138 |
Interest payable | 376 | 47,866 |
Other accrued liabilities | 1,367 | 5,662 |
Total accrued liabilities | 73,530 | 164,698 |
Revenue payable | 14,963 | 71,296 |
Production tax payable | 448 | 3,443 |
Other | (111) | |
Other | 1,328 | |
Total other payables | 16,739 | 74,628 |
Operated prepayment liability | 31,921 | 51,844 |
Deferred gain on Western Catarina Midstream Divestiture - short term | 23,720 | |
Phantom compensation payable - short term | 17 | |
Phantom compensation payable - short term | 40 | |
Total other current liabilities | $ 31,961 | $ 75,581 |
Stockholders' and Mezzanine E_3
Stockholders' and Mezzanine Equity (Details) $ / shares in Units, $ in Thousands | Sep. 30, 2019USD ($)a$ / sharesshares | Jul. 29, 2019shares | Jun. 14, 2019shares | Mar. 26, 2019shares | Mar. 08, 2019shares | Feb. 12, 2019shares | Mar. 01, 2017asubsidiaryshares | Mar. 31, 2018USD ($) | Sep. 30, 2019USD ($)a$ / sharesshares | Dec. 31, 2018 |
Shares issued | $ | $ 566 | |||||||||
Preferred Stock | ||||||||||
Increase (decrease) in dividends accrued or accumulated | $ | $ (1,600) | $ (1,600) | ||||||||
Series A Preferred Stock | ||||||||||
Conversion ratio | shares | 2.325 | 2.325 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 21.51 | |||||||||
Number of shares of preferred stock converted into common stock | shares | 5,000 | 155,929 | 422,222 | 563,832 | 72,500 | |||||
Number of shares of common stock issued upon conversion of preferred stock | shares | 11,625 | 362,535 | 981,667 | 1,310,914 | 168,563 | 1,440,343 | ||||
Annual dividend (as a percent) | 4.875% | 4.875% | ||||||||
Liquidation preference (in dollars per share) | $ / shares | $ 50 | $ 50 | ||||||||
Series B Preferred Stock | ||||||||||
Conversion ratio | shares | 2.337 | 2.337 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 21.40 | |||||||||
Number of shares of preferred stock converted into common stock | shares | 45,000 | 770,986 | 245,832 | |||||||
Number of shares of common stock issued upon conversion of preferred stock | shares | 105,165 | 1,801,798 | 574,510 | 5,763,071 | ||||||
Annual dividend (as a percent) | 6.50% | 6.50% | ||||||||
Liquidation preference (in dollars per share) | $ / shares | $ 50 | $ 50 | ||||||||
The "Comanche Assets" | ||||||||||
Number of subsidiaries | subsidiary | 2 | |||||||||
Area under agreement, gross (in acres) | a | 318,000 | |||||||||
Area under agreement, net (in acres) | a | 155,000 | |||||||||
Percentage of working interest | 49.00% | |||||||||
The "Comanche Assets" | SN UnSub Preferred Units | GSO Capital Partners L.P. | ||||||||||
Number of shares issued (in shares) | shares | 485,000 | |||||||||
The "Comanche Assets" | SN UnSub Preferred Units | Intrepid Private Equity V-A, LLC | ||||||||||
Number of shares issued (in shares) | shares | 15,000 | |||||||||
Eagle Ford Shale | ||||||||||
Area under agreement, gross (in acres) | a | 435,000 | 435,000 | ||||||||
Area under agreement, net (in acres) | a | 233,000 | 233,000 | ||||||||
Eagle Ford Shale | The "Comanche Assets" | ||||||||||
Area under agreement, gross (in acres) | a | 252,000 | |||||||||
Area under agreement, net (in acres) | a | 122,000 | |||||||||
Pearsall Shale | The "Comanche Assets" | ||||||||||
Area under agreement, gross (in acres) | a | 66,000 | |||||||||
Area under agreement, net (in acres) | a | 33,000 |
Stockholders' and Mezzanine E_4
Stockholders' and Mezzanine Equity (Mezzanine Equity) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Stockholders' and Mezzanine Equity | ||
Mezzanine equity, beginning balance | $ 452,828 | $ 427,512 |
Accretion of discount | 22,029 | 25,316 |
Dividends accrued | 37,500 | 50,000 |
Dividends prepaid | (2,592) | |
Dividends/distributions paid | (37,500) | (47,408) |
Mezzanine equity, ending balance | $ 474,857 | $ 452,828 |
