Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2015shares | |
Entity Registrant Name | BERRY PETROLEUM COMPANY, LLC |
Entity Central Index Key | 778,438 |
Current Fiscal Year End Date | --12-31 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2015 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 0 |
Entity Filer Category | Non-accelerated Filer |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | Yes |
Entity Current Reporting Status | Yes |
Condensed Balance Sheets (unaud
Condensed Balance Sheets (unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 282,805 | $ 1,586 |
Accounts receivable – trade, net | 55,530 | 100,359 |
Derivative instruments | 26,529 | 43,694 |
Other current assets | 43,420 | 59,259 |
Total current assets | 408,284 | 204,898 |
Noncurrent assets: | ||
Oil and natural gas properties (successful efforts method) | 5,000,233 | 4,872,059 |
Less accumulated depletion and amortization | (1,493,749) | (525,007) |
Oil and natural gas properties, successful efforts method, net | 3,506,484 | 4,347,052 |
Other property and equipment | 128,891 | 115,999 |
Less accumulated depreciation | (16,288) | (8,452) |
Other property and equipment, net | 112,603 | 107,547 |
Derivative instruments | 336 | 0 |
Advance to affiliate | 0 | 293,627 |
Restricted cash | 250,245 | 125 |
Other noncurrent assets | 10,747 | 14,159 |
Noncurrent assets, excluding property, total | 261,328 | 307,911 |
Total noncurrent assets | 3,880,415 | 4,762,510 |
Total assets | 4,288,699 | 4,967,408 |
Current liabilities: | ||
Accounts payable and accrued expenses | 182,453 | 242,350 |
Derivative instruments | 1,462 | 0 |
Other accrued liabilities | 12,707 | 19,087 |
Total current liabilities | 196,622 | 261,437 |
Noncurrent liabilities: | ||
Credit facility | 1,173,175 | 1,173,175 |
Senior notes, net | 845,804 | 913,777 |
Derivative instruments | 423 | 0 |
Other noncurrent liabilities | 200,931 | 200,015 |
Total noncurrent liabilities | $ 2,220,333 | $ 2,286,967 |
Commitments and contingencies (Note 8) | ||
Member’s equity: | ||
Additional paid-in capital | $ 2,757,836 | $ 2,416,381 |
Accumulated income (deficit) | (886,092) | 2,623 |
Total member's equity | 1,871,744 | 2,419,004 |
Total liabilities and member’s equity | $ 4,288,699 | $ 4,967,408 |
Condensed Statements of Operati
Condensed Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues and other: | ||||
Oil, natural gas and natural gas liquids sales | $ 140,252 | $ 350,863 | $ 470,219 | $ 1,044,359 |
Electricity sales | 8,610 | 11,300 | 20,370 | 31,461 |
Gains on oil and natural gas derivatives | 27,664 | 44,990 | 26,457 | 22,893 |
Marketing revenues | 1,109 | 2,018 | 4,329 | 9,106 |
Other revenues | 1,672 | 245 | 5,103 | 238 |
Total revenues | 179,307 | 409,416 | 526,478 | 1,108,057 |
Expenses: | ||||
Lease operating expenses | 67,341 | 83,684 | 184,426 | 267,069 |
Electricity generation expenses | 4,759 | 5,892 | 14,322 | 21,904 |
Transportation expenses | 13,794 | 13,326 | 39,378 | 28,802 |
Marketing expenses | 967 | 1,811 | 3,047 | 6,505 |
General and administrative expenses | 21,564 | 16,566 | 79,853 | 88,379 |
Depreciation, depletion and amortization | 63,057 | 79,725 | 199,088 | 226,109 |
Impairment of long-lived assets | 510,631 | 0 | 782,631 | 0 |
Taxes, other than income taxes | 14,520 | 24,830 | 60,048 | 71,338 |
(Gains) losses on sale of assets and other, net | 2,633 | 49,011 | (2,651) | 56,635 |
Total expenses | 699,266 | 274,845 | 1,360,142 | 766,741 |
Other income and (expenses): | ||||
Interest expense, net of amounts capitalized | (21,484) | (19,068) | (65,595) | (66,555) |
Gain on extinguishment of debt | 4,378 | 0 | 11,209 | 0 |
Other, net | (90) | (179) | (723) | (813) |
Total other income and (expenses) | (17,196) | (19,247) | (55,109) | (67,368) |
Income (loss) before income taxes | (537,155) | 115,324 | (888,773) | 273,948 |
Income tax expense (benefit) | 3 | 159 | (58) | 77 |
Net income (loss) | $ (537,158) | $ 115,165 | $ (888,715) | $ 273,871 |
Condensed Statement of Member's
Condensed Statement of Member's Equity (unaudited) - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands | Total | Additional paid-in capital | Accumulated income (deficit) |
Members' Equity at Dec. 31, 2014 | $ 2,419,004 | $ 2,416,381 | $ 2,623 |
Capital contributions from affiliate | 398,678 | 398,678 | 0 |
Distributions to affiliate | (57,223) | (57,223) | 0 |
Net loss | (888,715) | 0 | (888,715) |
Members' Equity at Sep. 30, 2015 | $ 1,871,744 | $ 2,757,836 | $ (886,092) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flow from operating activities: | ||
Net income (loss) | $ (888,715) | $ 273,871 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation, depletion and amortization | 199,088 | 226,109 |
Impairment of long-lived assets | 782,631 | 0 |
Gain on extinguishment of debt | (11,209) | 0 |
Amortization and write-off of deferred financing fees | 1,121 | (5,174) |
(Gains) losses on sale of assets and other, net | (1,521) | 48,357 |
Deferred income taxes | (58) | 77 |
Derivatives activities: | ||
Total gains | (29,355) | (22,893) |
Cash settlements | 48,054 | (18,130) |
Changes in assets and liabilities: | ||
(Increase) decrease in accounts receivable – trade, net | 43,709 | (10,611) |
Decrease in other assets | 1,519 | 4,551 |
Decrease in accounts payable and accrued expenses | (15,171) | (16,341) |
Decrease in other liabilities | (20,789) | (36,626) |
Net cash provided by operating activities | 109,304 | 443,190 |
Cash flow from investing activities: | ||
Development of oil and natural gas properties | (3,076) | (429,940) |
Purchases of other property and equipment | (12,760) | (8,316) |
Settlement of advance to affiliate | 129,217 | 0 |
Proceeds from sale of properties and equipment and other | 22,486 | 256 |
Net cash provided by (used in) investing activities | 135,867 | (438,000) |
Cash flow from financing activities: | ||
Repayments of debt | (55,418) | (206,124) |
Financing fees and other, net | 11 | (11,252) |
Capital contributions from affiliate | 148,678 | 220,000 |
Distributions to affiliate | (57,223) | (52,279) |
Net cash provided by (used in) financing activities | 36,048 | (49,655) |
Net increase (decrease) in cash and cash equivalents | 281,219 | (44,465) |
Cash and cash equivalents: | ||
Beginning | 1,586 | 51,041 |
Ending | $ 282,805 | $ 6,576 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation Nature of Business Berry Petroleum Company, LLC (“Berry” or the “Company”) was formed as a Delaware limited liability company on December 16, 2013, and is an indirect wholly owned subsidiary of Linn Energy, LLC (“LINN Energy”) engaged in the production and development of oil and natural gas. The Company’s predecessor, Berry Petroleum Company, was publicly traded from 1987 until December 2013. On December 16, 2013, the Company completed the transactions contemplated by the merger agreement between LINN Energy, LinnCo, LLC (“LinnCo”), an affiliate of LINN Energy, and Berry under which LinnCo acquired all of the outstanding common shares of Berry and the contribution agreement between LinnCo and LINN Energy, under which LinnCo contributed Berry to LINN Energy in exchange for LINN Energy units. Linn Acquisition Company, LLC, a direct subsidiary of LINN Energy, is the Company’s sole member. The Company’s properties are located in the United States (“U.S.”), in California (San Joaquin Valley and Los Angeles basins), Kansas and the Oklahoma Panhandle (Hugoton Basin), Utah (Uinta Basin), Colorado (Piceance Basin) and east Texas. In August and November of 2014, the Company divested all of its properties located in the Permian Basin. Principles of Reporting The information reported herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the results for the interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under Securities and Exchange Commission (“SEC”) rules and regulations; as such, this report should be read in conjunction with the financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results reported in these unaudited condensed financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. Investments in noncontrolled entities over which the Company exercises significant influence are accounted for under the equity method. The condensed financial statements for previous periods include certain reclassifications that were made to conform to current presentation. Such reclassifications have no impact on previously reported net income (loss), member’s equity or cash flows. Use of Estimates The preparation of the accompanying condensed financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amount of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. The estimates that are particularly significant to the financial statements include estimates of the Company’s reserves of oil, natural gas and natural gas liquids (“NGL”), future cash flows from oil and natural gas properties, depreciation, depletion and amortization, asset retirement obligations, certain revenues and operating expenses, fair values of commodity derivatives and fair values of assets acquired and liabilities assumed. As fair value is a market-based measurement, it is determined based on the assumptions that market participants would use. