Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-12935 | |
Entity Registrant Name | DENBURY INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0467835 | |
Entity Address, Address Line One | 5851 Legacy Circle, | |
Entity Address, City or Town | Plano, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75024 | |
City Area Code | (972) | |
Local Phone Number | 673-2000 | |
Title of 12(b) Security | Common Stock $.001 Par Value | |
Trading Symbol | DEN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 49,999,999 | |
Entity Central Index Key | 0000945764 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 21,860 | $ 516 |
Restricted cash | 10,662 | 0 |
Accrued production receivable | 74,296 | 139,407 |
Trade and other receivables, net | 34,788 | 18,318 |
Derivative assets | 26,778 | 11,936 |
Other current assets | 11,730 | 10,434 |
Total current assets | 180,114 | 180,611 |
Oil and natural gas properties (using full cost accounting) | ||
Proved properties | 796,687 | 11,447,680 |
Unevaluated properties | 98,656 | 872,910 |
CO2 properties | 187,397 | 1,198,846 |
Pipelines | 132,669 | 2,329,078 |
Other property and equipment | 97,770 | 212,334 |
Less accumulated depletion, depreciation, amortization and impairment | (4,446) | (11,688,020) |
Net property and equipment | 1,308,733 | 4,372,828 |
Operating lease right-of-use assets | 1,225 | 34,099 |
Derivative assets | 1,147 | 0 |
Intangible assets, net | 99,655 | 22,139 |
Other assets | 86,996 | 82,190 |
Total assets | 1,677,870 | 4,691,867 |
Current liabilities | ||
Accounts payable and accrued liabilities | 166,385 | 183,832 |
Oil and gas production payable | 45,013 | 62,869 |
Derivative liabilities | 5,739 | 8,346 |
Current maturities of long-term debt (including future interest payable of $0 and $86,054, respectively - see Note 6) | 73,511 | 102,294 |
Operating lease liabilities | 763 | 6,901 |
Total current liabilities | 291,411 | 364,242 |
Long-term liabilities | ||
Long-term debt, net of current portion (including future interest payable of $0 and $78,860, respectively - see Note 6) | 102,456 | 2,232,570 |
Asset retirement obligations | 158,757 | 177,108 |
Derivative liabilities | 584 | 0 |
Deferred tax liabilities, net | 3,836 | 410,230 |
Operating lease liabilities | 463 | 41,932 |
Other liabilities | 22,186 | 53,526 |
Total long-term liabilities | 288,282 | 2,915,366 |
Stockholders' equity | ||
Preferred stock, $.001 par value | 0 | 0 |
Common stock, $.001 par value | 50 | 508 |
Paid-in capital in excess of par | 1,095,369 | 2,739,099 |
Treasury stock, at cost, 0 and 1,652,771 shares, respectively | (6,034) | |
Retained earnings (accumulated deficit) | 2,758 | (1,321,314) |
Total stockholders' equity | 1,098,177 | 1,412,259 |
Total liabilities and stockholders' equity | $ 1,677,870 | $ 4,691,867 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Future interest payable - current | $ 73,511,000 | $ 102,294,000 |
Future interest payable - long-term | $ 102,456,000 | $ 2,232,570,000 |
Stockholders' equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 750,000,000 |
Common stock, shares issued | 49,999,999 | 508,065,495 |
Treasury stock, shares | 0 | 1,652,771 |
Future interest payable on senior secured notes | ||
Debt Instrument [Line Items] | ||
Future interest payable - current | $ 0 | $ 86,054,000 |
Future interest payable - long-term | $ 0 | $ 78,860,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 | Sep. 18, 2020 | Sep. 30, 2019 |
Revenues and other income | $ 23,533,000 | $ 170,036,000 | $ 315,453,000 | $ 530,112,000 | $ 964,270,000 |
Expenses | |||||
Taxes other than income | 2,073,000 | 13,473,000 | 22,010,000 | 43,531,000 | 71,312,000 |
General and administrative expenses | 1,735,000 | 15,013,000 | 18,266,000 | 48,522,000 | 54,697,000 |
Interest, net of amounts capitalized | 334,000 | 7,704,000 | 22,858,000 | 48,267,000 | 60,672,000 |
Depletion, depreciation, and amortization | 5,283,000 | 36,317,000 | 55,064,000 | 188,593,000 | 170,625,000 |
Commodity derivatives expense (income) | (4,035,000) | 4,609,000 | (43,155,000) | (102,032,000) | 15,462,000 |
Gain on debt extinguishment | 0 | 0 | (5,874,000) | (18,994,000) | (106,220,000) |
Write-down of oil and natural gas properties | 0 | 261,677,000 | 0 | 996,658,000 | 0 |
Reorganization items, net | 0 | 849,980,000 | 0 | 849,980,000 | 0 |
Other expenses | 2,164,000 | 22,084,000 | 2,140,000 | 35,868,000 | 8,664,000 |
Total expenses | 20,763,000 | 1,282,963,000 | 205,541,000 | 2,378,819,000 | 678,722,000 |
Income (loss) before income taxes | 2,770,000 | (1,112,927,000) | 109,912,000 | (1,848,707,000) | 285,548,000 |
Income tax provision (benefit) | 12,000 | (303,807,000) | 37,050,000 | (416,129,000) | 91,668,000 |
Net income (loss) | $ 2,758,000 | $ (809,120,000) | $ 72,862,000 | $ (1,432,578,000) | $ 193,880,000 |
Net income (loss) per common share | |||||
Basic | $ 0.06 | $ (1.63) | $ 0.16 | $ (2.89) | $ 0.43 |
Diluted | $ 0.06 | $ (1.63) | $ 0.14 | $ (2.89) | $ 0.41 |
Weighted average common shares outstanding | |||||
Basic | 50,000 | 497,398 | 455,487 | 495,560 | 453,287 |
Diluted | 50,000 | 497,398 | 547,205 | 495,560 | 490,054 |
Other income | |||||
Revenues and other income | $ 94,000 | $ 7,097,000 | $ 7,817,000 | $ 8,419,000 | $ 12,274,000 |
Transportation and marketing | |||||
Operating expenses | 1,344,000 | 8,155,000 | 10,067,000 | 27,164,000 | 32,076,000 |
Oil, natural gas, and related product sales | |||||
Revenues and other income | 22,321,000 | 153,090,000 | 293,192,000 | 492,101,000 | 918,190,000 |
Operating expenses | 11,484,000 | 59,708,000 | 117,850,000 | 250,271,000 | 361,205,000 |
CO2 | |||||
Revenues and other income | 967,000 | 6,517,000 | 8,976,000 | 21,049,000 | 25,532,000 |
Operating expenses | 242,000 | 955,000 | 879,000 | 2,592,000 | 2,016,000 |
Oil marketing | |||||
Revenues and other income | 151,000 | 3,332,000 | 5,468,000 | 8,543,000 | 8,274,000 |
Operating expenses | $ 139,000 | $ 3,288,000 | $ 5,436,000 | $ 8,399,000 | $ 8,213,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 | Sep. 18, 2020 | Sep. 30, 2019 |
Expenses | |||||
Capitalized interest | $ 183 | $ 4,704 | $ 8,773 | $ 22,885 | $ 27,545 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 |
Cash flows from operating activities | |||
Net income (loss) | $ 2,758,000 | $ (1,432,578,000) | $ 193,880,000 |
Adjustments to reconcile net income (loss) to cash flows from operating activities | |||
Noncash reorganization items, net | 0 | 810,909,000 | 0 |
Depletion, depreciation, and amortization | 5,283,000 | 188,593,000 | 170,625,000 |
Write-down of oil and natural gas properties | 0 | 996,658,000 | 0 |
Deferred income taxes | 6,000 | (408,869,000) | 90,454,000 |
Stock-based compensation | 0 | 4,111,000 | 9,866,000 |
Commodity derivatives expense (income) | (4,035,000) | (102,032,000) | 15,462,000 |
Receipt on settlements of commodity derivatives | 6,660,000 | 81,396,000 | 14,714,000 |
Gain on debt extinguishment | 0 | (18,994,000) | (106,220,000) |
Debt issuance costs and discounts | 114,000 | 11,571,000 | 7,607,000 |
Other, net | 589,000 | 439,000 | (6,862,000) |
Changes in assets and liabilities, net of effects from acquisitions | |||
Accrued production receivable | 38,537,000 | 26,575,000 | (1,428,000) |
Trade and other receivables | 1,366,000 | (22,343,000) | (147,000) |
Other current and long-term assets | 705,000 | 743,000 | 27,000 |
Accounts payable and accrued liabilities | (7,980,000) | (16,102,000) | (33,167,000) |
Oil and natural gas production payable | (11,064,000) | (6,792,000) | (1,819,000) |
Other liabilities | (29,000) | 123,000 | (9,414,000) |
Net cash provided by operating activities | 32,910,000 | 113,408,000 | 343,578,000 |
Cash flows from investing activities | |||
Oil and natural gas capital expenditures | (2,125,000) | (99,582,000) | (204,904,000) |
Pipelines and plants capital expenditures | (6,000) | (11,601,000) | (25,965,000) |
Net proceeds from sales of oil and natural gas properties and equipment | 880,000 | 41,322,000 | 10,494,000 |
Other | (309,000) | 12,747,000 | 5,797,000 |
Net cash used in investing activities | (1,560,000) | (57,114,000) | (214,578,000) |
Cash flows from financing activities | |||
Bank repayments | (55,000,000) | (551,000,000) | (641,000,000) |
Bank borrowings | 0 | 691,000,000 | 691,000,000 |
Interest payments treated as a reduction of debt | 0 | (46,417,000) | (59,808,000) |
Cash paid in conjunction with debt repurchases | 0 | (14,171,000) | 0 |
Cash paid in conjunction with debt exchange | 0 | 0 | (125,268,000) |
Costs of debt financing | 0 | (12,482,000) | (11,017,000) |
Pipeline financing and capital lease debt repayments | (54,000) | (51,792,000) | (10,279,000) |
Other | 0 | (9,363,000) | 5,470,000 |
Net cash provided by (used in) financing activities | (55,054,000) | 5,775,000 | (150,902,000) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (23,704,000) | 62,069,000 | (21,902,000) |
Cash, cash equivalents, and restricted cash at beginning of period | 95,114,000 | 33,045,000 | 54,949,000 |
Cash, cash equivalents, and restricted cash at end of period | $ 71,410,000 | $ 95,114,000 | $ 33,047,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock ($.001 Par Value) | Paid-In Capital in Excess of Par | Retained Earnings (Accumulated Deficit) | Treasury Stock (at cost) |
Beginning balance, shares at Dec. 31, 2018 | 462,355,725 | 1,941,749 | |||
Beginning balance at Dec. 31, 2018 | $ 1,141,777 | $ 462 | $ 2,685,211 | $ (1,533,112) | $ (10,784) |
Issued or purchased pursuant to stock compensation plans, shares | 1,331,050 | ||||
Issued or purchased pursuant to stock compensation plans, value | 2 | $ 2 | |||
Issued pursuant to directors' compensation plan, shares | 41,487 | ||||
Stock-based compensation, value | 4,306 | 4,306 | |||
Tax withholding - stock compensation, shares | 531,494 | ||||
Tax withholding - stock compensation, value | (1,091) | $ (1,091) | |||
Net income (loss) | (25,674) | (25,674) | |||
Ending balance, shares at Mar. 31, 2019 | 463,728,262 | 2,473,243 | |||
Ending balance at Mar. 31, 2019 | 1,119,320 | $ 464 | 2,689,517 | (1,558,786) | $ (11,875) |
Beginning balance, shares at Dec. 31, 2018 | 462,355,725 | 1,941,749 | |||
Beginning balance at Dec. 31, 2018 | 1,141,777 | $ 462 | 2,685,211 | (1,533,112) | $ (10,784) |
Net income (loss) | 193,880 | ||||
Ending balance, shares at Sep. 30, 2019 | 49,999,999 | 0 | |||
Ending balance at Sep. 30, 2019 | 1,346,120 | $ 50 | 1,095,369 | 2,758 | $ 0 |
Beginning balance, shares at Mar. 31, 2019 | 463,728,262 | 2,473,243 | |||
Beginning balance at Mar. 31, 2019 | 1,119,320 | $ 464 | 2,689,517 | (1,558,786) | $ (11,875) |
Issued or purchased pursuant to stock compensation plans, shares | 400,850 | ||||
Issued pursuant to directors' compensation plan, shares | 37,367 | ||||
Stock-based compensation, value | 4,667 | 4,667 | |||
Tax withholding - stock compensation, shares | 1,661 | ||||
Tax withholding - stock compensation, value | (3) | $ (3) | |||
Net income (loss) | 146,692 | 146,692 | |||
Ending balance, shares at Jun. 30, 2019 | 464,166,479 | 2,474,904 | |||
Ending balance at Jun. 30, 2019 | 1,270,676 | $ 464 | 2,694,184 | (1,412,094) | $ (11,878) |
Issued or purchased pursuant to stock compensation plans, shares | 9,046,748 | ||||
Issued or purchased pursuant to stock compensation plans, value | $ 9 | (9) | |||
Stock-based compensation, value | 3,983 | 3,983 | |||
Tax withholding - stock compensation, shares | 1,145,881 | ||||
Tax withholding - stock compensation, value | (1,401) | $ (1,401) | |||
Net income (loss) | 72,862 | 72,862 | |||
Ending balance, shares at Sep. 30, 2019 | 49,999,999 | 0 | |||
Ending balance at Sep. 30, 2019 | $ 1,346,120 | $ 50 | 1,095,369 | 2,758 | $ 0 |
Beginning balance, shares at Dec. 31, 2019 | 508,065,495 | 508,065,495 | 1,652,771 | ||
Beginning balance at Dec. 31, 2019 | $ 1,412,259 | $ 508 | 2,739,099 | (1,321,314) | $ (6,034) |
Issued or purchased pursuant to stock compensation plans, shares | 312,516 | ||||
Issued pursuant to directors' compensation plan, shares | 37,367 | ||||
Stock-based compensation, value | 3,204 | 3,204 | |||
Tax withholding - stock compensation, shares | 175,673 | ||||
Tax withholding - stock compensation, value | (34) | $ (34) | |||
Net income (loss) | 74,016 | 74,016 | |||
Ending balance, shares at Mar. 31, 2020 | 508,415,378 | 1,828,444 | |||
Ending balance at Mar. 31, 2020 | $ 1,489,445 | $ 508 | 2,742,303 | (1,247,298) | $ (6,068) |
Beginning balance, shares at Dec. 31, 2019 | 508,065,495 | 508,065,495 | 1,652,771 | ||
Beginning balance at Dec. 31, 2019 | $ 1,412,259 | $ 508 | 2,739,099 | (1,321,314) | $ (6,034) |
Net income (loss) | (1,432,578) | ||||
Ending balance, shares at Sep. 18, 2020 | 49,999,999 | ||||
Ending balance at Sep. 18, 2020 | 1,095,419 | $ 50 | 1,095,369 | ||
Beginning balance, shares at Mar. 31, 2020 | 508,415,378 | 1,828,444 | |||
Beginning balance at Mar. 31, 2020 | 1,489,445 | $ 508 | 2,742,303 | (1,247,298) | $ (6,068) |
Cancellation of equity | (6,218,868) | ||||
Canceled pursuant to stock compensation plans, value | $ (6) | 6 | |||
Stock-based compensation, value | $ 987 | 987 | |||
Stock issued pursuant to notes conversion, shares | 7,400,000 | 7,357,450 | |||
Issued pursuant to notes conversion, value | $ 11,461 | $ 8 | 11,453 | ||
Net income (loss) | (697,474) | (697,474) | |||
Ending balance, shares at Jun. 30, 2020 | 509,553,960 | 1,828,444 | |||
Ending balance at Jun. 30, 2020 | 804,419 | $ 510 | 2,754,749 | (1,944,772) | $ (6,068) |
Cancellation of equity | (95,016) | ||||
Stock-based compensation, value | 10,126 | 10,126 | |||
Stock issued pursuant to notes conversion, shares | 14,800 | ||||
Issued pursuant to notes conversion, value | 40 | 40 | |||
Tax withholding - stock compensation, shares | 567,189 | ||||
Tax withholding - stock compensation, value | (134) | $ (134) | |||
Net income (loss) | (809,120) | (809,120) | |||
Cancellation of Predecessor equity | (509,473,744) | (2,395,633) | |||
Cancellation of Predecessor equity | (5,331) | $ (510) | (2,764,915) | 2,753,892 | $ 6,202 |
Issuance of Successor equity, shares | 49,999,999 | ||||
Issuance of Successor equity, value | 1,095,419 | $ 50 | 1,095,369 | ||
Ending balance, shares at Sep. 18, 2020 | 49,999,999 | ||||
Ending balance at Sep. 18, 2020 | 1,095,419 | $ 50 | 1,095,369 | ||
Net income (loss) | $ 2,758 | 2,758 | |||
Ending balance, shares at Sep. 30, 2020 | 49,999,999 | 473,213,227 | 3,620,785 | ||