Stockholders' and Mezzanine E_5
Stockholders' and Mezzanine Equity (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings (Loss) Per Share | ||||||||
Net loss | $ (112,448) | $ (52,965) | $ (67,342) | $ 5,598 | $ (34,987) | $ (4,815) | $ (232,755) | $ (34,204) |
Preferred stock dividends | (2,312) | (3,987) | (7,153) | (11,961) | ||||
Preferred unit dividends and distributions | (12,500) | (12,500) | (37,500) | (34,908) | ||||
Preferred unit amortization | (7,638) | $ (7,358) | $ (7,033) | (6,458) | $ (6,189) | $ (5,930) | (22,029) | (18,577) |
Net loss attributable to common stockholders | $ (134,898) | $ (17,347) | $ (299,437) | $ (99,650) | ||||
Weighted average number of shares used to calculate net loss attributable to common stockholders - basic | 97,395,000 | 82,073,000 | 95,272,000 | 81,597,000 | ||||
Net loss per common share - basic and diluted (in dollars per share) | $ (1.39) | $ (0.21) | $ (3.14) | $ (1.22) | ||||
Restricted stock | ||||||||
Earnings (Loss) Per Share | ||||||||
Anti-dilutive stock | 433,369 | 1,840,007 | 942,551 | 2,591,553 | ||||
Common Stock | ||||||||
Earnings (Loss) Per Share | ||||||||
Anti-dilutive stock | 7,306,402 | 12,520,179 | 8,757,574 | 12,520,179 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-Based Compensation | ||||||
Total stock-based compensation expense (benefit) | $ (5) | $ (4,051) | $ 4,344 | $ 355 | ||
Additional disclosure related to compensation cost | ||||||
Closing price of common stock (in dollars per share) | $ 0.03 | $ 0.03 | ||||
Restricted stock | ||||||
Additional disclosure related to compensation cost | ||||||
Unrecognized compensation costs | $ 300 | $ 300 | ||||
Expected average period for recognition of unrecognized compensation costs | 1 year 8 months 12 days | |||||
Number of Non-Vested Shares | ||||||
Shares available for future issuance to participants | 8,400,000 | 8,400,000 | ||||
Restricted stock | LTIP PLan | ||||||
Number of Non-Vested Shares | ||||||
Granted (in shares) | 0 | 0 | ||||
Restricted stock | Directors | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation expense (benefit) | 305 | $ 932 | 42 | |||
Restricted stock | Non-employees | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation expense (benefit) | $ 45 | (862) | 1,957 | 270 | ||
PARS | ||||||
Additional disclosure related to compensation cost | ||||||
Unrecognized compensation costs | 100 | $ 100 | ||||
Expected average period for recognition of unrecognized compensation costs | 1 year 6 months | |||||
PAPS | ||||||
Additional disclosure related to compensation cost | ||||||
Unrecognized compensation costs | 100 | $ 100 | ||||
Expected average period for recognition of unrecognized compensation costs | 1 year 8 months 12 days | |||||
Phantom stock shares and PAPS | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation expense (benefit) | $ (101) | $ (2,652) | $ 1,467 | $ (40) | ||
Number of Non-Vested Shares | ||||||
Non-vested shares, beginning of period (in shares) | 2,857,000 | 5,888,000 | 5,125,000 | 3,589,000 | 3,589,000 | |
Granted (in shares) | 253,000 | 7,000 | 3,905,000 | |||
Vested (in shares) | (60,000) | (46,000) | (1,874,000) | (1,197,000) | ||
Forfeited (in shares) | (58,000) | (465,000) | (519,000) | (667,000) | ||
Non-vested shares, end of the period (in shares) | 2,739,000 | 5,630,000 | 2,739,000 | 5,630,000 | 5,125,000 | 3,589,000 |
Phantom stock shares and PAPS | LTIP PLan | ||||||
Stock-Based Compensation | ||||||
Vesting period | 3 years | |||||
Number of Non-Vested Shares | ||||||
Granted (in shares) | 0 | 0 | ||||
Performance awards | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation expense (benefit) | $ 51 | $ (842) | $ (12) | $ 83 | ||
Additional disclosure related to compensation cost | ||||||