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates. Any changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. Recently Issued Accounting Standards In April 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that is intended to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU will be applied retrospectively as of the date of adoption and is effective for fiscal years beginning after December 15, 2015, and interim periods within those years (early adoption permitted). The Company does not expect the adoption of this ASU to have a material impact on its financial statements. In May 2014, the FASB issued an ASU that is intended to improve and converge the financial reporting requirements for revenue from contracts with customers. This ASU will be applied either retrospectively or as a cumulative-effect adjustment as of the date of adoption and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years (early adoption permitted for fiscal years beginning after December 15, 2016, including interim periods within that year). The Company is currently evaluating the impact, if any, of the adoption of this ASU on its financial statements and related disclosures. |
Exchange of Properties
Exchange of Properties | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Exchange of Properties | Exchange of Properties On August 15, 2014, the Company, along with a subsidiary of its indirect parent LINN Energy, completed the trade of a portion of its Permian Basin properties to Exxon Mobil Corporation and its affiliates, including its wholly owned subsidiary XTO Energy Inc., in exchange for properties in the Hugoton Basin. The noncash exchange was accounted for at fair value and the Company recognized a net loss of approximately $49 million , equal to the difference between the carrying value and the fair value of the assets exchanged, which is included in “(gains) losses on sale of assets and other, net” on the condensed statements of operations. The fair value measurements were based on inputs that are not observable in the market and therefore represent Level 3 inputs under the fair value hierarchy. |
Oil and Natural Gas Properties
Oil and Natural Gas Properties | 9 Months Ended |
Sep. 30, 2015 | |
Oil and Natural Gas Properties [Abstract] | |
Oil and Natural Gas Properties | Oil and Natural Gas Properties Oil and Natural Gas Capitalized Costs Aggregate capitalized costs related to oil, natural gas and NGL production activities with applicable accumulated depletion and amortization are presented below: September 30, 2015 December 31, 2014 (in thousands) Oil and natural gas: Proved properties $ 4,161,155 $ 4,025,595 Unproved properties 839,078 846,464 5,000,233 4,872,059 Less accumulated depletion and amortization (1,493,749 ) (525,007 ) $ 3,506,484 $ 4,347,052 Impairment of Proved Properties The Company evaluates the impairment of its proved oil and natural gas properties on a field-by-field basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying values of proved properties are reduced to fair value when the expected undiscounted future cash flows of proved and risk-adjusted probable and possible reserves are less than net book value. The fair values of proved properties are measured using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount. Significant inputs used to determine the fair values of proved properties include estimates of: (i) reserves; (ii) future operating and development costs; (iii) future commodity prices; and (iv) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation and are the most sensitive and subject to change. Based on the analysis described above, the Company recorded the following noncash impairment charges (before and after tax) associated with proved oil and natural gas properties: Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 (in thousands) California operating area $ 330,311 $ 537,511 Uinta Basin operating area 111,339 111,339 East Texas operating area 13,637 78,437 Piceance Basin operating area 55,344 55,344 $ 510,631 $ 782,631 The impairment charges in 2015 were due to a decline in commodity prices and the Company’s estimates of proved reserves. The Company recorded no impairment charges for the three months or nine months ended September 30, 2014. The carrying values of the impaired proved properties were reduced to fair value, estimated using inputs characteristic of a Level 3 fair value measurement. The impairment charges are included in “impairment of long-lived assets” on the condensed statements of operations. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following summarizes the Company’s outstanding debt: September 30, 2015 December 31, 2014 (in thousands, except percentages) Credit facility (1) $ 1,173,175 $ 1,173,175 6.75% senior notes due November 2020 261,100 299,970 6.375% senior notes due September 2022 572,700 599,163 Net unamortized premiums 12,004 14,644 Total debt, net 2,018,979 2,086,952 Less current maturities — — Total long-term debt, net $ 2,018,979 $ 2,086,952 (1) Variable interest rates of 2.71% and 2.67% at September 30, 2015 , and December 31, 2014 , respectively. Fair Value The Company’s debt is recorded at the carrying amount in the condensed balance sheets. The carrying amount of the Company’s Credit Facility, as defined below, approximates fair value because the interest rate is variable and reflective of market rates. The Company uses a market approach to determine the fair value of its senior notes using estimates based on prices quoted from third-party financial institutions, which is a Level 2 fair value measurement. September 30, 2015 December 31, 2014 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Credit facility $ 1,173,175 $ 1,173,175 $ 1,173,175 $ 1,173,175 Senior notes, net 845,804 269,564 913,777 699,462 Total debt, net $ 2,018,979 $ 1,442,739 $ 2,086,952 $ 1,872,637 Credit Facility The Company’s Second Amended and Restated Credit Agreement (“Credit Facility”) had a borrowing base of $1.2 billion , subject to lender commitments, as of September 30, 2015 . The maturity date is April 2019. At September 30, 2015 , lender commitments under the facility were $1.2 billion but there was less than $1 million of available borrowing capacity, including outstanding letters of credit. In October 2015, the Company entered into an amendment to the Credit Facility to provide for, among other things: (i) a springing maturity based on the maturity of any outstanding junior lien debt; (ii) the ability of the Company to incur junior lien debt to refinance its senior notes or as additional indebtedness, but such additional indebtedness issued may not exceed $500 million outstanding at any one time and is subject to a borrowing base reduction; (iii) a decrease in the Company’s covenant requiring the maintenance of an EBITDA to Interest Expense ratio of 2.5 to 1.0 , such that the permissible ratio is decreased to 2.0 to 1.0 from December 31, 2015 through December 31, 2016, to 2.25 to 1.0 from March 31, 2017 through June 30, 2017 and returning to 2.5 to 1.0 thereafter; (iv) an increase in the mortgage requirement on the total value of the oil and natural gas properties included in the Company’s most recent reserve report from 80% to 90% ; (v) an increase to the applicable margin charged on borrowings under the Credit Facility by 0.25% and increase the commitment fee under the Credit Facility to 0.5% per