Ending balance at Sep. 30, 2020 | $ 1,098,177 | $ 473 | $ 2,698,158 | $ (1,339,232) | $ (13,279) |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 1. Basis of Presentation Organization and Nature of Operations Denbury Inc. (“Denbury,” “Company” or the “Successor”), a Delaware corporation, is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. Our goal is to increase the value of our properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO 2 enhanced oil recovery operations. As further described in Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code below, Denbury Inc. became the successor reporting company of Denbury Resources Inc. (the “Predecessor”) upon the Predecessor’s emergence from bankruptcy on September 18, 2020. References to “Successor” relate to the financial position and results of operations of the Company subsequent to September 18, 2020, and references to “Predecessor” relate to the financial position and results of operations of the Company prior to, and including, September 18, 2020. On September 18, 2020, Denbury filed the Third Restated Certificate of Incorporation with the Delaware Secretary of State to effect a change of the Company’s corporate name from Denbury Resources Inc. to Denbury Inc., and on September 21, 2020, the Successor’s new common stock commenced trading on the New York Stock Exchange under the ticker symbol DEN. Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code On July 28, 2020, Denbury Resources Inc. and its subsidiaries entered into a Restructuring Support Agreement (the “RSA”) with lenders holding 100% of the revolving loans under our pre-petition revolving bank credit facility and debtholders holding approximately 67.1% of our senior secured second lien notes and approximately 73.1% of our convertible senior notes, which contemplated a restructuring of the Company pursuant to a prepackaged joint plan of reorganization (the “Plan”). On July 30, 2020 (the “Petition Date”), Denbury Resources Inc. and its subsidiaries filed petitions for reorganization in a “prepackaged” voluntary bankruptcy (the “Chapter 11 Restructuring”) under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) under the caption “ In re Denbury Resources Inc., et al. , Case No. 20-33801”. On September 2, 2020, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan and approving the Disclosure Statement, and on September 18, 2020 (the “Emergence Date”), the Plan became effective in accordance with its terms and the Company emerged from Chapter 11. On the Emergence Date and pursuant to the terms of the Plan and the Confirmation Order, all outstanding obligations under the senior secured second lien notes, convertible senior notes, and senior subordinated notes were fully extinguished, relieving approximately $2.1 billion of debt by issuing equity and/or warrants in the Successor to the former holders of that debt, and the Company: • Adopted an amended and restated certificate of incorporation and bylaws which reserved for issuance 250,000,000 shares of common stock, par value $0.001 per share, of Denbury (the “New Common Stock”) and 50,000,000 shares of preferred stock, par value $0.001 per share; • Cancelled all outstanding senior secured second lien notes, convertible senior notes, and senior subordinated notes issued by the Predecessor and related registration rights. In accordance with the Plan, claims against and interests in the Predecessor were treated as follows: ◦ Holders of secured pipeline lease claims received payment in full in cash, the collateral securing such pipeline lease claim, reinstatement, or such other treatment rendering such pipeline lease claim unimpaired (see Note 6 , Long-Term Debt – Pipeline Financing Transactions , for discussion of subsequent pipeline transactions); ◦ Holders of senior secured second lien notes claims received their pro rata share of 47,499,999 shares representing 95% of the New Common Stock issued on the Emergence Date, subject to dilution on account of warrants and a to-be-adopted management incentive plan; ◦ Holders of convertible senior notes claims received their pro rata share of (a) 2,500,000 shares representing 5% of the New Common Stock issued on the Emergence Date, subject to dilution on account of warrants and a to-be-adopted management incentive plan and (b) 100% of the series A warrants (see below), reflecting up to a maximum of 5% ownership stake in the reorganized company’s equity interests; ◦ Holders of subordinated notes claims received their pro rata share of 54.55% of the series B warrants (see below), reflecting up to a maximum of 3% of the reorganized company’s equity interests after giving effect to the exercise of the series A warrants; ◦ Holders of general unsecured claims received payment in full in cash, reimbursement, or such other treatment rendering such general unsecured claim unimpaired; and ◦ Holder of existing equity interests received their pro rata share of 45.45% of the series B warrants (see below), reflecting up to a maximum of 2.5% of the reorganized company’s equity interests after giving effect to the exercise of the series A warrants. ◦ Issued 2,631,579 series A warrants at an initial exercise price of $32.59 per share to former holders of the Predecessor’s convertible senior notes and 2,894,740 series B warrants at an initial exercise price of $35.41 per share to former holders of the Predecessor’s senior subordinated notes and Predecessor’s equity interests; • Entered into a new senior secured revolving credit agreement with a syndicate of banks (the “Successor Bank Credit Agreement”) with total aggregate commitments of $575 million ; • Appointed a new board of directors (the “Board”) consisting of four new independent members: Anthony Abate, Caroline Angoorly, Brett Wiggs and James N. “Jim” Chapman, and three continuing members: Dr. Kevin O. Meyers (Chairman of the Board), Lynn A. Peterson and Chris Kendall, Denbury’s President and Chief Executive Officer; and • Adopted a framework for a management incentive plan which will reserve primarily for employees and directors a pool of shares of New Common Stock representing up to 10% of the New Common Stock, determined on a fully diluted and fully distributed basis, with initial awards from within this pool to be issued within 60 days of emergence. During the Predecessor period, the Company applied Financial Accounting Standards Board Codification (“FASC”) Topic 852, Reorganizations, in preparing the consolidated financial statements. FASC Topic 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Restructuring, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during 2020 related to the Chapter 11 Restructuring, including the write-off of unamortized long-term debt fees and discounts associated with debt classified as liabilities subject to compromise, and professional fees incurred directly as a result of the Chapter 11 Restructuring are recorded as “Reorganization items, net” in our Unaudited Condensed Consolidated Statements of Operations in the Predecessor period. FASC Topic 852 requires certain additional reporting for financial statements prepared between the bankruptcy filing date and the date of emergence from bankruptcy, including: • Reclassification of pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured, to a separate line item in the Unaudited Condensed Consolidated Balance Sheet titled “Liabilities subject to compromise”; and • Segregation of Reorganization items, net as a separate line in the Unaudited Condensed Consolidated Statements of Operations. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. During the Chapter 11 Restructuring, the Company’s ability to continue as a going concern was contingent upon the Company’s ability to successfully implement a prepackaged joint plan of reorganization, among other factors. As a result of the effectiveness and implementation of the restructuring, there is no longer substantial doubt about the Company's ability to continue as a going concern. Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of Denbury Inc. and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and the notes thereto should be read in conjunction with the Predecessor’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury Inc. and its subsidiaries. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, and the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of September 30, 2020 (Successor) and December 31, 2019 (Predecessor); our consolidated results of operations and consolidated statements of changes in stockholders’ equity for the periods September 19, 2020 through September 30, 2020 (Successor), for the period July 1, 2020 through September 18, 2020 (Predecessor) and January 1, 2020 through September 18, 2020 (Predecessor), and for the three and nine months ended September 30, 2019 (Predecessor); and our consolidated cash flows for the period September 19, 2020 through September 30, 2020 (Successor), for the period January 1, 2020 through September 18, 2020 (Predecessor) and for the nine months ended September 30, 2019 (Predecessor). Upon the adoption of fresh start accounting, the Company’s assets and liabilities were recorded at their fair values as of the fresh start reporting date (see Note 2 , Fresh Start Accounting ). As a result of the adoption of fresh start accounting, certain values and operational results of the Company’s condensed consolidated financial statements subsequent to September 18, 2020 are not comparable to those in its condensed consolidated financial statements prior to, and including September 18, 2020, and as such, “black-line” financial statements are presented to distinguish between the Predecessor and Successor companies. Risks and Uncertainties In March 2020, the World Health Organization declared the ongoing COVID-19 coronavirus (“COVID-19”) outbreak a pandemic, and the President of the United States declared the COVID-19 pandemic a national emergency. The COVID-19 pandemic has caused a rapid and precipitous drop in oil demand, which worsened an already deteriorated oil market that followed the early-March 2020 failure by the group of oil producing nations known as OPEC+ to reach an agreement over proposed oil production cuts. Although OPEC+ subsequently agreed to reduced levels of production output, concerns about the ability of OPEC+ to maintain compliance with their reduced production targets and uncertainty about the duration of the COVID-19 pandemic and its resulting economic consequences has resulted in abnormally high worldwide inventories of produced oil. While oil prices have improved from the low points experienced during the second quarter of 2020, the concerns and uncertainties around the balance of supply and demand for oil are expected to continue for some time. Because the realized oil prices we have received since early March 2020 have been significantly reduced, our operating cash flow and liquidity have been adversely affected. Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows: Successor Predecessor In thousands Sept. 30, 2020 Dec. 31, 2019 Cash and cash equivalents $ 21,860 $ 516 Restricted cash, current 10,662 — Restricted cash included in other assets 38,888 32,529 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 71,410 $ 33,045 Restricted cash, current in the table above represents restricted escrow funds maintained by the Successor as required by certain contractual arrangements in accordance with the Plan. Other restricted cash amounts represent escrow accounts that are legally restricted for certain of our asset retirement obligations, and are included in “Other assets” in the accompanying Unaudited Condensed Consolidated Balance Sheets. Net Income (Loss) per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is calculated in the same manner but includes the impact of potentially dilutive securities. Potentially dilutive securities have historically consisted of nonvested restricted stock, nonvested performance-based equity awards, warrants, and shares into which our convertible senior notes are convertible . The following tables set forth the reconciliations of net income (loss) and weighted average shares used for purposes of calculating the basic and diluted net income (loss) per common share for the periods indicated: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Numerator Net income (loss) – basic $ 2,758 $ (809,120 ) $ 72,862 Effect of potentially dilutive securities Interest on convertible senior notes including amortization of discount, net of tax — — 5,101 Net income (loss) – diluted $ 2,758 $ (809,120 ) $ 77,963 Denominator Weighted average common shares outstanding – basic 50,000 497,398 455,487 Effect of potentially dilutive securities Restricted stock and performance-based equity awards — — 865 Convertible senior notes (1) — — 90,853 Weighted average common shares outstanding – diluted 50,000 497,398 547,205 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Numerator Net income (loss) – basic $ 2,758 $ (1,432,578 ) $ 193,880 Effect of potentially dilutive securities Interest on convertible senior notes including amortization of discount, net of tax — — 5,649 Net income (loss) – diluted $ 2,758 $ (1,432,578 ) $ 199,529 Denominator Weighted average common shares outstanding – basic 50,000 495,560 453,287 Effect of potentially dilutive securities Restricted stock and performance-based equity awards — — 2,489 Convertible senior notes (1) — — 34,278 Weighted average common shares outstanding – diluted 50,000 495,560 490,054 (1) Shares shown under “convertible senior notes” represent the impact over the Predecessor periods of the approximately 90.9 million shares of the Predecessor’s common stock issuable upon full conversion of the convertible senior notes which were issued on June 19, 2019. Time-vesting restricted stock is included in basic weighted average common shares from the vesting date (although time-vesting restricted stock is issued and outstanding upon grant). For purposes of calculating diluted weighted average common shares for the three and nine months ended September 30, 2019 , the nonvested restricted stock and performance-based equity awards are included in the computation using the treasury stock method, with the deemed proceeds equal to the average unrecognized compensation during the period, and for the shares underlying the convertible senior notes as if the convertible senior notes were converted at the beginning of 2019 . The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income (loss) per share, as their effect would have been antidilutive: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Stock appreciation rights — — 2,011 Restricted stock and performance-based equity awards — 165 7,996 Convertible senior notes — 