Unrecognized compensation costs | 100 | $ 100 | ||||
Expected average period for recognition of unrecognized compensation costs | 2 years 3 months 18 days | |||||
PBPS awards | ||||||
Additional disclosure related to compensation cost | ||||||
Unrecognized compensation costs | $ 100 | $ 100 | ||||
Expected average period for recognition of unrecognized compensation costs | 1 year 1 month 6 days | |||||
Number of Non-Vested Shares | ||||||
Non-vested shares, beginning of period (in shares) | 2,714,000 | 5,767,000 | 5,024,000 | 4,897,000 | 4,897,000 | |
Granted (in shares) | 146,000 | 3,303,000 | ||||
Vested (in shares) | (51,000) | (59,000) | (2,164,000) | (2,218,000) | ||
Forfeited (in shares) | (24,000) | (414,000) | (221,000) | (542,000) | ||
Non-vested shares, end of the period (in shares) | 2,639,000 | 5,440,000 | 2,639,000 | 5,440,000 | 5,024,000 | 4,897,000 |
PBPS awards | LTIP PLan | ||||||
Additional disclosure related to compensation cost | ||||||
Target shares awarded (as a percent) | 71.00% | 0.00% | ||||
Cash-settled PBPS awards | LTIP PLan | ||||||
Number of Non-Vested Shares | ||||||
Granted (in shares) | 419,430 | |||||
Stock-settled PBPS awards | LTIP PLan | ||||||
Number of Non-Vested Shares | ||||||
Granted (in shares) | 419,430 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Taxes | |||
Effective tax rate (as a percent) | 0.00% | 0.00% | |
Federal statutory rate | 21.00% | 21.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($)item | Dec. 31, 2020item | Dec. 31, 2019item | |
Commitments and contingencies | ||||
Loss contingencies, loss on impairment | $ | $ 11,800 | $ 11,800 | ||
ASC 842 | ||||
Commitments and contingencies | ||||
Lease payment obligations | $ | $ 283,484 | $ 283,484 | ||
Forecast | Palmetto | ||||
Commitments and contingencies | ||||
Number of wells, gross | 6 | |||
Number of wells, net | 5 | 3 | ||
SN Catarina | ||||
Commitments and contingencies | ||||
Maximum number of wells to be drilled in each annual period | 50 | |||
Minimum number of wells to be drilled in accordance with agreement | 1 | |||
Consecutive period over which at least one well can be drilled in order to continue to maintain rights to any future undeveloped acreage | 120 days | |||
Number of wells that can be carried over to satisfy part of the well requirement in the subsequent annual period on a well-for-well basis | 30 | |||
Maximum | Forecast | Palmetto | ||||
Commitments and contingencies | ||||
Number of wells, gross | 10 | |||
Anadarko E&P Onshore, LLC | The "Comanche Assets" | ||||
Commitments and contingencies | ||||
Minimum number of wells to be drilled in accordance with agreement | 60 | |||
Number of wells that can be carried over to satisfy part of the well requirement in the subsequent annual period on a well-for-well basis | 30 | |||
Contingent per well default fee | $ | $ 200 |
Commitments and Contingencies_2
Commitments and Contingencies (Commitments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Gathering and processing fees | $ 74,740 | $ 75,594 | $ 231,441 | $ 225,186 |
Lease payment obligations | 289,391 | 289,391 | ||
Oil and natural gas production expenses | 74,740 | 75,594 | 231,441 | 225,186 |
Volume commitments | ||||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Future commitments | 406,300 | 406,300 | ||
Gathering and processing fees | 3,600 | 1,600 | 7,500 | 3,800 |
Oil and natural gas production expenses | 3,600 | $ 1,600 | 7,500 | $ 3,800 |
Volume commitments 2019 through 2021 | ||||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Future commitments | 140,600 | 140,600 | ||
Volume commitments 2022 through 2024 | ||||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Future commitments | 128,800 | 128,800 | ||