annum; and (vi) permission to prepay or exchange the Company’s senior notes with notes issued by LINN Energy. Redetermination of the borrowing base under the Credit Facility, based primarily on reserve reports using lender commodity price expectations at such time, occurs semi-annually, in April and October. A super-majority of the lenders under the Credit Facility and Berry also have the right to request interim borrowing base redeterminations once between scheduled redeterminations. The spring 2015 semi-annual borrowing base redetermination was completed in May 2015, and, as a result of lower commodity prices, the borrowing base under the Credit Facility decreased from $1.4 billion to $1.2 billion . The fall 2015 semi-annual redetermination was completed in October 2015 and the borrowing base under the Credit Facility decreased from $1.2 billion to $900 million . Continued low commodity prices, reductions in the Company’s capital budget and the resulting reserve write-downs may impact future redeterminations. In connection with the reduction in Berry’s borrowing base in October 2015, Berry repaid $300 million of borrowings outstanding under the Credit Facility. In connection with the reduction in Berry’s borrowing base in May 2015, LINN Energy borrowed $250 million under the LINN Credit Facility, which it contributed to Berry to post as restricted cash with Berry’s lenders. As directed by LINN Energy, the $250 million was deposited on Berry’s behalf in a security account with the administrative agent subject to a security control agreement. Berry’s ability to withdraw funds from this account is subject to a concurrent reduction of the borrowing base under the Credit Facility or lender’s consent in connection with a redetermination of such borrowing base. The $250 million may be used to satisfy obligations under the Credit Facility or, subject to restrictions in the indentures governing Berry’s senior notes, may be returned to LINN Energy in the future. The amount is included in “restricted cash” on the condensed consolidated balance sheet. The Company’s obligations under the Credit Facility, as amended, are secured by mortgages on its oil and natural gas properties and other personal property. The Company is required to maintain mortgages on properties representing at least 90% of the present value of its oil and natural gas proved reserves. The Company is in compliance with all financial and other covenants of the Credit Facility. At the Company’s election, interest on borrowings under the Credit Facility, as amended, is determined by reference to either the LIBOR plus an applicable margin between 1.75% and 2.75% per annum (depending on the then-current level of borrowings under the Credit Facility) or a Base Rate (as defined in the Credit Facility) plus an applicable margin between 0.75% and 1.75% per annum (depending on the then-current level of borrowings under the Credit Facility). Interest is generally payable quarterly for loans bearing interest based on the Base Rate and at the end of the applicable interest period for loans bearing interest at the LIBOR. The Company is required to pay a commitment fee to the lenders under the Credit Facility, which accrues at a rate per annum of 0.5% on the average daily unused amount of the maximum commitment amount of the lenders. Repurchases of Senior Notes During the nine months ended September 30, 2015 , the Company repurchased, on the open market and through a privately negotiated transaction, approximately $65 million of its outstanding senior notes including approximately $39 million of its 6.75% senior notes due November 2020 and approximately $26 million of its 6.375% senior notes due September 2022. In connection with the repurchases, the Company paid approximately $55 million in cash and recorded a gain on extinguishment of debt of approximately $11 million for the nine months ended September 30, 2015 . Senior Notes Covenants The Company’s senior notes contain covenants that, among other things, may limit its ability to: (i) incur or guarantee additional indebtedness; (ii) pay distributions or dividends on its equity or redeem its subordinated debt; (iii) create certain liens; (iv) enter into agreements that restrict distributions or other payments from the Company’s restricted subsidiaries to the Company; (v) sell assets; (vi) engage in transactions with affiliates; and (vii) consolidate, merge or transfer all or substantially all of the Company’s assets. The Company is in compliance with all financial and other covenants of its senior notes. In addition, any cash generated by the Company is currently being used by the Company to fund its activities. To the extent that the Company generates cash in excess of its needs and determines to distribute such amounts to LINN Energy, the indentures governing the Company’s senior notes limit the amount it may distribute to LINN Energy to the amount available under a “restricted payments basket,” and the Company may not distribute any such amounts unless it is permitted by the indentures to incur additional debt pursuant to the consolidated coverage ratio test set forth in the Company’s indentures. The Company’s restricted payments basket may be increased in accordance with the terms of the Company’s indentures by, among other things, 50% of the Company’s future net income, reductions in its indebtedness and restricted investments, and future capital contributions. The Company may from time to time seek to repurchase its outstanding debt through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, may be material and will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company seeks to hedge a portion of its forecasted production to reduce exposure to commodity price fluctuations and provide long-term cash flow predictability to manage its business. The Company also, from time to time, enters into derivative contracts for a portion of its natural gas consumption. The current direct NGL hedging market is constrained in terms of price, volume, duration and number of counterparties, which limits the Company’s ability to effectively hedge its NGL production. The Company also hedges its exposure to natural gas differentials in certain operating areas but does not currently hedge exposure to oil differentials. The Company enters into commodity hedging transactions primarily in the form of swap contracts, collars and three-way collars. Swap contracts are designed to provide a fixed price. Collar contracts specify floor and ceiling prices to be received as compared to floating market prices. Three-way collar contracts combine a short put (the lower price), a long put (the middle price) and a short call (the higher price) to provide a higher ceiling price as compared to a regular collar and limit downside risk to the market price plus the difference between the middle price and the lower price if the market price drops below the lower price. The Company enters into these transactions with respect to a portion of its projected production or consumption to provide an economic hedge of the risk related to the future commodity prices received or paid. The Company does not enter into derivative contracts for trading purposes. The Company did not designate any of its contracts as cash flow hedges; therefore, the changes in fair value of these instruments are recorded in current earnings. See Note 6 for fair value disclosures about oil and natural gas commodity derivatives. The following table summarizes derivative positions for the periods indicated as of September 30, 2015 : October 1 - December 31, 2015 2016 Oil positions: Fixed price swaps (NYMEX WTI): Hedged volume (MBbls) 966 — Average price ($/Bbl) $ 59.94 $ — Three-way collars (NYMEX WTI): Hedged volume (MBbls) 276 — Short put ($/Bbl) $ 70.00 $ — Long put ($/Bbl) $ 90.00 $ — Short call ($/Bbl) $ 101.62 $ — Natural gas basis differential positions: (1) NWPL Rockies basis swaps: (2) Hedged volume (MMMBtu) 2,576 11,712 Hedged differential ($/MMBtu) $ (0.34 ) $ (0.34 ) SoCal basis swaps: (3) Hedged volume (MMMBtu) 8,280 32,940 Hedged differential ($/MMBtu) $ (0.03 ) $ (0.03 ) (1) Settle on the respective pricing index to hedge basis differential to the NYMEX Henry Hub natural gas price. (2) For positions which hedge exposure to differentials in producing