82,445 — Warrants (1) 5,526 — — Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Stock appreciation rights — 1,007 2,043 Restricted stock and performance-based equity awards — 7,280 5,859 Convertible senior notes — 87,888 — Warrants (1) 5,526 — — (1) Shares shown under “warrants” represent the impact over the Successor periods of the approximately 5.5 million shares of the Successor’s common stock issuable upon full exercise of the series A and series B warrants which were issued pursuant to the Plan to the Predecessor’s convertible senior notes, senior subordinated notes, and equity holders. Oil and Natural Gas Properties Unevaluated Costs. Under full cost accounting, we exclude certain unevaluated costs from the amortization base and full cost ceiling test pending the determination of whether proved reserves can be assigned to such properties. These costs are transferred to the full cost amortization base as these properties are developed, tested and evaluated. At least annually, we test these assets for impairment based on an evaluation of management’s expectations of future pricing, evaluation of lease expiration terms, and planned development activities. Given the significant declines in NYMEX oil prices in March and April 2020 due to the oil supply and demand imbalance precipitated by the dramatic fall in demand associated with the COVID-19 pandemic combined with the concurrent OPEC+ decision to increase oil supply, we reassessed our development plans and recognized an impairment of $244.9 million of our unevaluated costs during the three months ended March 31, 2020 (Predecessor), whereby these costs were transferred to the full cost amortization base. Upon emergence from bankruptcy, the Company adopted fresh start accounting which resulted in our oil and natural gas properties, including unevaluated properties, being recorded at their fair values at the Emergence Date (see Note 2 , Fresh Start Accounting , for additional information). Write-Down of Oil and Natural Gas Properties. The net capitalized costs of oil and natural gas properties are limited to the lower of unamortized cost or the cost center ceiling. The cost center ceiling is defined as (1) the present value of estimated future net revenues from proved oil and natural gas reserves before future abandonment costs (discounted at 10%), based on the average first-day-of-the-month oil and natural gas price for each month during a 12-month rolling period prior to the end of a particular reporting period; plus (2) the cost of properties not being amortized; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) related income tax effects. Our future net revenues from proved oil and natural gas reserves are not reduced for development costs related to the cost of drilling for and developing CO 2 reserves nor those related to the cost of constructing CO 2 pipelines, as we do not have to incur additional costs to develop the proved oil and natural gas reserves. Therefore, we include in the ceiling test, as a reduction of future net revenues, that portion of our capitalized CO 2 costs related to CO 2 reserves and CO 2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves. The fair value of our oil and natural gas derivative contracts is not included in the ceiling test, as we do not designate these contracts as hedge instruments for accounting purposes. The cost center ceiling test is prepared quarterly and was also prepared as of the Emergence Date. The Predecessor recognized full cost pool ceiling test write-downs of $261.7 million during the period from July 1, 2020 through September 18, 2020, $662.4 million during the three months ended June 30, 2020, and $72.5 million during the three months ended March 31, 2020. There was no full cost pool ceiling test write-down for the Successor period from September 19, 2020 through September 30, 2020. The first-day-of-the-month oil prices for the preceding 12 months, after adjustments for market differentials by field, averaged $40.08 per Bbl as of September 18, 2020, $44.74 per Bbl as of June 30, 2020, and $55.17 per Bbl as of March 31, 2020. In addition, the first-day-of-the-month natural gas prices for the preceding 12 months, after adjustments for market differentials by field, averaged $1.72 per MMBtu as of September 18, 2020, $1.91 per MMBtu as of June 30, 2020, and $1.68 per MMBtu as of March 31, 2020. Impairment Assessment of Long-Lived Assets We test long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. These long-lived assets, which are not subject to our full cost pool ceiling test, are principally comprised of our capitalized CO 2 properties and pipelines. Given the significant declines in NYMEX oil prices to approximately $20 per Bbl in late March 2020 due to OPEC supply pressures and a reduction in worldwide oil demand amid the COVID-19 pandemic, we performed a long-lived asset impairment test for our two long-lived asset groups (Gulf Coast region and Rocky Mountain region) as of March 31, 2020 (Predecessor). We perform our long-lived asset impairment test by comparing the net carrying costs of our two long-lived asset groups to the respective expected future undiscounted net cash flows that are supported by these long-lived assets which include production of our probable and possible oil and natural gas reserves. The portion of our capitalized CO 2 costs related to CO 2 reserves and CO 2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves is included in the full cost pool ceiling test as a reduction to future net revenues. The remaining net capitalized costs that are not included in the full cost pool ceiling test, and related intangible assets, are subject to long-lived asset impairment testing. These costs totaled approximately $ 1.3 billion as of March 31, 2020 (Predecessor). If the undiscounted net cash flows are below the net carrying costs for an asset group, we must record an impairment loss by the amount, if any, that net carrying costs exceed the fair value of the long-lived asset group. The undiscounted net cash flows for our asset groups exceeded the net carrying costs; thus, step two of the impairment test was not required and no impairment was recorded. Significant assumptions impacting expected future undiscounted net cash flows include projections of future oil and natural gas prices, projections of estimated quantities of oil and natural gas reserves, projections of future rates of production, timing and amount of future development and operating costs, projected availability and cost of CO 2 , projected recovery factors of tertiary reserves and risk-adjustment factors applied to the cash flows. We performed a qualitative assessment as of June 30, 2020 and September 18, 2020 (Predecessor periods) and determined there were no material changes to our key cash flow assumptions and no triggering events since the analysis performed as of March 31, 2020; therefore, no impairment test was performed for the second quarter of 2020 or for the period ending September 18, 2020. Upon emergence from bankruptcy, the Company adopted fresh start accounting which resulted in our long-lived assets being recorded at their fair value at the Emergence Date (see Note 2 , Fresh Start Accounting , for additional information). Recent Accounting Pronouncements Recently Adopted Financial Instruments – Credit Losses. In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, and requires the use of a new forward-looking expected loss model that will result in the earlier recognition of allowances for losses. Effective January 1, 2020, we adopted ASU 2016-13. The implementation of this standard did not have a material impact on our consolidated financial statements. Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”). ASU 2018-13 adds, modifies, or removes certain disclosure requirements for recurring and nonrecurring fair value measurements based on the FASB’s consideration of costs and benefits. Effective January 1, 2020, we adopted ASU 2018-13. The implementation of this standard did not have a material impact on our consolidated financial statements or footnote disclosures. Not Yet Adopted Income Taxes. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The objective of ASU 2019-12 is to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and to provide more consistent application to improve the comparability of financial statements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020, and early adoption is permitted. We are currently evaluating the impact this guidance may have on our consolidated financial statements and related footnote disclosures. |
Fresh Start Accounting
Fresh Start Accounting | 9 Months Ended |
Sep. 30, 2020 | |
Fresh Start Accounting | Note 2. Fresh Start Accounting Fresh Start Accounting Upon emergence from bankruptcy, we met the criteria and were required to adopt fresh start accounting in accordance with FASC Topic 852, Reorganizations , which on the Emergence Date resulted in a new entity, the Successor, for financial reporting purposes, with no beginning retained earnings or deficit as of the fresh start reporting date. The criteria requiring fresh start accounting are: (1) the holders of the then-existing common shares of the Predecessor received less than 50 percent of the new common shares of the Successor outstanding upon emergence from bankruptcy and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims. Fresh start accounting requires that new fair values be established for the Company’s assets, liabilities and equity as of the date of emergence from bankruptcy, September 18, 2020, and therefore certain values and operational results of the condensed consolidated financial statements subsequent to September 18, 2020 are not comparable to those in the Company’s condensed consolidated financial statements prior to, and including September 18, 2020. The Emergence Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor. Reorganization Value The reorganization value derived from the range of enterprise values associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values. Under FASC Topic 852, reorganization value generally approximates the fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of the restructuring. The value of the reconstituted entity (i.e., Successor) was based on management projections and the valuation models as determined by the Company’s financial advisors in setting an estimated range of enterprise values. As set forth in the Plan and Disclosure Statement approved by the Bankruptcy Court, the valuation analysis resulted in an enterprise value between $1.1 billion and $1.5 billion , with a mid-point of $1.3 billion . For U.S. GAAP purposes, we valued the Successor’s individual assets, liabilities, and equity instruments and determined the value of the enterprise was approximately $1.3 billion as of the Emergence Date, which fell in line with the mid-point of the forecast enterprise value ranges approved by the Bankruptcy Court. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process. The following table reconciles the enterprise value to the equity value of the Successor as of the Emergence Date: In thousands Sept. 18, 2020 Enterprise value $ 1,280,856 Plus: Cash and cash equivalents 45,585 Less: Total debt (231,022 ) Equity value $ 1,095,419 The following table reconciles enterprise value to reorganization value of the Successor (i.e., value of the reconstituted entity) and total reorganization value: In thousands Sept. 18, 2020 Enterprise value $ 1,280,856 Plus: Cash and cash equivalents 45,585 Plus: Current liabilities excluding current maturities of long-term debt 239,738 Plus: Non-interest bearing noncurrent liabilities 185,228 Reorganization value of the reconstituted Successor $ 1,751,407 With the assistance of third-party valuation advisors, we determined the enterprise and corresponding equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of the present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of September 18, 2020. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially, including variances when presented in our upcoming Form 10-K report for the year ended December 31, 2020. Reorganization Items, Net Reorganization items represent (i) expenses incurred during the Chapter 11 Restructuring subsequent to the Petition Date as a direct result of the Plan, (ii) gains or losses from liabilities settled and (iii) fresh start accounting adjustments and are recorded in “Reorganization items, net” in our Unaudited Condensed Consolidated Statements of Operations. Professional service provider charges associated with our restructuring that were incurred before the Petition Date and after the Emergence Date are recorded in “Other expenses” in our Unaudited Condensed Consolidated Statements of Operations. Contractual interest expense of $ 22.0 million from the Petition Date through the Emergence Date associated with our outstanding senior secured second lien notes, convertible senior notes, and senior subordinated notes was not accrued or recorded in the unaudited condensed consolidated statement of operations as interest expense. The following table summarizes the losses (gains) on reorganization items, net: Predecessor Period from July 1, 2020 through In thousands Sept. 18, 2020 Gain on settlement of liabilities subject to compromise $ (1,024,864 ) Fresh start accounting adjustments 1,834,423 Professional service provider fees and other expenses 11,267 Success fees for professional service providers 9,700 Loss on rejected contracts and leases 10,989 Valuation adjustments to debt classified as subject to compromise 757 DIP credit agreement fees 3,107 Acceleration of Predecessor stock compensation expense 4,601 Total reorganization items, net $ 849,980 Payments of professional service provider fees and success fees of $ 12.7 million and fees of $ 3.1 million related to the Senior Secured Superpriority Debtor-in-Possession Credit Agreement (“DIP Facility”) were included in cash outflows from operating activities and financing activities, respectively, in our Unaudited Condensed Consolidated Statements of Cash Flows for the period January 1, 2020 through September 18, 2020. Valuation Process The fair values of our principal assets, including oil and natural gas properties, CO 2 properties, pipelines, other property and equipment, long-term CO 2 customer contracts, favorable and unfavorable vendor contracts, pipeline financing liabilities and right-of-use assets, asset retirement obligations and warrants were estimated as of the Emergence Date. Oil and Natural Gas Properties