Volume commitments expiring after December 31, 2024 | ||||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Future commitments | 136,900 | 136,900 | ||
Natural gas | Volume commitments | ||||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Future commitments | 40,500 | 40,500 | ||
Natural gas | Volume commitments 2019 through 2021 | ||||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Future commitments | 39,800 | 39,800 | ||
Natural gas | Volume commitments 2022 through 2024 | ||||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||||
Future commitments | $ 700 | $ 700 |
Condensed Consolidating Finan_3
Condensed Consolidating Financial Information (Details) | Sep. 30, 2019 |
Ownership interest in subsidies (as a percent) | 100.00% |
7.75% Notes | |
Interest rate (as a percent) | 7.75% |
6.125% Notes | |
Interest rate (as a percent) | 6.125% |
Condensed Consolidating Finan_4
Condensed Consolidating Financial Information (Balance Sheet) (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||||||||
Total current assets | $ 300,910 | $ 372,981 | ||||||
Total oil and natural gas properties, net | 2,216,225 | 2,359,125 | ||||||
Other assets | 345,675 | 87,854 | ||||||
Total assets | 2,862,810 | 2,819,960 | ||||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | 296,796 | 348,299 | ||||||
Long-term liabilities | 2,788,236 | 2,463,356 | ||||||
Mezzanine equity | 474,857 | 452,828 | $ 427,512 | |||||
Total shareholders' equity (deficit) | (697,079) | $ (562,277) | $ (487,287) | (444,523) | $ (538,620) | $ (519,875) | $ (466,863) | $ (469,140) |
Total liabilities and stockholders' equity deficit | 2,862,810 | 2,819,960 | ||||||
Eliminations | ||||||||
Assets | ||||||||
Total current assets | (172,357) | (316,780) | ||||||
Investment in subsidiaries | (1,601,815) | (1,569,774) | ||||||
Total assets | (1,774,172) | (1,886,554) | ||||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | (172,357) | (316,780) | ||||||
Total shareholders' equity (deficit) | (1,601,815) | (1,569,774) | ||||||
Total liabilities and stockholders' equity deficit | (1,774,172) | (1,886,554) | ||||||
Parent Company | ||||||||
Assets | ||||||||
Total current assets | 243,889 | 473,062 | ||||||
Total oil and natural gas properties, net | 60 | 36 | ||||||
Investment in subsidiaries | 1,609,093 | 1,577,054 | ||||||
Other assets | 52,146 | 22,917 | ||||||
Total assets | 1,905,188 | 2,073,069 | ||||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | 77,254 | 155,396 | ||||||
Long-term liabilities | 2,370,695 | 2,203,546 | ||||||
Total shareholders' equity (deficit) | (542,761) | (285,873) | ||||||
Total liabilities and stockholders' equity deficit | 1,905,188 | 2,073,069 | ||||||
Combined Guarantor Subsidiaries | ||||||||
Assets | ||||||||
Total current assets | 122,817 | 69,934 | ||||||
Total oil and natural gas properties, net | 1,498,844 | 1,600,378 | ||||||
Other assets | 259,623 | 10,307 | ||||||
Total assets | 1,881,284 | 1,680,619 | ||||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | 202,889 | 282,719 | ||||||
Long-term liabilities | 235,861 | 51,211 | ||||||
Total shareholders' equity (deficit) | 1,442,534 | 1,346,689 | ||||||
Total liabilities and stockholders' equity deficit | 1,881,284 | 1,680,619 | ||||||
Combined Non-Guarantor Subsidiaries | ||||||||
Assets | ||||||||
Total current assets | 106,561 | 146,765 | ||||||
Total oil and natural gas properties, net | 717,321 | 758,711 | ||||||
Investment in subsidiaries | (7,278) | (7,280) | ||||||
Other assets | 33,906 | 54,630 | ||||||
Total assets | 850,510 | 952,826 | ||||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | 189,010 | 226,964 | ||||||
Long-term liabilities | 181,680 | 208,599 | ||||||
Mezzanine equity | 474,857 | 452,828 | ||||||
Total shareholders' equity (deficit) | 4,963 | 64,435 | ||||||