areas, the Company receives the NYMEX Henry Hub natural gas price plus the respective spread and pays the specified index price. Cash settlements are made on a net basis. (3) For positions which hedge exposure to differentials in consuming areas, the Company pays the NYMEX Henry Hub natural gas price plus the respective spread and receives the specified index price. Cash settlements are made on a net basis. During the nine months ended September 30, 2015 , the Company entered into commodity derivative contracts consisting of natural gas basis swaps for May 2015 through December 2016 to hedge exposure to differentials in certain producing areas, and oil swaps for April 2015 through December 2015. In addition, the Company entered into natural gas basis swaps for May 2015 through December 2016 to hedge exposure to the differential in California, where it consumes natural gas in its heavy oil development operations. Settled derivatives on oil production for the three months and nine months ended September 30, 2015 , included volumes of 1,273 MBbls and 2,617 MBbls, respectively, at average contract prices of $65.89 per Bbl and $68.44 per Bbl. Settled derivatives on oil production for the three months and nine months ended September 30, 2014 , included volumes of 2,300 MBbls and 6,825 MBbls, respectively, at an average contract price of $92.16 per Bbl. The oil derivatives are settled based on the average closing price of NYMEX WTI crude oil for each day of the delivery month. Balance Sheet Presentation The Company’s commodity derivatives are presented on a net basis in “derivative instruments” on the condensed balance sheets. The following summarizes the fair value of derivatives outstanding on a gross basis: September 30, December 31, 2014 (in thousands) Assets: Commodity derivatives $ 34,416 $ 60,843 Liabilities: Commodity derivatives $ 9,436 $ 17,149 By using derivative instruments to economically hedge exposures to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company’s counterparties are current participants or affiliates of participants in its Credit Facility or were participants or affiliates of participants in its Credit Facility at the time it originally entered into the derivatives. The Credit Facility is secured by the Company’s oil, natural gas and NGL reserves; therefore, the Company is not required to post any collateral. The Company does not receive collateral from its counterparties. The maximum amount of loss due to credit risk that the Company would incur if its counterparties failed completely to perform according to the terms of the contracts, based on the gross fair value of financial instruments, was approximately $34 million at September 30, 2015 . The Company minimizes the credit risk in derivative instruments by: (i) limiting its exposure to any single counterparty; (ii) entering into derivative instruments only with counterparties that meet the Company’s minimum credit quality standard, or have a guarantee from an affiliate that meets the Company’s minimum credit quality standard; and (iii) monitoring the creditworthiness of the Company’s counterparties on an ongoing basis. In accordance with the Company’s standard practice, its commodity derivatives are subject to counterparty netting under agreements governing such derivatives and therefore the risk of loss due to counterparty nonperformance is somewhat mitigated. Gains (Losses) on Derivatives A summary of gains and losses on derivatives included on the condensed statements of operations is presented below: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Gains on oil and natural gas derivatives $ 27,664 $ 44,990 $ 26,457 $ 22,893 Lease operating expenses (1) (162 ) — 2,898 — Total gains on oil and natural gas derivatives $ 27,502 $ 44,990 $ 29,355 $ 22,893 (1) Consists of gains and (losses) on derivatives used to hedge exposure to differentials in consuming areas, which were entered into in March 2015. For the three months and nine months ended September 30, 2015 , the Company received net cash settlements of approximately $15 million and $48 million , respectively. For the three months and nine months ended September 30, 2014 , the Company paid net cash settlements of approximately $8 million and $19 million , respectively. |
Fair Value Measurements on a Re
Fair Value Measurements on a Recurring Basis | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements on a Recurring Basis | Fair Value Measurements on a Recurring Basis The Company accounts for its commodity derivatives at fair value (see Note 5) on a recurring basis. The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. Inputs to the pricing models include publicly available prices and forward price curves generated from a compilation of data gathered from third parties. Company management validates the data provided by third parties by understanding the pricing models used, obtaining market values from other pricing sources, analyzing pricing data in certain situations and confirming that those instruments trade in active markets. Assumed credit risk adjustments, based on published credit ratings, public bond yield spreads and credit default swap spreads are applied to the Company’s commodity derivatives. Fair Value Hierarchy In accordance with applicable accounting standards, the Company has categorized its financial instruments, based on the priority of inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The following presents the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis: September 30, 2015 Level 2 Netting (1) Total (in thousands) Assets: Commodity derivatives $ 34,416 $ (7,551 ) $ 26,865 Liabilities: Commodity derivatives $ 9,436 $ (7,551 ) $ 1,885 December 31, 2014 Level 2 Netting (1) Total (in thousands) Assets: Commodity derivatives $ 60,843 $ (17,149 ) $ 43,694 Liabilities: Commodity derivatives $ 17,149 $ (17,149 ) $ — (1) Represents counterparty netting under agreements governing such derivatives. |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Sep. 30, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Asset Retirement Obligations The Company has the obligation to plug and abandon oil and natural gas wells and related equipment at the end of production operations. Estimated asset retirement costs are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets when the obligation is incurred. The liabilities are included in “other accrued liabilities” and “other noncurrent liabilities” on the condensed balance sheets. Accretion expense is included in “depreciation, depletion and amortization” on the statements of operations. The fair value of additions to the asset retirement obligations is estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plug and abandon costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors ( 2% for the nine months ended September 30, 2015 ); and (iv) a credit-adjusted risk-free interest rate (average of 5.5% for the nine months ended September 30, 2015 ). These inputs require significant judgments and estimates by the Company’s management at the time of the valuation and are the most sensitive and subject to change. The following presents a reconciliation of the Company’s asset retirement obligations (in thousands): Asset retirement obligations at December 31, 2014 $ 121,760 Liabilities added from drilling 1,185 Current year accretion expense 5,051 Settlements (447 ) Revision of estimates 8,319 Asset retirement obligations at September 30, 2015 $ 135,868 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies East Texas Gathering System The Company is party to certain long-term natural gas gathering agreements for its East Texas production. The agreements contain embedded leases and the transaction was accounted for as a financing obligation. The asset is being depreciated over the remaining useful life and has a net book value of approximately $12 million at September 30, 2015 . There are no minimum payments required under these agreements. Carry and Earning Agreement In January 2011, the Company entered into an amendment relating to certain contractual obligations to a third-party co-owner of certain Piceance Basin assets in Colorado. The amendment waives a $200,000 penalty for each well not spud by February 2011 and requires the Company to reassign to such third party, by January 