The Company’s principal assets are its oil and natural gas properties, which are accounted for under the full cost accounting method as described in Note 1 , Basis of Presentation – Oil and Natural Gas Properties . The Company determined the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the Emergence Date. The fair value analysis was based on the Company’s estimated future production of proved and probable reserves as prepared by the Company’s independent petroleum engineering firm. Discounted cash flow models were prepared using the estimated future revenues and operating costs for all developed wells and undeveloped properties comprising the proved and probable reserves. Future revenues were based upon forward strip oil and natural gas prices as of the Emergence Date through 2024 and escalated for inflation thereafter, adjusted for differentials. Operating costs were adjusted for inflation beginning in year 2025. A risk adjustment factor was applied to each reserve category, consistent with the risk of the category. The discounted cash flow models also included adjustments for income tax expenses. Discount factors utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type and varying corporate income tax rates based on the expected point of sale for each property’s produced assets. Cash flows were also adjusted for a market participant profit on CO 2 costs, since Denbury charges oil fields for CO 2 use on a cost basis. Finally, reserve values were adjusted for any asset retirement obligations as well as for CO 2 indirect costs not directly allocable to oil fields. Based on this analysis, the Company concluded the fair value of its proved and probable reserves was $ 865.4 million as of the Emergence Date (see footnote 10 to Fresh Start Adjustments discussion below). CO 2 Properties The fair value of CO 2 properties includes the value of CO 2 mineral rights and associated infrastructure and was determined using the discounted cash flow method under the income approach. After-tax cash flows were forecast based on expected costs to produce and transport CO 2 as provided by management, and income was imputed using a gross-up of costs based on a five-year average historical EBITDA margin for publicly traded companies that primarily develop or produce natural gas. Cash flows were then discounted using a rate considering reduced risk associated with CO 2 industrial sales. Pipelines The fair values of our pipelines were determined using a combination of the replacement cost method under the cost approach and the discounted cash flow method under the income approach. The replacement cost method considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow. For assets valued using the discounted cash flow method, after-tax cash flows were forecast based on expected costs provided by management, and profits were imputed using a gross-up of costs based on a five-year average historical EBITDA margin for publicly traded companies that primarily transport natural gas. Pipeline depreciable lives represent the remaining estimated useful lives of the pipelines, which will be depreciated on a straight-line basis ranging from 20 to 43 years. Other Property and Equipment The fair value of the non-reserve related property and equipment such as land, buildings, equipment, leasehold improvements and software was determined using the replacement cost method under the cost approach which considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow. Long-Term CO 2 Customer Contracts The fair value of long-term CO 2 customer contracts was determined using the multi-period excess earnings method (“MPEEM”) under the income approach. MPEEM attributes cash flow to a specific intangible asset based on residual cash flows from a set of assets generating revenues after accounting for appropriate returns on and of other assets contributing to that revenue generation. Cash flows were forecast based on expected changes in pricing, volumes, renewal rates, and costs using volumes and prices through and beyond the initial contract terms. After-tax cash flows were discounted using a rate considering reduced risk of these industrial contracts relative to overall oil and gas production risks. The contracts will be depreciated over a useful life of seven to 14 years. Favorable and Unfavorable Vendor Contracts We recognized both favorable and unfavorable contracts using the incremental value method under the income approach. The incremental value method calculates value on the basis of the pricing differential between historical contracted rates and estimated pricing that the Company would most likely receive if it entered into similar contract conditions (other than the price) as of the Emergence Date. The differential is applied to expected contract volumes, tax-affected and discounted at a discount rate consistent with the risk of the associated cash flows. Asset Retirement Obligations The fair value of the asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, an appropriate long-term inflation adjustment, and our revised credit adjusted risk-free rate (“CARFR”). The new CARFR was based on an evaluation of similar industry peers with similar factors such as emergence, new capital structure and current rates for oil and gas companies. Pipeline Financing Liabilities The fair value of the pipeline financing liabilities was measured as the present value of the remaining payments under the restructured pipeline agreements (see Note 6, Long-Term Debt – Pipeline Financing Transactions , for further discussion). Warrants The fair values of the warrants issued upon the Emergence Date were estimated by applying a Black-Scholes-Merton model. The Black-Scholes-Merton model is a pricing model used to estimate the fair value of a European-style call or put option/warrant based on a current stock price, strike price, time to maturity, risk-free rate, annual volatility rate, and annual dividend yield. The model used the following assumptions: implied stock price (total equity divided by total shares outstanding) of the Successor’s shares of common stock of $ 22.14 ; initial strike price per share of $ 32.59 and $ 35.41 for series A and B warrants, respectively; expected volatility of 49.3% and 53.6% for series A and B warrants, respectively; risk-free interest rates of 0.3% and 0.2% for series A and B warrants, respectively, using the United States Treasury Constant Maturity rates; and an expected annual dividend yield of 0% . Expected volatility was estimated using volatilities of similar entities whose share or option prices and assumptions were publicly available. The time to maturity of the warrants was based on the contractual terms of the warrants of five and three years for series A and series B warrants, respectively. The values were also adjusted for potential dilution impacts. Condensed Consolidated Balance Sheet The following illustrates the effects on the Company’s consolidated balance sheet due to the reorganization and fresh start accounting adjustments. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities, and warrants. As of September 18, 2020 In thousands Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Assets Current assets Cash and cash equivalents $ 73,372 $ (27,787 ) (1) $ — $ 45,585 Restricted cash — 10,662 (2) — 10,662 Accrued production receivable 112,832 — — 112,832 Trade and other receivables, net 36,221 — — 36,221 Derivative assets 32,635 — — 32,635 Other current assets 12,968 (539 ) (3) — 12,429 Total current assets 268,028 (17,664 ) — 250,364 Property and equipment Oil and natural gas properties (using full cost accounting) Proved properties 11,723,546 — (10,941,313 ) 782,233 Unevaluated properties 650,553 — (538,570 ) 111,983 CO 2 properties 1,198,515 — (1,011,169 ) 187,346 Pipelines 2,339,864 — (2,207,246 ) 132,618 Other property and equipment 201,565 — (104,152 ) 97,413 Less accumulated depletion, depreciation, amortization and impairment (12,864,141 ) — 12,864,141 — Net property and equipment 3,249,902 — (1,938,309 ) (10) 1,311,593 Operating lease right-of-use assets 1,774 — 69 (10) 1,843 Derivative assets 501 — — 501 Intangible assets, net 20,405 — 79,678 (11) 100,083 Other assets 81,809 8,241 (4) (3,027 ) (12) 87,023 Total assets $ 3,622,419 $ (9,423 ) $ (1,861,589 ) $ 1,751,407 As of September 18, 2020 In thousands Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Liabilities and Stockholders’ Equity Current liabilities Accounts payable and accrued liabilities $ 67,789 $ 102,793 (5) $ 3,738 (13) $ 174,320 Oil and gas production payable 39,372 16,705 (6) — 56,077 Derivative liabilities 8,613 — — 8,613 Current maturities of long-term debt — 73,199 (6) 364 (14) 73,563 Operating lease liabilities — 757 (6) (29 ) (10) 728 Total current liabilities 115,774 193,454 4,073 313,301 Long-term liabilities Long-term debt, net of current portion 140,000 42,610 (6) (25,151 ) (14) 157,459 Asset retirement obligations 2,727 180,408 (6) (24,697 ) (10) 158,438 Derivative liabilities 295 — — 295 Deferred tax liabilities, net — 417,951 (6)(15) (414,120 ) (15) 3,831 Operating lease liabilities — 515 (6) 10 (10) 525 Other liabilities — 3,540 (6) 18,599 (16) 22,139 Total long-term liabilities not subject to compromise 143,022 645,024 (445,359 ) 342,687 Liabilities subject to compromise 2,823,506 (2,823,506 ) (6) — — Commitments and contingencies (Note 12) Stockholders’ equity Predecessor preferred stock — — — — Predecessor common stock 510 (510 ) (7) — — Predecessor paid-in capital in excess of par 2,764,915 (2,764,915 ) (7) — — Predecessor treasury stock, at cost (6,202 ) 6,202 (7) — — Successor preferred stock — — — — Successor common stock — 50 (8) — 50 Successor paid-in-capital in excess of par — 1,095,369 (8) — 1,095,369 Accumulated deficit (2,219,106 ) 3,639,409 (9) (1,420,303 ) (17) — Total stockholders ’ equity 540,117 1,975,605 (1,420,303 ) 1,095,419 Total liabilities and stockholders’ equity $ 3,622,419 $ (9,423 ) $ (1,861,589 ) $ 1,751,407 Reorganization Adjustments (1) Represents the net cash payments that occurred on the Emergence Date as follows: In thousands Sources: Cash proceeds from Successor Bank Credit Agreement $ 140,000 140,000 Uses: Payment in full of DIP Facility and pre-petition revolving bank credit facility (140,000 ) Retained professional service provider fees paid to escrow account (10,662 ) Non-retained professional service provider fees paid (7,420 ) Accrued interest and fees on DIP Facility (1,464 ) Debt issuance costs related to Successor Bank Credit Agreement (8,241 ) (167,787 ) Net uses $ (27,787 ) (2) Represents the transfer of funds to a restricted cash account utilized for the payment of fees to retained professional service providers assisting in the bankruptcy process. (3) Represents the write-off of costs related to the DIP Facility and a run-off policy for directors and officers’ insurance coverage, partially offset by the recording of prepaid amounts for non-retained professional service provider fees. (4) Represents debt issuance costs related to the Successor Bank Credit Agreement. (5) Adjustments to accounts payable and accrued liabilities as follows: In thousands Accrual of professional service provider fees $ 2,826 Payment of accrued interest and fees on DIP Facility (1,464 ) Reinstatement of accounts payable and accrued liabilities from liabilities subject to compromise 101,431 Accounts payable and accrued liabilities $ 102,793 (6) Liabilities subject to compromise were settled as follows in accordance with the Plan: In thousands Liabilities subject to compromise prior to the Emergence Date: Settled liabilities subject to compromise Senior secured second lien notes $ 1,629,417 Convertible senior notes 234,055 Senior subordinated notes 251,480 Total settled liabilities subject to compromise 2,114,952 Reinstated liabilities subject to compromise Current maturities of long-term debt 73,199 Accounts payable and accrued liabilities 101,431 Oil and gas production payable 16,705 Operating lease liabilities, current 757 Long-term debt, net of current portion 42,610 Asset retirement obligations 180,408 Deferred tax liabilities 289,389 Operating lease liabilities, long-term 515 Other long-term liabilities 3,540 Total reinstated liabilities subject to compromise 708,554 Total liabilities subject to compromise 2,823,506 Issuance of New Common Stock to second lien note holders (1,014,608 ) Issuance of New Common Stock to convertible note holders (53,400 ) Issuance of series A warrants to convertible note holders (15,683 ) Issuance of series B warrants to senior subordinated note holders (6,398 ) Reinstatement of liabilities subject to compromise (708,553 ) Gain on settlement of liabilities subject to compromise $ 1,024,864 (7) Represents the cancellation of the Predecessor’s common stock, treasury stock, and related components of the Predecessor’s paid-in capital in excess of par. Paid-in capital in excess of par includes $4.6 million as a result of terminated Predecessor stock compensation plans. (8) Represents the Successor’s common stock and additional paid-in capital as follows: In thousands Capital in excess of par value of 47,499,999 issued and outstanding shares of New Common Stock issued to holders of the senior secured second lien note claims $ 1,014,608 Capital in excess of par value of 2,500,000 issued and outstanding shares of New Common Stock issued to holders of the convertible senior note claims 53,400 Fair value of series A warrants issued to convertible senior note holders 15,683 Fair value of series B warrants issued to senior subordinated note holders 6,398 Fair value of series B warrants issued to Predecessor equity holders 5,330 Total change in Successor common stock and additional paid-in-capital 1,095,419 Less: Par value of Successor common stock (50 ) Change in Successor additional paid-in-capital $ 1,095,369 (9) Reflects the cumulative net impact of the effects on accumulated deficit as follows: In thousands Cancellation of Predecessor common stock, paid-in capital in excess of par, and treasury stock $ 2,763,824 Gain on settlement of liabilities subject to compromise 1,024,864 Acceleration of Predecessor stock compensation expense (4,601 ) Recognition of tax expenses related to reorganization adjustments (128,556 ) Professional service provider fees recognized at emergence (9,700 ) Issuance of series B warrants to Predecessor equity holders (5,330 ) Other (1,092 ) Net impact to Predecessor accumulated deficit $ 3,639,409 Fresh Start Adjustments (10) Reflects fair value adjustments to our (i) oil and natural gas properties, CO 2 properties, pipelines, and other property and equipment, as well as the elimination of accumulated depletion, depreciation, and amortization, (ii) operating lease right-of-use assets and liabilities, and (iii) asset retirement obligations. (11) Reflects fair value adjustments to our long-term CO 2 customer contracts. (12) Reflects fair value adjustments to our other assets as follows: In thousands Fair value adjustment for CO 2 and oil pipeline line-fill $ (3,698 ) Fair value adjustments for escrow accounts 671 Fair value adjustments to other assets $ (3,027 ) (13) Reflects fair value adjustments to accounts payable and accrued liabilities as follows: In thousands Fair value adjustment for the current portion of an unfavorable vendor contract $ 3,500 Fair value adjustment for the current portion of Predecessor asset retirement obligation 689 Write-off accrued interest on NEJD pipeline financing (451 ) Fair value adjustments to accounts payable and accrued liabilities $ 3,738 (14) Represents adjustments to current and long-term maturities of debt associated with pipeline lease financings. The cumulative effect is as follows: In thousands Fair value adjustment for Free State pipeline lease financing $ (24,699 ) Fair value adjustment for NEJD pipeline lease financing (88 ) Fair value adjustments to current and long-term maturities of debt $ (24,787 ) Our pipeline lease financings were restructured in late October 2020 (see Note 6 , Long-Term Debt – Pipeline Financing Transactions ). (15) Represents (i) adjustment to deferred taxes, including the recognition of tax expenses related to reorganization adjustments as a result of the cancellation of debt and retaining tax attributes for the Successor and the reinstatement of deferred tax liabilities subject to compromise totaling $128.6 million and (ii) adjustments to deferred tax liabilities related to fresh start accounting of $414.1 million . (16) Represents a fair value adjustment for the long-term portion of an unfavorable vendor contract. (17) Represents the cumulative effect of the fresh start accounting adjustments discussed above. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 3. Leases We evaluate contracts for leasing arrangements at inception. We lease office space, equipment, and vehicles that have non-cancelable lease terms. Leases with a term of 12 months or less are not recorded on our balance sheet. As part of the Chapter 11 Restructuring, the Predecessor elected to terminate some of its operating leases, primarily related to office space. Lease costs for operating leases or leases with a term of 12 months or less are recognized on a straight-line basis over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset are recognized separately, with the depreciable life reflective of the expected lease term. The Predecessor previously subleased part of the office space included in its operating leases for which it received rental payments. Since those office space leases were terminated during the Chapter 11 Restructuring, the underlying sublease agreements were also terminated as of September 30, 2020. The following tables summarize the components of lease costs and sublease income: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Income Statement Presentation Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Operating lease cost General and administrative expenses $ 8 $ 1,715 $ 1,187 Lease operating expenses 19 121 — CO 2 operating and discovery expenses 2 11 — $ 29 $ 1,847 $ 1,187 Finance lease cost Amortization of right-of-use assets Depletion, depreciation, and amortization $ 1 $ 5 $ 54 Interest on lease liabilities Interest expense — 2 2 Total finance lease cost $ 1 $ 7 $ 56 Sublease income General and administrative expenses $ 100 $ 790 $ 964 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Income Statement Presentation Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Operating lease cost General and administrative expenses $ 8 $ 5,683 $ 6,014 Lease operating expenses 19 214 — CO 2 operating and discovery expenses 2 37 — $ 29 $ 5,934 $ 6,014 Finance lease cost Amortization of right-of-use assets Depletion, depreciation, and amortization $ 1 $ 9 $ 1,188 Interest on lease liabilities Interest expense — 3 40 Total finance lease cost $ 1 $ 12 $ 1,228 Sublease income General and administrative expenses $ 100 $ 2,584 $ 3,331 |
Predecessor Divestiture
Predecessor Divestiture | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Divestiture | Note 4. Predecessor Divestiture On March 4, 2020, the Predecessor closed a farm-down transaction for the sale of half of its working interest positions in four southeast Texas oil fields for $40 million net cash and a carried interest in ten wells to be drilled by the purchaser. The Predecessor did not record a gain or loss on the sale of the properties in accordance with the full cost method of accounting. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 5. Revenue Recognition We record revenue in accordance with FASC Topic 606, Revenue from Contracts with Customers . The core principle of FASC Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount of consideration that it expects to be entitled to receive for those goods or services. Once we have delivered the volume of commodity to the delivery point and the customer takes delivery and possession, we are entitled to payment and we invoice the customer for such delivered production. Payment under most oil and CO 2 contracts is made within a month following product delivery and for natural gas and NGL contracts is generally made within two months following delivery. Timing of revenue recognition may differ from the timing of invoicing to customers; however, as the right to consideration after delivery is unconditional based on only the passage of time before payment of the consideration is due, upon delivery we record a receivable in “Accrued production receivable” in our Unaudited Condensed Consolidated Balance Sheets, which was $74.3 million and $139.4 million as of September 30, 2020 (Successor) and December 31, 2019 (Predecessor), respectively. From time to time, the Company enters into marketing arrangements for the purchase and sale of crude oil for third parties in the Gulf Coast region. Revenues and expenses from these transactions are presented on a gross basis, as we act as a principal in the transaction by assuming control of the commodities purchased and the responsibility to deliver the commodities sold. Revenue is recognized when control transfers to the purchaser at the delivery point based on the price received from the purchaser. Disaggregation of Revenue The following tables summarize our revenues by product type: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Oil sales $ 22,311 $ 152,136 $ 292,100 Natural gas sales 10 954 1,092 CO 2 sales and transportation fees 967 6,517 8,976 Oil marketing sales 151 3,332 5,468 Total revenues $ 23,439 $ 162,939 $ 307,636 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Oil sales $ 22,311 $ 489,251 $ 912,636 Natural gas sales 10 2,850 5,554 CO 2 sales and transportation fees 967 21,049 25,532 Oil marketing sales 151 8,543 8,274 Total revenues $ 23,439 $ 521,693 $ 951,996 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 6. Long-Term Debt The table below reflects long-term debt outstanding as of the dates indicated: Successor Predecessor In thousands Sept. 30, 2020 Dec. 31, 2019 Successor Senior Secured Bank Credit Agreement $ 85,000 $ — Predecessor Senior Secured Bank Credit Agreement — — 9% Senior Secured Second Lien Notes due 2021 — 614,919 9¼% Senior Secured Second Lien Notes due 2022 — 455,668 7¾% Senior Secured Second Lien Notes due 2024 — 531,821 7½% Senior Secured Second Lien Notes due 2024 — 20,641 6⅜% Convertible Senior Notes due 2024 — 245,548 6⅜% Senior Subordinated Notes due 2021 — 51,304 5½% Senior Subordinated Notes due 2022 — 58,426 4⅝% Senior Subordinated Notes due 2023 — 135,960 Pipeline financings 90,815 167,439 Capital lease obligations 152 — Total debt principal balance 175,967 2,281,726 Debt discount — (101,767 ) Future interest payable — 164,914 Debt issuance costs — (10,009 ) Total debt, net of debt issuance costs and discount 175,967 2,334,864 Less: current maturities of long-term debt (73,511 ) (102,294 ) Long-term debt $ 102,456 $ 2,232,570 The ultimate parent company in our corporate structure, Denbury Inc., is the sole issuer of all our outstanding obligations under our Successor Bank Credit Agreement. Denbury Inc. has no independent assets or operations. Each of the subsidiary guarantors of such obligations is 100% owned, directly or indirectly, by Denbury Inc., and the guarantees of such obligations are full and unconditional and joint and several. Prior to our emergence from bankruptcy, our debt consisted of the Predecessor’s Bank Credit Agreement, senior secured second lien notes, convertible senior notes, senior subordinated notes, pipeline financings, and capital lease obligations. On the Emergence Date, pursuant to the terms of the Plan, all outstanding obligations under the senior secured second lien notes, convertible senior notes, and senior subordinated notes were fully extinguished, relieving approximately $ 2.1 billion of debt by issuing equity and/or warrants in the Successor to the holders of that debt. See Note 1 , Basis of Presentation – Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code , for additional information. Successor Senior Secured Bank Credit Agreement In connection with our emergence from Chapter 11 proceedings on September 18, 2020, we entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders party thereto (the “Successor Bank Credit Agreement”). The Successor Bank Credit Agreement is a senior secured revolving credit facility with an initial borrowing base and lender commitments of $ 575 million . Additionally, under the Successor Bank Credit Agreement, letters of credit are available in an aggregate amount not to exceed $ 100 million , and short-term swingline loans are available in an aggregate amount not to exceed $ 25 million , each subject to the available commitments under the Successor Bank Credit Agreement. Availability under the Successor Bank Credit Agreement is subject to a borrowing base, which is redetermined semiannually on or around May 1 and November 1 of each year, with our next scheduled redetermination around May 1, 2021. The borrowing base is adjusted at the lenders’ discretion and is based, in part, upon external factors over which we have no control. The borrowing base is subject to a reduction by twenty-five percent ( 25% ) of the principal amount of any unsecured or subordinated debt issued or incurred. The borrowing base may also be reduced if we sell borrowing base properties and/or cancel commodity derivative positions with an aggregate value in excess of 5% of the then-effective borrowing base between redeterminations. If our outstanding debt under the Successor Bank Credit Agreement exceeds the then-effective borrowing base, we would be required to repay the excess amount over a period not to exceed six months. The Successor Bank Credit Agreement matures on January 30, 2024. The Successor Bank Credit Agreement prohibits us from paying dividends on our common stock through September 17, 2021. Commencing on September 18, 2021, we may pay dividends on our common stock or make other restricted payments in an amount not to exceed “Distributable Free Cash Flow”, but only if (1) no event of default or borrowing base deficiency exists; (2) our total leverage ratio is 2 to 1 or lower; and (3) availability under the Successor Bank Credit Agreement is at least 20% . The Successor Bank Credit Agreement also limits our ability to, among other things, incur and repay other indebtedness; grant liens; engage in certain mergers, consolidations, liquidations and dissolutions; engage in sales of assets; make acquisitions and investments; make other restricted payments (including redeeming, repurchasing or retiring our common stock); and enter into commodity derivative agreements, in each case subject to customary exceptions. The Successor Bank Credit Agreement is secured by (1) our proved oil and natural gas properties, which are held through our restricted subsidiaries; (2) the pledge of equity interests of such subsidiaries; (3) a pledge of our commodity derivative agreements; (4) a pledge of deposit accounts, securities accounts and commodity accounts of Denbury Inc. and such subsidiaries (as applicable); and (5) a security interest in substantially all other collateral that may be perfected by a Uniform Commercial Code filing, subject to certain exceptions. The Successor Bank Credit Agreement contains certain financial performance covenants, commencing with the fiscal quarter ending December 31, 2020 through the maturity of the facility, including the following: • A Consolidated Total Debt to Consolidated EBITDAX covenant, with such ratio not to exceed 3.5 times; and • A requirement to maintain a current ratio (i.e., Consolidated Current Assets to Consolidated Current Liabilities) of 1.0 times. For purposes of computing the current ratio per the Successor Bank Credit Agreement, Consolidated Current Assets exclude the current portion of derivative assets but include available borrowing capacity under that agreement, and Consolidated Current Liabilities exclude the current portion of derivative liabilities as well as the current portions of long-term indebtedness outstanding. Loans under the Successor Bank Credit Agreement are subject to varying rates of interest based on either (1) for ABR Loans, a base rate determined under the Successor Bank Credit Agreement (the “ABR”) plus an applicable margin ranging from 2.00% to 3.00% per annum, or (2) for LIBOR Loans, the LIBOR rate (subject to a 1% floor) plus an applicable margin ranging from 3.00% to 4.00% per annum (capitalized terms as defined in the Successor Bank Credit Agreement). The weighted average interest rate on borrowings outstanding as of September 30, 2020 under the Successor Bank Credit Agreement was 4.0% . The undrawn portion of the aggregate lender commitments under the Successor Bank Credit Agreement is subject to a commitment fee of 0.5% per annum. The above description of our Successor Bank Credit Agreement and defined terms are contained in the Successor Bank Credit Agreement. Pipeline Financing Transactions On August 7, 2020, Genesis Energy, L.P. (“Genesis”) as the beneficiary of the $ 41.3 million letter of credit issued as “financial assurances” under the NEJD pipeline lease financing drew