Total liabilities and stockholders' equity deficit | $ 850,510 | $ 952,826 |
Condensed Consolidating Finan_5
Condensed Consolidating Financial Information (Statements of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Income Statements, Captions [Line Items] | ||||||||
Total revenues | $ 162,546 | $ 277,710 | $ 574,350 | $ 788,251 | ||||
Total operating costs and expenses | (198,214) | (193,125) | (606,644) | (554,802) | ||||
Other income (expense) | (22,292) | (78,987) | (145,163) | (267,653) | ||||
Reorganization items | (55,321) | (55,321) | ||||||
Income (loss) before income taxes | (113,281) | 5,598 | (232,778) | (34,204) | ||||
Income tax benefit | (833) | (23) | ||||||
Net income (loss) | (112,448) | $ (52,965) | $ (67,342) | 5,598 | $ (34,987) | $ (4,815) | (232,755) | (34,204) |
Eliminations | ||||||||
Condensed Income Statements, Captions [Line Items] | ||||||||
Total operating costs and expenses | 90 | 134 | 360 | 406 | ||||
Other income (expense) | (90) | (134) | (360) | (406) | ||||
Equity in income of subsidiaries | (5,462) | (74,480) | (37,037) | (222,887) | ||||
Net income (loss) | (5,462) | (74,480) | (37,037) | (222,887) | ||||
Parent Company | ||||||||
Condensed Income Statements, Captions [Line Items] | ||||||||
Total operating costs and expenses | (35,928) | (16,717) | (90,587) | (56,967) | ||||
Other income (expense) | (27,494) | (52,165) | (123,907) | (200,124) | ||||
Reorganization items | (55,321) | (55,321) | ||||||
Income (loss) before income taxes | (118,743) | (68,882) | (269,815) | (257,091) | ||||
Income tax benefit | (833) | (23) | ||||||
Equity in income of subsidiaries | 5,462 | 74,480 | 37,037 | 222,887 | ||||
Net income (loss) | (112,448) | 5,598 | (232,755) | (34,204) | ||||
Combined Guarantor Subsidiaries | ||||||||
Condensed Income Statements, Captions [Line Items] | ||||||||
Total revenues | 110,327 | 197,203 | 395,050 | 543,529 | ||||
Total operating costs and expenses | (116,966) | (126,573) | (358,005) | (334,408) | ||||
Other income (expense) | 1,533 | 794 | 2,188 | (4,469) | ||||
Income (loss) before income taxes | (5,106) | 71,424 | 39,233 | 204,652 | ||||
Net income (loss) | (5,106) | 71,424 | 39,233 | 204,652 | ||||
Combined Non-Guarantor Subsidiaries | ||||||||
Condensed Income Statements, Captions [Line Items] | ||||||||
Total revenues | 52,219 | 80,507 | 179,300 | 244,722 | ||||
Total operating costs and expenses | (45,410) | (49,969) | (158,412) | (163,833) | ||||
Other income (expense) | 3,759 | (27,482) | (23,084) | (62,654) | ||||
Income (loss) before income taxes | 10,568 | 3,056 | (2,196) | 18,235 | ||||
Net income (loss) | $ 10,568 | $ 3,056 | $ (2,196) | $ 18,235 |
Condensed Consolidating Finan_6
Condensed Consolidating Financial Information (Cash Flows) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | $ 99,750 | $ 249,526 |
Net cash provided by (used in) investing activities | (110,217) | (453,822) |
Net cash provided by (used in) financing activities | (7,608) | 388,534 |
(Decrease) increase in cash and cash equivalents | (18,075) | 184,238 |
Cash and cash equivalents, beginning of period | 197,613 | 184,434 |
Cash and cash equivalents, end of period | 179,538 | 368,672 |
Eliminations | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) investing activities | (103,893) | 137,325 |
Net cash provided by (used in) financing activities | 103,893 | (137,325) |
Parent Company | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | (166,502) | (175,586) |
Net cash provided by (used in) investing activities | 109,510 | (136,290) |
Net cash provided by (used in) financing activities | 48,315 | 419,714 |
(Decrease) increase in cash and cash equivalents | (8,677) | 107,838 |
Cash and cash equivalents, beginning of period | 68,762 | 86,937 |