31, 2020, all of the interest acquired by the Company from the third party in each 160 -acre tract in which the Company has not drilled and completed a well that is producing or capable of producing from a designated formation, or deeper formation, on January 1, 2020. The amendment also requires the Company to pay the first $9 million of costs incurred in connection with the construction of either an extension of the existing access road or a new access road, including the third party’s 50% share. Pursuant to the terms of a further amendment effective September 30, 2015 , if by September 30, 2017, the Company does not expend $9 million on the construction of either the extension of the existing access road or a new access road, the Company is obligated to pay the third party 50% of the difference between $12 million and the actual amount expended on road construction as of such date. Under the terms of the 2015 amendment, this deadline is subject to further extension to no later than December 31, 2017. Due to the need to obtain regulatory approvals, among other reasons, the Company has not yet commenced construction of either an extension of the existing access road or a new access road and may be unable to do so by the extended deadline, thus triggering the payment of the obligation to the third party. Legal Matters The Company is involved in various lawsuits, claims and inquiries, most of which are routine to the nature of its business. In the opinion of management, the resolution of these matters will not have a material adverse effect on its overall business, financial position, results of operations or liquidity; however, cash flow could be significantly impacted in the reporting periods in which such matters are resolved. During the nine months ended September 30, 2015 , and September 30, 2014 , the Company made no significant payments to settle any legal, environmental or tax proceedings. The Company regularly analyzes current information and accrues for probable liabilities on the disposition of certain matters as necessary. Liabilities for loss contingencies arising from claims, assessments, litigation or other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is a limited liability company treated as a disregarded entity for federal and state income tax purposes, with the exception of the state of Texas. As such, with the exception of the state of Texas, the Company is not a taxable entity, it does not directly pay federal and state income taxes, and therefore, recognition has not been given to federal and state income taxes for the operations of the Company. Amounts recognized for income taxes are reported in “income tax expense (benefit)” on the condensed statements of operations. |
Supplemental Disclosures to the
Supplemental Disclosures to the Condensed Balance Sheets and Condensed Statements of Cash Flows | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental disclosures to the condensed balance sheets and condensed statements of cash flows [Abstract] | |
Supplemental Disclosures to the Condensed Balance Sheets and Condensed Statements of Cash Flows | Supplemental Disclosures to the Condensed Balance Sheets and Condensed Statements of Cash Flows “Other current assets” reported on the condensed balance sheets primarily consist of inventories. “Other accrued liabilities” reported on the condensed balance sheets include the following: September 30, 2015 December 31, 2014 (in thousands) Accrued interest $ 9,548 $ 15,803 Asset retirement obligations 3,101 3,101 Other 58 183 $ 12,707 $ 19,087 Supplemental disclosures to the condensed statements of cash flows are presented below: Nine Months Ended September 30, 2015 2014 (in thousands) Cash payments for interest, net of amounts capitalized $ 70,853 $ 79,090 Cash payments for income taxes $ — $ — Noncash investing activities: Accrued capital expenditures $ 20,959 $ 79,425 For the nine months ended September 30, 2015 , LINN Energy spent approximately $165 million of capital expenditures in respect of Berry’s operations. Berry recorded the $165 million to oil and natural gas properties with an offset to the advance due from LINN Energy. On September 30, 2015 , LINN Energy repaid in full the remaining advance of approximately $129 million . In addition, in May 2015, LINN Energy made a capital contribution of $250 million to Berry which was deposited on Berry’s behalf and posted as restricted cash with Berry’s lenders in connection with the reduction in its borrowing base (see Note 4). |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions LINN Energy The Company has no employees. The employees of Linn Operating, Inc. (“LOI”), a subsidiary of LINN Energy, provide services and support to the Company in accordance with an agency agreement and power of attorney between the Company and LOI. For the three months and nine months ended September 30, 2015 , the Company incurred management fee expenses of approximately $20 million and $73 million , respectively, for services provided by LOI. For the three months and nine months ended September 30, 2014 , the Company incurred management fee expenses of approximately $14 million and $74 million , respectively, for services provided by LOI. The Company also had affiliated accounts payable due to LINN Energy of approximately $6 million and $13 million at September 30, 2015 , and December 31, 2014 , respectively, included in “accounts payable and accrued expenses” on the condensed balance sheets. During the nine months ended September 30, 2015 , the Company made cash distributions of approximately $57 million to LINN Energy. During the nine months ended September 30, 2014, the Company made cash distributions of approximately $52 million to LINN Energy. In 2014, the Company advanced approximately $352 million , to a subsidiary of LINN Energy, of net cash proceeds from the sale of certain of the Company’s Wolfberry properties in Ector and Midland counties in the Permian Basin to Fleur de Lis Energy, LLC. These proceeds must be used by LINN Energy on capital expenditures in respect of Berry’s operations, to repay Berry’s indebtedness or as otherwise permitted under the terms of Berry’s indentures and Credit Facility. During the twelve months ended September 30, 2015 , LINN Energy spent approximately $223 million , including approximately $58 million in 2014, of capital expenditures in respect of Berry’s operations. On September 30, 2015 , LINN Energy repaid in full the remaining advance of approximately $129 million . In October 2015, Berry used that cash to repay borrowings under its Credit Facility. During the nine months ended September 30, 2015 , Linn Energy made capital contributions of approximately $399 million to Berry including $250 million which was deposited on Berry’s behalf and posted as restricted cash with Berry’s lenders in connection with the reduction in its borrowing base in May 2015 (see Note 4). The $250 million may be used to satisfy obligations under the Credit Facility or may be returned to LINN Energy in the future if commodity prices improve. During the second quarter of 2014, LINN Energy made a cash capital contribution of $220 million to the Company which was used to pay in full the remaining outstanding principal amount of its approximate $205 million 10.25% senior notes due June 2014 plus accrued interest. Other One of LINN Energy’s directors is the President and Chief Executive Officer of Superior Energy Services, Inc. (“Superior”), which provides oilfield services to the Company. For the three months and nine months ended September 30, 2015 , the Company incurred expenditures of approximately $24,000 and $342,000 , respectively, and for the nine months ended September 30, 2014 , the Company incurred expenditures of approximately $176,000 related to services rendered by Superior and its subsidiaries. No expenditures were incurred for the three months ended September 30, 2014 . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation [Abstract] | |