the full amount of such letter of credit in accordance with its terms as a result of the Predecessor’s Chapter 11 Restructuring, which resulted in a corresponding reduction to the principal balance outstanding. In late October 2020, we restructured our CO 2 pipeline financing arrangements with Genesis, whereby (1) Denbury reacquired the NEJD pipeline system from Genesis in exchange for $ 70 million to be paid in four equal payments during 2021, representing full settlement of all remaining obligations under the NEJD secured financing lease; and (2) Denbury reacquired the Free State Pipeline from Genesis in exchange for a one-time payment of $ 22.5 million on October 30, 2020. Predecessor Senior Secured Bank Credit Facility From December 2014 through September 18, 2020, the Company maintained a senior secured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders party thereto (the “Predecessor Bank Credit Agreement”). All but a minor portion of the Predecessor Bank Credit Agreement was refinanced through the DIP Facility from August 4, 2020 through September 18, 2020, which was in turn refinanced by the Successor Bank Credit Agreement upon emergence from the Chapter 11 Restructuring. Second Quarter 2020 Conversion of 6⅜% Convertible Senior Notes due 2024 During the second quarter of 2020, holders of $ 19.9 million aggregate principal amount outstanding of the Predecessor’s 6⅜% Convertible Senior Notes due 2024 converted their notes into shares of the Predecessor’s common stock, at the rates specified in the indenture for the notes, resulting in the issuance of 7.4 million shares of Predecessor common stock upon conversion. The debt principal balance net of debt discounts totaling $13.9 million , was reclassified to “Paid-in capital in excess of par” and “Common stock” in the Unaudited Condensed Consolidated Balance Sheets of the Predecessor upon the conversion of the notes into shares of Predecessor common stock. First Quarter 2020 Repurchases of Senior Secured Notes During March 2020, the Predecessor repurchased a total of $ 30.2 million aggregate principal amount of its 9% Senior Secured Second Lien Notes due 2021 in open-market transactions for a total purchase price of $ 14.2 million , excluding accrued interest. In connection with these transactions, the Predecessor recognized a $ 19.0 million gain on debt extinguishment, net of unamortized debt issuance costs and future interest payable written off. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7. Income Taxes On March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide certain taxpayer relief as a result of the COVID-19 pandemic. The CARES Act included several favorable provisions that impacted income taxes, primarily the modified rules on the deductibility of business interest expense for 2019 and 2020, a five-year carryback period for net operating losses generated after 2017 and before 2021, and the acceleration of refundable alternative minimum tax credits. We evaluate our estimated annual effective income tax rate based on current and forecasted business results and enacted tax laws on a quarterly basis and apply this tax rate to our ordinary income or loss to calculate our estimated tax liability or benefit. Our income taxes are based on an estimated statutory rate of approximately 25% in 2020 and 2019. Our effective tax rate for the Predecessor period ended September 18, 2020 differed from our estimated statutory rate, primarily due to the numerous tax impacts related to the emergence from the Chapter 11 Restructuring, including the reduction of tax attributes from the exclusion of cancellation of debt income according to Section 108 of the U.S. Internal Revenue Code, and the establishment of a valuation allowance of our federal and state deferred tax assets existing after fresh start accounting. For the Successor period ended September 30, 2020, our effective tax rate differed from our estimated statutory rate as a result of a valuation allowance applied to our federal and state deferred tax assets. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 8. Stockholders' Equity Registration Rights Agreement On the Emergence Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with former beneficial holders of the second lien notes of the Predecessor who entered into the RSA dated July 28, 2020, and that together with their affiliates received 4% or more of New Common Stock (including as a result of exercise of series A warrants of the Successor) pursuant to the Plan, or their affiliates. Under the Registration Rights Agreement, Securityholders have customary demand and piggyback registration rights, subject to the limitations set forth in the Registration Rights Agreement. As part of the offering registration rights, Securityholders have the right to demand the Company to effectuate the distribution of any or all of its Registrable Securities (as defined in the Registration Rights Agreement) by means of an underwritten offering pursuant to an effective registration statement; provided, however, that the expected aggregate offering price is equal to or greater than $ 25.0 million or includes at least 20% of the then-outstanding Registrable Securities. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in an offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. The Company will generally pay all registration expenses in connection with its obligations under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. The registration rights granted in the Registration Rights Agreement are subject to customary indemnification and contribution provisions, as well as customary restrictions such as blackout periods and, if an underwritten offering is contemplated, limitations on the number of shares to be included in the underwritten offering that may be imposed by the managing underwriter. |
Stock Compensation
Stock Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Compensation | Note 9. Stock Compensation 2020 Compensation Adjustments In response to the then ongoing significant economic and market uncertainty affecting the oil and gas industry, in June 2020 the Predecessor and its Board of Directors (the “Predecessor Board”) and Compensation Committee (the “Predecessor Compensation Committee”) conducted a comprehensive review of compensation programs across the organization. As a result of this review, the Predecessor Board and Predecessor Compensation Committee determined that its historic compensation structure and performance metrics would not be effective in motivating and incentivizing its workforce in the current environment. With the advice of its independent compensation consultant and its legal advisors, e ffective June 3, 2020, the Predecessor and the Predecessor Board implemented a revised compensation structure for all of the Predecessor’s employees (including its named executive officers) and non-employee directors. In connection with the revised compensation structure, the Company’s CEO voluntarily reduced his 2020 base annual salary by 20% , and the Company’s CEO and CFO voluntarily reduced 2020 targeted variable compensation by 35% and 20% , respectively. In addition, the Predecessor Chairman of the Board reduced his 2020 chairman retainer by 20% . Under part of the revised compensation structure, which applies to a group of 21 of the Company’s executives (including our named executive officers) and senior managers, all outstanding equity awards and 2020 targeted variable cash-based compensation for those individuals were canceled and replaced with a cash retention incentive. In total, $15.2 million in cash retention incentives were prepaid to those employees in June 2020, with an obligation to repay up to 100% of the compensation (on an after-tax basis) if specified conditions are not satisfied. The Predecessor’s named executive officers’ cash retention incentive will be earned 50% based on their continued employment for a period of up to 12 months, and 50% based on achieving certain specified incentive metrics. In accordance with FASC Topic 718, Compensation – Stock Compensation , we accounted for the transaction involving equity compensation as an award modification and reclassified the awards from equity to liability awards. As a result of the modification of the awards, unrecognized compensation at the time of modification was determined to be $18.7 million ($ 4.1 million of incremental compensation expense, of which $3.4 million was expensed during the second quarter of 2020 and $ 0.7 million was expensed during the Predecessor period from July 1, 2020 through September 18, 2020), which was higher than the $15.2 million cash payment, and was calculated as the greater of (i) grant date fair value of the previously-outstanding awards plus incremental compensation (defined as cash paid related to the cash retention incentive in excess of the modification date fair value of the previously-existing awards) or (ii) cash paid for the cash retention incentive for each award. The value was recognized as total compensation expense for each award over the service period. We recognized $11.5 million of the $18.7 million as compensation expense in “General and administrative expenses” in our Unaudited Condensed Consolidated Statements of Operations during the second quarter of 2020, and the remaining $7.2 million during the Predecessor period from July 1, 2020 through September 18, 2020. The accounting for the Predecessor’s remaining share-based compensation awards continued throughout the period covered by the Chapter 11 Restructuring, and upon cancellation of the awards, an additional $ 4.6 million of compensation expense was recognized during the Predecessor period ended September 18, 2020. |
Commodity Derivative Contracts
Commodity Derivative Contracts | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Commodity Derivative Contracts | Note 10. Commodity Derivative Contracts We do not apply hedge accounting treatment to our oil and natural gas derivative contracts; therefore, the changes in the fair values of these instruments are recognized in income in the period of change. These fair value changes, along with the settlements of expired contracts, are shown under “ Commodity derivatives expense (income) ” in our Unaudited Condensed Consolidated Statements of Operations. Historically, we have entered into various oil and natural gas derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future oil and natural gas production and to provide more certainty to our future cash flows. We do not hold or issue derivative financial instruments for trading purposes. Generally, these contracts have consisted of various combinations of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. The production that we hedge has varied from year to year depending on our levels of debt, financial strength and expectation of future commodity prices. Under the terms of our Successor Bank Credit Agreement, at any point in time within the initial measurement period of August 1, 2020 through July 31, 2021, we are required to have hedges in place covering a minimum of 65% of our anticipated crude oil production and 35% of our anticipated crude oil production for the second measurement period of August 1, 2021 through July 31, 2022. We have until December 31, 2020 to enter into transactions for the initial measurement period to be in compliance. We manage and control market and counterparty credit risk through established internal control procedures that are reviewed on an ongoing basis. We attempt to minimize credit risk exposure to counterparties through formal credit policies, monitoring procedures and diversification, and all of our commodity derivative contracts are with parties that are lenders under our Successor Bank Credit Agreement (or affiliates of such lenders). As of September 30, 2020 , all of our outstanding derivative contracts were subject to enforceable master netting arrangements whereby payables on those contracts can be offset against receivables from separate derivative contracts with the same counterparty. It is our policy to classify derivative assets and liabilities on a gross basis on our balance sheets, even if the contracts are subject to enforceable master netting arrangements. The following table summarizes our commodity derivative contracts as of September 30, 2020 , none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic: Months Index Price Volume (Barrels per day) Contract Prices ($/Bbl) Range (1) Weighted Average Price Swap Sold Put Floor Ceiling Oil Contracts: 2020 Fixed-Price Swaps Oct – Dec NYMEX 13,500 $ 36.25 – 61.00 $ 40.52 $ — $ — $ — Oct – Dec Argus LLS 7,500 35.00 – 64.26 51.67 — — — 2020 Three-Way Collars (2) Oct – Dec NYMEX 9,500 $ 55.00 – 82.65 $ — $ 47.93 $ 57.00 $ 63.25 Oct – Dec Argus LLS 5,000 58.00 – 87.10 — 52.80 61.63 70.35 2021 Fixed-Price Swaps Jan – Dec NYMEX 8,000 $ 41.70 – 45.20 $ 43.41 $ — $ — $ — 2022 Fixed-Price Swaps Jan – June NYMEX 6,000 $ 42.90 – 45.50 $ 43.75 $ — $ — $ — (1) Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For three-way collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. (2) A three-way collar is a costless collar contract combined with a sold put feature (at a lower price) with the same counterparty. The value received for the sold put is used to enhance the contracted floor and ceiling price of the related collar. At the contract settlement date, (1) if the index price is higher than the ceiling price, we pay the counterparty the difference between the index price and ceiling price for the contracted volumes, (2) if the index price is between the floor and ceiling price, no settlements occur, (3) if the index price is lower than the floor price but at or above the sold put price, the counterparty pays us the difference between the index price and the floor price for the contracted volumes and (4) if oil prices average less than the sold put price, our receipts on settlement would be limited to the difference between the floor price and the sold put price for the contracted volumes. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 11. Fair Value Measurements The FASC Fair Value Measurement topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (often referred to as the “exit price”). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the income approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We are able to classify fair value balances based on the observability of those inputs. The FASC establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: • Level 1 – Quoted prices in active markets for identical assets or liabilities as of the reporting date. • Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded oil derivatives that are based on NYMEX and regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless collars and the sold put features of our three-way collars are valued using the Black-Scholes model, an industry standard option valuation model that takes into account inputs such as contractual prices for the underlying instruments, maturity, quoted forward prices for commodities, interest rates, volatility factors and credit worthiness, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. • Level 3 – Pricing inputs include significant inputs that are generally less observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. As of December 31, 2019, instruments in this category included non-exchange-traded three-way collars that were based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). The valuation models utilized for three-way collars were consistent with the methodologies described above; however, the implied volatilities utilized in the valuation of Level 3 instruments were developed using a benchmark, which was considered a significant unobservable input. We adjust the valuations from the valuation model for nonperformance risk, using our estimate of the counterparty’s credit quality for asset positions and our credit quality for liability positions. We use multiple sources of third-party credit data in determining counterparty nonperformance risk, including credit default swaps. The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of the periods indicated: Fair Value Measurements Using: In thousands Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total September 30, 2020 (Successor) Assets Oil derivative contracts – current $ — $ 26,778 $ — $ 26,778 Oil derivative contracts – long-term — 1,147 — 1,147 Total Assets $ — $ 27,925 $ — $ 27,925 Liabilities Oil derivative contracts – current $ — $ (5,739 ) $ — $ (5,739 ) Oil derivative contracts – long-term — (584 ) — (584 ) Total Liabilities $ — $ (6,323 ) $ — $ (6,323 ) December 31, 2019 (Predecessor) Assets Oil derivative contracts – current $ — $ 8,503 $ 3,433 $ 11,936 Total Assets $ — $ 8,503 $ 3,433 $ 11,936 Liabilities Oil derivative contracts – current $ — $ (6,522 ) $ (1,824 ) $ (8,346 ) Total Liabilities $ — $ (6,522 ) $ (1,824 ) $ (8,346 ) Since we do not apply hedge accounting for our commodity derivative contracts, any gains and losses on our assets and liabilities are included in “ Commodity derivatives expense (income) ” in the accompanying Unaudited Condensed Consolidated Statements of Operations. Level 3 Fair Value Measurements The following tables summarize the changes in the fair value of our Level 3 assets and liabilities: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Fair value of Level 3 instruments, beginning of period $ — $ — $ 6,073 Transfers out of Level 3 — — — Fair value gains on commodity derivatives — — 6,450 Receipts on settlements of commodity derivatives — — (1,323 ) Fair value of Level 3 instruments, end of period $ — $ — $ 11,200 The amount of total gains for the period included in earnings attributable to the change in unrealized gains relating to assets or liabilities still held at the reporting date $ — $ — $ 6,234 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Fair value of Level 3 instruments, beginning of period $ — $ 1,609 $ 13,624 Transfers out of Level 3 — (1,609 ) — Fair value gains on commodity derivatives — — 90 Receipts on settlements of commodity derivatives — — (2,514 ) Fair value of Level 3 instruments, end of period $ — $ — $ 11,200 The amount of total gains for the period included in earnings attributable to the change in unrealized gains relating to assets or liabilities still held at the reporting date $ — $ — $ 6,540 Instruments previously categorized as Level 3 included non-exchange-traded three-way collars that were based on regional pricing other than NYMEX, whereby the implied volatilities utilized were developed using a benchmark, which was considered a significant unobservable input. The transfers between Level 3 and Level 2 during the period generally relate to changes in the significant relevant observable and unobservable inputs that are available for the fair value measurements of such financial instruments. Other Fair Value Measurements The carrying value of our loans under our Successor Bank Credit Agreement approximate fair value, as they are subject to short-term floating interest rates that approximate the rates available to us for those periods. We use a market approach to determine the fair value of our fixed-rate long-term debt using observable market data. The fair values of the Predecessor’s senior secured second lien notes, convertible senior notes, and senior subordinated notes were based on quoted market prices, which are considered Level 1 measurements under the fair value hierarchy. The estimated fair value of the principal amount of our debt as of September 30, 2020 and December 31, 2019 , excluding pipeline financing obligations, was $85.0 million and $1,833.1 million , respectively, which decrease is primarily the result of the cancellation of $2.1 billion principal amount of debt as part of the Chapter 11 Restructuring. See Note 1 , Basis of Presentation – Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code , for additional information. We have other financial instruments consisting primarily of cash, cash equivalents, U.S. Treasury notes, short-term receivables and payables that approximate fair value due to the nature of the instrument and the relatively short maturities. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies Chapter 11 Proceedings On July 30, 2020, Denbury Resources Inc. and each of its wholly-owned subsidiaries filed for relief under Chapter 11 of the Bankruptcy Code. The chapter 11 cases were administered jointly under the caption “ In re Denbury Resources Inc., et al. , Case No. 20-33801”. On September 2, 2020, the Bankruptcy Court entered the Confirmation Order and on the Emergence Date, all of the conditions of the Plan were satisfied or waived and the Plan became effective and was implemented in accordance with its terms. On September 30, 2020, the Bankruptcy Court closed the chapter 11 cases of each of Denbury Inc.’s wholly-owned subsidiaries. The chapter 11 case captioned “ In re Denbury Resources Inc., et al. , Case No. 20-33801” will remain pending until the final resolution of all outstanding claims. Litigation We are involved in various lawsuits, claims and regulatory proceedings incidental to our businesses. We are also subject to audits for various taxes (income, sales and use, and severance) in the various states in which we operate, and from time to time receive assessments for potential taxes that we may owe. While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position, results of operations or cash flows, litigation is subject to inherent uncertainties. We accrue for losses from litigation and claims if we determine that a loss is probable and the amount can be reasonably estimated. Riley Ridge Helium Supply Contract Claim As part of our 2010 and 2011 acquisitions of the Riley Ridge Unit and associated gas processing facility that was under construction, the Company assumed a 20 -year helium supply contract under which we agreed to supply the helium separated from the full well stream by operation of the gas processing facility to a third-party purchaser, APMTG Helium, LLC (“APMTG”). The helium supply contract provides for the delivery of a minimum contracted quantity of helium, with liquidated damages payable if specified quantities of helium are not supplied in accordance with the terms of the contract. The liquidated damages are capped at an aggregate of $46.0 million over the term of the contract. As the gas processing facility has been shut-in since mid-2014 due to significant technical issues, we have not been able to supply helium under the helium supply contract. In a case filed in November 2014 in the Ninth Judicial District Court of Sublette County, Wyoming, APMTG claimed multiple years of liquidated damages for non-delivery of volumes of helium specified under the helium supply contract. The Company claimed that its contractual obligations were excused by virtue of events that fall within the force majeure provisions in the helium supply contract. On March 11, 2019, the trial court entered a final judgment that a force majeure condition did exist, but the Company’s performance was excused by the force majeure provisions of the contract for only a 35-day period in 2014, and as a result the Company should pay APMTG liquidated damages and interest thereon for those time periods from contract commencement to the close of evidence (November 29, 2017). The Company’s position continues to be that its contractual obligations have been and continue to be excused by events that fall within the force majeure provisions of the helium supply contract, so the Company has appealed the trial court’s ruling to the Wyoming Supreme Court. Oral arguments were heard by the Wyoming Supreme Court on August 13, 2020. We anticipate the Wyoming Supreme Court will enter its judgment on the appeal within the next few months; however, the outcome of the appeal is currently unpredictable. Absent reversal of the trial court’s ruling on appeal, the Company anticipates total liquidated damages would equal the $46.0 million aggregate cap under the helium supply contract plus $6.7 million of associated costs (through September 30, 2020 ), for a total of $52.7 million , included in “Accounts payable and accrued liabilities” in our Unaudited Condensed Consolidated Balance Sheets as of September 30, 2020 . The Company has a $32.8 million letter of credit posted as security in this case as part of the appeal process. |
Additional Balance Sheet Detail
Additional Balance Sheet Details | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Additional Balance Sheet Details | Note 13. Additional Balance Sheet Details Trade and Other Receivables, Net Successor Predecessor In thousands Sept. 30, 2020 Dec. 31, 2019 Trade accounts receivable, net $ 9,447 $ 12,630 Commodity derivative settlement receivables 7,606 675 Federal income tax receivable, net 1,600 2,987 Other receivables 16,135 2,026 Total $ 34,788 $ 18,318 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14. Subsequent Events Houston Area Land Sale On October 30, 2020, we completed the sale of a portion of certain non-producing surface acreage in the Houston area for approximately $11 million . Pipeline Financing Transactions In late October 2020, we restructured our CO 2 pipeline financing arrangements with Genesis, resulting in Denbury reacquiring the NEJD and Free State pipelines. See Note 6 , Long-Term Debt – Pipeline Financing Transactions , for further discussion. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations Denbury Inc. (“Denbury,” “Company” or the “Successor”), a Delaware corporation, is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. Our goal is to increase the value of our properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO 2 enhanced oil recovery operations. As further described in Emergence from Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code below, Denbury Inc. became the successor reporting company of Denbury Resources Inc. (the “Predecessor”) upon the Predecessor’s emergence from bankruptcy on September 18, 2020. References to “Successor” relate to the financial position and results of operations of the Company subsequent to September 18, 2020, and references to “Predecessor” relate to the financial position and results of operations of the Company prior to, and including, September 18, 2020. On September 18, 2020, Denbury filed the Third Restated Certificate of Incorporation with the Delaware Secretary of State to effect a change of the Company’s corporate name from Denbury Resources Inc. to Denbury Inc., and on September 21, 2020, the Successor’s new common stock commenced trading on the New York Stock Exchange under the ticker symbol DEN. |
Interim Financial Statements - Basis of Accounting, Policy | Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of Denbury Inc. and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and the notes thereto should be read in conjunction with the Predecessor’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury Inc. and its subsidiaries. |
Interim Financial Statements - Use of Estimates | Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, and the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of September 30, 2020 (Successor) and December 31, 2019 (Predecessor); our consolidated results of operations and consolidated statements of changes in stockholders’ equity for the periods September 19, 2020 through September 30, 2020 (Successor), for the period July 1, 2020 through September 18, 2020 (Predecessor) and January 1, 2020 through September 18, 2020 (Predecessor), and for the three and nine months ended September 30, 2019 (Predecessor); and our consolidated cash flows for the period September 19, 2020 through September 30, 2020 (Successor), for the period January 1, 2020 through September 18, 2020 (Predecessor) and for the nine months ended September 30, 2019 (Predecessor). Upon the adoption of fresh start accounting, the Company’s assets and liabilities were recorded at their fair values as of the fresh start reporting date (see Note 2 , Fresh Start Accounting ). As a result of the adoption of fresh start accounting, certain values and operational results of the Company’s condensed consolidated financial statements subsequent to September 18, 2020 are not comparable to those in its condensed consolidated financial statements prior to, and including September 18, 2020, and as such, “black-line” financial statements are presented to distinguish between the Predecessor and Successor companies. |
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows: Successor Predecessor In thousands Sept. 30, 2020 Dec. 31, 2019 Cash and cash equivalents $ 21,860 $ 516 Restricted cash, current 10,662 — Restricted cash included in other assets 38,888 32,529 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 71,410 $ 33,045 Restricted cash, current in the table above represents restricted escrow funds maintained by the Successor as required by certain contractual arrangements in accordance with the Plan. Other restricted cash amounts represent escrow accounts that are legally restricted for certain of our asset retirement obligations, and are included in “Other assets” in the accompanying Unaudited Condensed Consolidated Balance Sheets. |