Cash and cash equivalents, end of period | 60,085 | 194,775 |
Combined Guarantor Subsidiaries | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 233,600 | 326,068 |
Net cash provided by (used in) investing activities | (81,169) | (396,492) |
Net cash provided by (used in) financing activities | (159,599) | 128,026 |
(Decrease) increase in cash and cash equivalents | (7,168) | 57,602 |
Cash and cash equivalents, beginning of period | 58,429 | 29,046 |
Cash and cash equivalents, end of period | 51,261 | 86,648 |
Combined Non-Guarantor Subsidiaries | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 32,652 | 99,044 |
Net cash provided by (used in) investing activities | (34,665) | (58,365) |
Net cash provided by (used in) financing activities | (217) | (21,881) |
(Decrease) increase in cash and cash equivalents | (2,230) | 18,798 |
Cash and cash equivalents, beginning of period | 70,422 | 68,451 |
Cash and cash equivalents, end of period | $ 68,192 | $ 87,249 |
Variable Interest Entities ("_3
Variable Interest Entities ("VIE") (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss | $ 8,121 | $ 11,189 |
Investments | 800 | 3,900 |
GRHL | ||
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss | 7,300 | 7,300 |
SNMP | ||
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss | 800 | 3,900 |
Recurring basis | SNMP | ||
Variable Interest Entity [Line Items] | ||
Investments | $ 841 | $ 3,909 |
Variable Interest Entities ("_4
Variable Interest Entities ("VIE") (Carrying Amounts) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Variable Interest Entities ("VIE") | ||
Beginning Balance | $ 11,189 | $ 32,507 |
Gain (loss) from change in fair value of investment in SNMP | (3,068) | (21,318) |
Maximum exposure to loss | $ 8,121 | $ 11,189 |
Leases (Details)
Leases (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | $ 25,069 | $ 74,997 |
Short term and variable lease expense | 4,688 | 20,657 |
Total lease expense | 29,757 | 95,654 |
Operating lease cost | 3,118 | 6,175 |
Short-term lease cost | 191 | 1,187 |
Variable lease cost | 65 | |
Total lease cost | $ 3,309 | 7,427 |
Operating cash flows from operating leases | 95,654 | |
Investing cash flows from operating leases | 7,427 | |
ROU assets obtained in exchange for operating lease obligations | 361,648 | |
Amortization of ROU assets | $ (81,509) | |
Weighted average remaining lease term (years) | 3 years 1 month 6 days | 3 years 1 month 6 days |
Weighted average discount rate | 10.00% | 10.00% |
Vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 18 months | 18 months |
Minimum | Real estate | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 3 years | 3 years |
Minimum | Compressor arrangements | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 12 months | 12 months |
Maximum | Gathering systems or processing facilities | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 17 years | 17 years |
Maximum | Real estate | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 10 years | 10 years |
Maximum | Drilling rig arrangements | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 18 months | 18 months |
Maximum | Compressor arrangements | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 24 months | 24 months |
Leases - Operating Lease Liabil
Leases - Operating Lease Liabilities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Lessee, Lease, Description [Line Items] | |
2019 | $ 100,640 |
2020 | 84,472 |
2021 | 52,499 |
2022 | 31,682 |
2023 | 11,631 |
Thereafter | 8,467 |
Total lease payment | 289,391 |
ASC 842 | |
Lessee, Lease, Description [Line Items] | |
2019 | 34,228 |
2020 | 119,293 |
2021 | 80,513 |
2022 | 60,269 |
2023 | 26,847 |
Thereafter | 9,797 |
Total lease payment | 330,947 |
Less: Imputed interest | 47,463 |
Present value of lease liabilities | $ 283,484 |