Principles of Reporting | Principles of Reporting The information reported herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the results for the interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under Securities and Exchange Commission (“SEC”) rules and regulations; as such, this report should be read in conjunction with the financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results reported in these unaudited condensed financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. Investments in noncontrolled entities over which the Company exercises significant influence are accounted for under the equity method. The condensed financial statements for previous periods include certain reclassifications that were made to conform to current presentation. Such reclassifications have no impact on previously reported net income (loss), member’s equity or cash flows. |
Use of Estimates | Use of Estimates The preparation of the accompanying condensed financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amount of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. The estimates that are particularly significant to the financial statements include estimates of the Company’s reserves of oil, natural gas and natural gas liquids (“NGL”), future cash flows from oil and natural gas properties, depreciation, depletion and amortization, asset retirement obligations, certain revenues and operating expenses, fair values of commodity derivatives and fair values of assets acquired and liabilities assumed. As fair value is a market-based measurement, it is determined based on the assumptions that market participants would use. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates. Any changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In April 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that is intended to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU will be applied retrospectively as of the date of adoption and is effective for fiscal years beginning after December 15, 2015, and interim periods within those years (early adoption permitted). The Company does not expect the adoption of this ASU to have a material impact on its financial statements. In May 2014, the FASB issued an ASU that is intended to improve and converge the financial reporting requirements for revenue from contracts with customers. This ASU will be applied either retrospectively or as a cumulative-effect adjustment as of the date of adoption and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years (early adoption permitted for fiscal years beginning after December 15, 2016, including interim periods within that year). The Company is currently evaluating the impact, if any, of the adoption of this ASU on its financial statements and related disclosures. |
Oil and Natural Gas Properties
Oil and Natural Gas Properties (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Oil and Natural Gas Properties [Abstract] | |
Capitalized Costs Relating to Oil and Natural Gas Producing Activities Disclosure | Aggregate capitalized costs related to oil, natural gas and NGL production activities with applicable accumulated depletion and amortization are presented below: September 30, 2015 December 31, 2014 (in thousands) Oil and natural gas: Proved properties $ 4,161,155 $ 4,025,595 Unproved properties 839,078 846,464 5,000,233 4,872,059 Less accumulated depletion and amortization (1,493,749 ) (525,007 ) $ 3,506,484 $ 4,347,052 |
Details of Impairment of Long-Lived Assets Held and Used by Asset [Table Text Block] | Based on the analysis described above, the Company recorded the following noncash impairment charges (before and after tax) associated with proved oil and natural gas properties: Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 (in thousands) California operating area $ 330,311 $ 537,511 Uinta Basin operating area 111,339 111,339 East Texas operating area 13,637 78,437 Piceance Basin operating area 55,344 55,344 $ 510,631 $ 782,631 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The following summarizes the Company’s outstanding debt: September 30, 2015 December 31, 2014 (in thousands, except percentages) Credit facility (1) $ 1,173,175 $ 1,173,175 6.75% senior notes due November 2020 261,100 299,970 6.375% senior notes due September 2022 572,700 599,163 Net unamortized premiums 12,004 14,644 Total debt, net 2,018,979 2,086,952 Less current maturities — — Total long-term debt, net $ 2,018,979 $ 2,086,952 (1) Variable interest rates of 2.71% and 2.67% at September 30, 2015 , and December 31, 2014 , respectively. |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | September 30, 2015 December 31, 2014 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Credit facility $ 1,173,175 $ 1,173,175 $ 1,173,175 $ 1,173,175 Senior notes, net 845,804 269,564 913,777 699,462 Total debt, net $ 2,018,979 $ 1,442,739 $ 2,086,952 $ 1,872,637 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of derivatives instruments | The following table summarizes derivative positions for the periods indicated as of September 30, 2015 : October 1 - December 31, 2015 2016 Oil positions: Fixed price swaps (NYMEX WTI): Hedged volume (MBbls) 966 — Average price ($/Bbl) $ 59.94 $ — Three-way collars (NYMEX WTI): Hedged volume (MBbls) 276 — Short put ($/Bbl) $ 70.00 $ — Long put ($/Bbl) $ 90.00 $ — Short call ($/Bbl) $ 101.62 $ — Natural gas basis differential positions: (1) NWPL Rockies basis swaps: (2) Hedged volume (MMMBtu) 2,576 11,712 Hedged differential ($/MMBtu) $ (0.34 ) $ (0.34 ) SoCal basis swaps: (3) Hedged volume (MMMBtu) 8,280 32,940 Hedged differential ($/MMBtu) $ (0.03 ) $ (0.03 ) (1) Settle on the respective pricing index to hedge basis differential to the NYMEX Henry Hub natural gas price. (2) For positions which hedge exposure to differentials in producing areas, the Company receives the NYMEX Henry Hub natural gas price plus the respective spread and pays the specified index price. Cash settlements are made on a net basis. (3) For positions which hedge exposure to differentials in consuming areas, the Company pays the NYMEX Henry Hub natural gas price plus the respective spread and receives the specified index price. Cash settlements are made on a net basis. |
Schedule of derivatives assets and liabilities | The Company’s commodity derivatives are presented on a net basis in “derivative instruments” on the condensed balance sheets. The following summarizes the fair value of derivatives outstanding on a gross basis: September 30, December 31, 2014 (in thousands) Assets: Commodity derivatives $ 34,416 $ 60,843 Liabilities: Commodity derivatives $ 9,436 $ 17,149 |
Derivative Instruments, Gain (Loss) | A summary of gains and losses on derivatives included on the condensed statements of operations is presented below: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Gains on oil and natural gas derivatives $ 27,664 $ 44,990 $ 26,457 $ 22,893 Lease operating expenses (1) (162 ) — 2,898 — Total gains on oil and natural gas derivatives $ 27,502 $ 44,990 $ 29,355 $ 22,893 (1) Consists of gains and (losses) on derivatives used to hedge exposure to differentials in consuming areas, which were entered into in March 2015. |
Fair Value Measurements on a 21
Fair Value Measurements on a Recurring Basis (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements on a Recurring Basis | The following presents the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis: September 30, 2015 Level 2 Netting (1) Total (in thousands) Assets: Commodity derivatives $ 34,416 $ (7,551 ) $ 26,865 Liabilities: Commodity derivatives $ 9,436 $ (7,551 ) $ 1,885 December 31, 2014 Level 2 Netting (1) Total (in thousands) Assets: Commodity derivatives $ 60,843 $ (17,149 ) $ 43,694 Liabilities: Commodity derivatives $ 17,149 $ (17,149 ) $ — (1) Represents counterparty netting under agreements governing such derivatives. |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations Reconciliation | The following presents a reconciliation of the Company’s asset retirement obligations (in thousands): Asset retirement obligations at December 31, 2014 $ 121,760 Liabilities added from drilling 1,185 Current year accretion expense 5,051 Settlements (447 ) Revision of estimates 8,319 Asset retirement obligations at September 30, 2015 $ 135,868 |
Supplemental Disclosures to t23
Supplemental Disclosures to the Condensed Balance Sheets and Condensed Statements of Cash Flows (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental disclosures to the condensed balance sheets and condensed statements of cash flows [Abstract] | |
Schedule of Accrued Liabilities | “Other accrued liabilities” reported on the condensed balance sheets include the following: September 30, 2015 December 31, 2014 (in thousands) Accrued interest $ 9,548 $ 15,803 Asset retirement obligations 3,101 3,101 Other 58 183 $ 12,707 $ 19,087 |
Supplemental Cash Flow Disclosures | Supplemental disclosures to the condensed statements of cash flows are presented below: Nine Months Ended September 30, 2015 2014 (in thousands) Cash payments for interest, net of amounts capitalized $ 70,853 $ 79,090 Cash payments for income taxes $ — $ — Noncash investing activities: Accrued capital expenditures $ 20,959 $ 79,425 |
Exchange of Properties Exchange
Exchange of Properties Exchange of Properties (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2014USD ($) | |
XOM I Trade [Member] | |
Business Acquisition [Line Items] | |
Gain (Loss) on Disposition of Oil and Gas Property | $ 49 |
Oil and Natural Gas Propertie25
Oil and Natural Gas Properties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Oil and natural gas: | |||||
Proved properties | $ 4,161,155 | $ 4,161,155 | $ 4,025,595 | ||
Unproved properties | 839,078 | 839,078 | 846,464 | ||
Oil and natural gas properties (successful efforts method) | 5,000,233 | 5,000,233 | 4,872,059 | ||
Less accumulated depletion and amortization | (1,493,749) | (1,493,749) | (525,007) | ||
Oil and natural gas properties, successful efforts method, net | 3,506,484 | 3,506,484 | $ 4,347,052 | ||
Property, Plant and Equipment [Line Items] | |||||
Impairment of long-lived assets | 510,631 | $ 0 | 782,631 | $ 0 | |
California operating area | |||||
Property, Plant and Equipment [Line Items] | |||||
Impairment of long-lived assets | 330,311 | 537,511 | |||
Uinta Basin operating area | |||||
Property, Plant and Equipment [Line Items] | |||||
Impairment of long-lived assets | 111,339 | 111,339 | |||
East Texas operating area | |||||
Property, Plant and Equipment [Line Items] | |||||
Impairment of long-lived assets | 13,637 | 78,437 | |||
Piceance Basin operating area | |||||
Property, Plant and Equipment [Line Items] | |||||
Impairment of long-lived assets | $ 55,344 | $ 55,344 |
Debt Schedule of long term debt
Debt Schedule of long term debt (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Debt Instruments [Abstract] | |||
Credit facility | $ 1,173,175 | $ 1,173,175 | |
Senior notes, net | 845,804 | 913,777 | |
Net unamortized premiums | 12,004 | 14,644 | |
Total debt, net | 2,018,979 | 2,086,952 | |
Less current maturities | 0 | 0 | |
Total long-term debt, net | 2,018,979 | 2,086,952 | |
Credit Facility | |||
Debt Instruments [Abstract] | |||
Credit facility | [1] | 1,173,175 | 1,173,175 |
November 2020 Senior Notes | |||
Debt Instruments [Abstract] | |||
Senior notes, net | $ 261,100 | 299,970 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.75% | ||
September 2022 Senior Notes | |||
Debt Instruments [Abstract] | |||
Senior notes, net | $ 572,700 | $ 599,163 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.375% | ||
Line of Credit [Member] | |||
Debt Instruments [Abstract] | |||
Debt Instrument, Interest Rate at Period End | 2.71% | 2.67% | |
[1] | Variable interest rates of 2.71% and 2.67% at September 30, 2015, and December 31, 2014, respectively. |
Debt Debt fair value disclosure
Debt Debt fair value disclosure (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Carrying Value | ||
Credit facility | $ 1,173,175 | $ 1,173,175 |
Senior notes, net | 845,804 | 913,777 |
Total debt, net | 2,018,979 | 2,086,952 |
Fair Value | ||
Credit facility | 1,173,175 | 1,173,175 |
Senior notes, net | 269,564 | 699,462 |
Total debt, net | $ 1,442,739 | $ 1,872,637 |
Debt (Details 2)
Debt (Details 2) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Oct. 31, 2015 | May. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Mar. 31, 2015 | |
Debt instrument | ||||||||
Repayments of Long-term Debt | $ 55,418,000 | $ 206,124,000 | ||||||
Capital contributions from affiliate | 398,678,000 | |||||||
Gain on extinguishment of debt | $ 4,378,000 | $ 0 | $ 11,209,000 | $ 0 | ||||
Percent of future net income allowable to increase Berry restricted payments basket | 50.00% | 50.00% | ||||||
November 2020 Senior Notes | ||||||||
Debt instrument | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.75% | 6.75% | ||||||
September 2022 Senior Notes | ||||||||
Debt instrument | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.375% | 6.375% | ||||||
Linn Energy, LLC [Member] | ||||||||
Debt instrument | ||||||||
Capital contributions from affiliate | $ 250,000,000 | $ 220,000,000 | $ 399,000,000 | |||||
Line of Credit [Member] | ||||||||
Debt instrument | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,200,000,000 | 1,200,000,000 | $ 1,400,000,000 | |||||
Line of Credit Facility, Current Borrowing Capacity | 1,200,000,000 | 1,200,000,000 | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 1,000,000 | $ 1,000,000 | ||||||
Line of Credit Facility Collateral Coverage Ratio | 2.5 | 2.5 | ||||||
LineOfCreditFacilityPortionOfPropertiesRequiredToMaintainMortgages | 80.00% | 80.00% | ||||||
Senior Notes [Member] | ||||||||
Debt instrument | ||||||||
Extinguishment of Debt, Amount | $ 65,000,000 | |||||||
Repayments of Long-term Debt | 55,000,000 | |||||||
Gain on extinguishment of debt | $ 11,000,000 | |||||||
Senior Notes [Member] | November 2020 Senior Notes | ||||||||
Debt instrument | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.75% | 6.75% | ||||||
Extinguishment of Debt, Amount | $ 39,000,000 | |||||||
Senior Notes [Member] | September 2022 Senior Notes | ||||||||
Debt instrument | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.375% | 6.375% | ||||||
Extinguishment of Debt, Amount | $ 26,000,000 | |||||||
Subsequent Event [Member] | Line of Credit [Member] | ||||||||
Debt instrument | ||||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.50% | |||||||
Repayments of Long-term Debt | $ 300,000,000 | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | 900,000,000 | |||||||
Maximum Junior Lien Debt | $ 500,000,000 | |||||||
LineOfCreditFacilityPortionOfPropertiesRequiredToMaintainMortgages | 90.00% | |||||||
Debt Instrument, Change in basis spread on variable rate | 0.25% | |||||||
Subsequent Event [Member] | Line of Credit [Member] | Minimum [Member] | ||||||||
Debt instrument | ||||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.50% | |||||||
Subsequent Event [Member] | Line of Credit [Member] | Minimum [Member] | Prime Rate [Member] | ||||||||
Debt instrument | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||||||
Subsequent Event [Member] | Line of Credit [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||
Debt instrument | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||||||
Subsequent Event [Member] | Line of Credit [Member] | Maximum [Member] | Prime Rate [Member] | ||||||||
Debt instrument | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||||||
Subsequent Event [Member] | Line of Credit [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||
Debt instrument | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.75% | |||||||
Subsequent Event [Member] | December 31, 2015 and December 31, 2016 [Member] | Line of Credit [Member] | ||||||||
Debt instrument | ||||||||
Line of Credit Facility Collateral Coverage Ratio | 2 | |||||||
Subsequent Event [Member] | March 31, 2017 and June 30, 2017 [Member] | Line of Credit [Member] | ||||||||
Debt instrument | ||||||||
Line of Credit Facility Collateral Coverage Ratio | 2.25 | |||||||
Subsequent Event [Member] | Subsequent to June 30, 2017 [Member] | Line of Credit [Member] | ||||||||
Debt instrument | ||||||||
Line of Credit Facility Collateral Coverage Ratio | 2.5 |
Derivative Instruments (Details
Derivative Instruments (Details) | Sep. 30, 2015mmbls$ / mmbls | |
2015 | Oil derivative instruments | Swap | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 966 | |
Average price ($/Bbl) | 59.94 | |
2015 | Oil derivative instruments | Crude Oil Sales - Three-way collars - Derivative 1 | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 276 | |
2015 | Oil derivative instruments | Short | Crude Oil Sales - Three-way collars - Derivative 1 | ||
Derivative | ||
Derivative, floor price ($/Bbl) | 70 | |
Derivative, cap price ($/Bbl) | 101.62 | |
2015 | Oil derivative instruments | Long | Crude Oil Sales - Three-way collars - Derivative 1 | ||
Derivative | ||
Derivative, floor price ($/Bbl) | 90 | |
2015 | Natural gas basis differential commodity contract [Member] | NWPL Rockies basis swap [Member] | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 2,576 | [1],[2] |
Hedged differential ($/Bbl) | (0.34) | [1],[2] |
2015 | Natural gas basis differential commodity contract [Member] | SoCal basis swap [Member] | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 8,280 | [2],[3] |
Hedged differential ($/Bbl) | (0.03) | [2],[3] |
2016 | Oil derivative instruments | Swap | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 0 | |
Average price ($/Bbl) | 0 | |
2016 | Oil derivative instruments | Crude Oil Sales - Three-way collars - Derivative 1 | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 0 | |
2016 | Oil derivative instruments | Short | Crude Oil Sales - Three-way collars - Derivative 1 | ||
Derivative | ||
Derivative, floor price ($/Bbl) | 0 | |
Derivative, cap price ($/Bbl) | 0 | |
2016 | Oil derivative instruments | Long | Crude Oil Sales - Three-way collars - Derivative 1 | ||
Derivative | ||
Derivative, floor price ($/Bbl) | 0 | |
2016 | Natural gas basis differential commodity contract [Member] | NWPL Rockies basis swap [Member] | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 11,712 | [1],[2] |
Hedged differential ($/Bbl) | (0.34) | [1],[2] |
2016 | Natural gas basis differential commodity contract [Member] | SoCal basis swap [Member] | ||
Derivative | ||
Hedged volume (MBbls) | mmbls | 32,940 | [2],[3] |
Hedged differential ($/Bbl) | (0.03) | [2],[3] |
[1] | For positions which hedge exposure to differentials in producing areas, the Company receives the NYMEX Henry Hub natural gas price plus the respective spread and pays the specified index price. Cash settlements are made on a net basis. | |
[2] | Settle on the respective pricing index to hedge basis differential to the NYMEX Henry Hub natural gas price. | |
[3] | For positions which hedge exposure to differentials in consuming areas, the Company pays the NYMEX Henry Hub natural gas price plus the respective spread and receives the specified index price. Cash settlements are made on a net basis. |
Derivative Instruments Derivati
Derivative Instruments Derivative Instruments Balance Sheet Presentation (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Assets: | ||
Commodity derivatives | $ 34,416 | $ 60,843 |
Liabilities: | ||
Commodity derivatives | 9,436 | $ 17,149 |
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure | $ 34,000 |
Derivative Instruments (Detai31
Derivative Instruments (Details 2) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($)MBbl$ / bbl | Sep. 30, 2014USD ($)MBbl$ / bbl | Sep. 30, 2015USD ($)MBbl$ / bbl | Sep. 30, 2014USD ($)MBbl$ / bbl | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Volume Of Oil On Settled Derivatives | MBbl | 1,273 | 2,300 | 2,617 | 6,825 |
Average contract price on oil settled derivatives per unit | 65.89 | 92.16 | 68.44 | 92.16 |
Cash settlements | $ | $ 15,000 | $ (8,000) | $ 48,054 | $ (18,130) |
Derivative Instruments Deriva32
Derivative Instruments Derivative Instruments Income Statement Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains on oil and natural gas derivatives | $ 27,502 | $ 44,990 | $ 29,355 | $ 22,893 |
Gains on oil and natural gas derivatives | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains on oil and natural gas derivatives | 27,664 | 44,990 | 26,457 | 22,893 |
Lease operating expenses | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains on oil and natural gas derivatives | $ (162) | $ 0 | $ 2,898 | $ 0 |
Fair Value Measurements on a 33
Fair Value Measurements on a Recurring Basis Fair Value Measurements on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Assets: | |||
Commodity derivatives | $ 34,416 | $ 60,843 | |
Commodity derivatives | [1] | (7,551) | (17,149) |
Commodity derivatives | 26,865 | 43,694 | |
Liabilities: | |||
Commodity derivatives | 9,436 | 17,149 | |
Commodity derivatives | [1] | (7,551) | (17,149) |
Commodity derivatives | $ 1,885 | $ 0 | |
[1] | Represents counterparty netting under agreements governing such derivatives. |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Asset Retirement Obligation Disclosure [Abstract] | |
Fair Value Inputs, Discount Rate | 5.50% |
Asset Retirement Obligation Future Inflation Factor | 2.00% |
Change in the asset retirement obligations | |
Asset retirement obligations at December 31, 2014 | $ 121,760 |
Liabilities added from drilling | 1,185 |
Current year accretion expense | 5,051 |
Settlements | (447) |
Asset Retirement Obligation, Revision of Estimate | 8,319 |
Asset retirement obligations at September 30, 2015 | $ 135,868 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Jan. 14, 2011USD ($)a | |
Loss Contingencies [Line Items] | |||
Gathering System, Book Value | $ 12,000 | ||
Payments for Legal Settlements | 0 | $ 0 | |
Performance Guarantee [Member] | |||
Loss Contingencies [Line Items] | |||
Contractual Obligation Amount, Penalty Waived Per Well | $ 200 | ||
Contractual Obligation, Acre Of Tracts | a | 160 | ||
Contractual Obligation, Contingent Construction Expense | $ 9,000 | ||
Third Party Share of Construction Costs, Percentage | 50.00% | ||
Contractual Obligation, Penalty as Percentage of Difference Between Specified Amount and Actual Expended | 50.00% | ||
Contractual Obligation, Specified Amount for Penalty Calculation | $ 12,000 |
Supplemental Disclosures to t36
Supplemental Disclosures to the Condensed Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Supplemental disclosures to the condensed balance sheets and condensed statements of cash flows [Abstract] | ||
Accrued interest | $ 9,548 | $ 15,803 |
Asset retirement obligations | 3,101 | 3,101 |
Other | 58 | 183 |
Other accrued liabilities | $ 12,707 | $ 19,087 |
Supplemental Disclosures to t37
Supplemental Disclosures to the Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | May. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 |
Supplemental disclosures to the statements of cash flows [Line Items] | |||||||
Cash payments for interest, net of amounts capitalized | $ 70,853 | $ 79,090 | |||||
Cash payments for income taxes | 0 | 0 | |||||
Noncash investing activities: | |||||||
Accrued capital expenditures | 20,959 | 79,425 | |||||
Settlement of advance to affiliate | 129,217 | $ 0 | |||||
Capital contributions from affiliate | 398,678 | ||||||
Linn Energy, LLC [Member] | |||||||
Noncash investing activities: | |||||||
Capital expenditures paid by affiliate | $ 58,000 | 165,000 | $ 223,000 | ||||
Decrease in advance due from LINN Energy | 165,000 | ||||||
Settlement of advance to affiliate | $ 129,000 | ||||||
Capital contributions from affiliate | $ 250,000 | $ 220,000 | $ 399,000 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | Sep. 30, 2015USD ($) | May. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2014USD ($) |
Related Party Transactions | |||||||||||
Entity Number of Employees | 0 | 0 | 0 | 0 | |||||||
Distributions to affiliate | $ 57,223 | $ 52,279 | |||||||||
Proceeds from sale of properties and equipment and other | $ 352,000 | ||||||||||
Settlement of advance to affiliate | 129,217 | 0 | |||||||||
Capital contributions from affiliate | 398,678 | ||||||||||
Linn Operating, Inc. | |||||||||||
Related Party Transactions | |||||||||||
Due to Affiliate, Current | $ 6,000 | $ 6,000 | $ 13,000 | 6,000 | $ 6,000 | $ 13,000 | |||||
Management fee expense | 20,000 | $ 14,000 | 73,000 | 74,000 | |||||||
Linn Energy, LLC [Member] | |||||||||||
Related Party Transactions | |||||||||||
Distributions to affiliate | 57,000 | 52,000 | |||||||||
Capital expenditures paid by affiliate | $ 58,000 | 165,000 | $ 223,000 | ||||||||
Settlement of advance to affiliate | $ 129,000 | ||||||||||
Capital contributions from affiliate | $ 250,000 | $ 220,000 | 399,000 | ||||||||
Superior Energy Services, Inc. | |||||||||||
Related Party Transactions | |||||||||||
Amount of related party transaction | $ 24 | $ 0 | $ 342 | $ 176 | |||||||
Senior Notes 10.25 Percent Due 2014 [Member] | |||||||||||
Related Party Transactions | |||||||||||
Debt Instrument, Face Amount | $ 205,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.25% |