Net Income (Loss) per Common Share | Net Income (Loss) per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is calculated in the same manner but includes the impact of potentially dilutive securities. Potentially dilutive securities have historically consisted of nonvested restricted stock, nonvested performance-based equity awards, warrants, and shares into which our convertible senior notes are convertible . The following tables set forth the reconciliations of net income (loss) and weighted average shares used for purposes of calculating the basic and diluted net income (loss) per common share for the periods indicated: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Numerator Net income (loss) – basic $ 2,758 $ (809,120 ) $ 72,862 Effect of potentially dilutive securities Interest on convertible senior notes including amortization of discount, net of tax — — 5,101 Net income (loss) – diluted $ 2,758 $ (809,120 ) $ 77,963 Denominator Weighted average common shares outstanding – basic 50,000 497,398 455,487 Effect of potentially dilutive securities Restricted stock and performance-based equity awards — — 865 Convertible senior notes (1) — — 90,853 Weighted average common shares outstanding – diluted 50,000 497,398 547,205 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Numerator Net income (loss) – basic $ 2,758 $ (1,432,578 ) $ 193,880 Effect of potentially dilutive securities Interest on convertible senior notes including amortization of discount, net of tax — — 5,649 Net income (loss) – diluted $ 2,758 $ (1,432,578 ) $ 199,529 Denominator Weighted average common shares outstanding – basic 50,000 495,560 453,287 Effect of potentially dilutive securities Restricted stock and performance-based equity awards — — 2,489 Convertible senior notes (1) — — 34,278 Weighted average common shares outstanding – diluted 50,000 495,560 490,054 (1) Shares shown under “convertible senior notes” represent the impact over the Predecessor periods of the approximately 90.9 million shares of the Predecessor’s common stock issuable upon full conversion of the convertible senior notes which were issued on June 19, 2019. Time-vesting restricted stock is included in basic weighted average common shares from the vesting date (although time-vesting restricted stock is issued and outstanding upon grant). For purposes of calculating diluted weighted average common shares for the three and nine months ended September 30, 2019 , the nonvested restricted stock and performance-based equity awards are included in the computation using the treasury stock method, with the deemed proceeds equal to the average unrecognized compensation during the period, and for the shares underlying the convertible senior notes as if the convertible senior notes were converted at the beginning of 2019 . The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income (loss) per share, as their effect would have been antidilutive: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Stock appreciation rights — — 2,011 Restricted stock and performance-based equity awards — 165 7,996 Convertible senior notes — 82,445 — Warrants (1) 5,526 — — |
Oil and Natural Gas Properties | Oil and Natural Gas Properties Unevaluated Costs. Under full cost accounting, we exclude certain unevaluated costs from the amortization base and full cost ceiling test pending the determination of whether proved reserves can be assigned to such properties. These costs are transferred to the full cost amortization base as these properties are developed, tested and evaluated. At least annually, we test these assets for impairment based on an evaluation of management’s expectations of future pricing, evaluation of lease expiration terms, and planned development activities. Given the significant declines in NYMEX oil prices in March and April 2020 due to the oil supply and demand imbalance precipitated by the dramatic fall in demand associated with the COVID-19 pandemic combined with the concurrent OPEC+ decision to increase oil supply, we reassessed our development plans and recognized an impairment of $244.9 million of our unevaluated costs during the three months ended March 31, 2020 (Predecessor), whereby these costs were transferred to the full cost amortization base. Upon emergence from bankruptcy, the Company adopted fresh start accounting which resulted in our oil and natural gas properties, including unevaluated properties, being recorded at their fair values at the Emergence Date (see Note 2 , Fresh Start Accounting , for additional information). Write-Down of Oil and Natural Gas Properties. The net capitalized costs of oil and natural gas properties are limited to the lower of unamortized cost or the cost center ceiling. The cost center ceiling is defined as (1) the present value of estimated future net revenues from proved oil and natural gas reserves before future abandonment costs (discounted at 10%), based on the average first-day-of-the-month oil and natural gas price for each month during a 12-month rolling period prior to the end of a particular reporting period; plus (2) the cost of properties not being amortized; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) related income tax effects. Our future net revenues from proved oil and natural gas reserves are not reduced for development costs related to the cost of drilling for and developing CO 2 reserves nor those related to the cost of constructing CO 2 pipelines, as we do not have to incur additional costs to develop the proved oil and natural gas reserves. Therefore, we include in the ceiling test, as a reduction of future net revenues, that portion of our capitalized CO 2 costs related to CO 2 reserves and CO 2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves. The fair value of our oil and natural gas derivative contracts is not included in the ceiling test, as we do not designate these contracts as hedge instruments for accounting purposes. The cost center ceiling test is prepared quarterly and was also prepared as of the Emergence Date. The Predecessor recognized full cost pool ceiling test write-downs of $261.7 million during the period from July 1, 2020 through September 18, 2020, $662.4 million during the three months ended June 30, 2020, and $72.5 million during the three months ended March 31, 2020. There was no full cost pool ceiling test write-down for the Successor period from September 19, 2020 through September 30, 2020. The first-day-of-the-month oil prices for the preceding 12 months, after adjustments for market differentials by field, averaged $40.08 per Bbl as of September 18, 2020, $44.74 per Bbl as of June 30, 2020, and $55.17 per Bbl as of March 31, 2020. In addition, the first-day-of-the-month natural gas prices for the preceding 12 months, after adjustments for market differentials by field, averaged $1.72 per MMBtu as of September 18, 2020, $1.91 per MMBtu as of June 30, 2020, and $1.68 per MMBtu as of March 31, 2020. |
Impairment Assessment of Long-Lived Assets | Impairment Assessment of Long-Lived Assets We test long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. These long-lived assets, which are not subject to our full cost pool ceiling test, are principally comprised of our capitalized CO 2 properties and pipelines. Given the significant declines in NYMEX oil prices to approximately $20 per Bbl in late March 2020 due to OPEC supply pressures and a reduction in worldwide oil demand amid the COVID-19 pandemic, we performed a long-lived asset impairment test for our two long-lived asset groups (Gulf Coast region and Rocky Mountain region) as of March 31, 2020 (Predecessor). We perform our long-lived asset impairment test by comparing the net carrying costs of our two long-lived asset groups to the respective expected future undiscounted net cash flows that are supported by these long-lived assets which include production of our probable and possible oil and natural gas reserves. The portion of our capitalized CO 2 costs related to CO 2 reserves and CO 2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves is included in the full cost pool ceiling test as a reduction to future net revenues. The remaining net capitalized costs that are not included in the full cost pool ceiling test, and related intangible assets, are subject to long-lived asset impairment testing. These costs totaled approximately $ 1.3 billion as of March 31, 2020 (Predecessor). If the undiscounted net cash flows are below the net carrying costs for an asset group, we must record an impairment loss by the amount, if any, that net carrying costs exceed the fair value of the long-lived asset group. The undiscounted net cash flows for our asset groups exceeded the net carrying costs; thus, step two of the impairment test was not required and no impairment was recorded. Significant assumptions impacting expected future undiscounted net cash flows include projections of future oil and natural gas prices, projections of estimated quantities of oil and natural gas reserves, projections of future rates of production, timing and amount of future development and operating costs, projected availability and cost of CO 2 , projected recovery factors of tertiary reserves and risk-adjustment factors applied to the cash flows. We performed a qualitative assessment as of June 30, 2020 and September 18, 2020 (Predecessor periods) and determined there were no material changes to our key cash flow assumptions and no triggering events since the analysis performed as of March 31, 2020; therefore, no impairment test was performed for the second quarter of 2020 or for the period ending September 18, 2020. Upon emergence from bankruptcy, the Company adopted fresh start accounting which resulted in our long-lived assets being recorded at their fair value at the Emergence Date (see Note 2 , Fresh Start Accounting , for additional information). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Financial Instruments – Credit Losses. In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, and requires the use of a new forward-looking expected loss model that will result in the earlier recognition of allowances for losses. Effective January 1, 2020, we adopted ASU 2016-13. The implementation of this standard did not have a material impact on our consolidated financial statements. Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”). ASU 2018-13 adds, modifies, or removes certain disclosure requirements for recurring and nonrecurring fair value measurements based on the FASB’s consideration of costs and benefits. Effective January 1, 2020, we adopted ASU 2018-13. The implementation of this standard did not have a material impact on our consolidated financial statements or footnote disclosures. Not Yet Adopted Income Taxes. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The objective of ASU 2019-12 is to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and to provide more consistent application to improve the comparability of financial statements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020, and early adoption is permitted. We are currently evaluating the impact this guidance may have on our consolidated financial statements and related footnote disclosures. |
Leases | We evaluate contracts for leasing arrangements at inception. We lease office space, equipment, and vehicles that have non-cancelable lease terms. Leases with a term of 12 months or less are not recorded on our balance sheet. Lease costs for operating leases or leases with a term of 12 months or less are recognized on a straight-line basis over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset are recognized separately, with the depreciable life reflective of the expected lease term. |
Revenue Recognition | We record revenue in accordance with FASC Topic 606, Revenue from Contracts with Customers . The core principle of FASC Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount of consideration that it expects to be entitled to receive for those goods or services. Once we have delivered the volume of commodity to the delivery point and the customer takes delivery and possession, we are entitled to payment and we invoice the customer for such delivered production. Payment under most oil and CO 2 contracts is made within a month following product delivery and for natural gas and NGL contracts is generally made within two months following delivery. Timing of revenue recognition may differ from the timing of invoicing to customers; however, as the right to consideration after delivery is unconditional based on only the passage of time before payment of the consideration is due, upon delivery we record a receivable in “Accrued production receivable” in our Unaudited Condensed Consolidated Balance Sheets, which was $74.3 million and $139.4 million as of September 30, 2020 (Successor) and December 31, 2019 (Predecessor), respectively. From time to time, the Company enters into marketing arrangements for the purchase and sale of crude oil for third parties in the Gulf Coast region. Revenues and expenses from these transactions are presented on a gross basis, as we act as a principal in the transaction by assuming control of the commodities purchased and the responsibility to deliver the commodities sold. Revenue is recognized when control transfers to the purchaser at the delivery point based on the price received from the purchaser. |
Income Taxes | We evaluate our estimated annual effective income tax rate based on current and forecasted business results and enacted tax laws on a quarterly basis and apply this tax rate to our ordinary income or loss to calculate our estimated tax liability or benefit. Our income taxes are based on an estimated statutory rate of approximately 25% |
Commodity Derivative Contracts | We do not apply hedge accounting treatment to our oil and natural gas derivative contracts; therefore, the changes in the fair values of these instruments are recognized in income in the period of change. These fair value changes, along with the settlements of expired contracts, are shown under “ Commodity derivatives expense (income) ” in our Unaudited Condensed Consolidated Statements of Operations. Historically, we have entered into various oil and natural gas derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future oil and natural gas production and to provide more certainty to our future cash flows. We do not hold or issue derivative financial instruments for trading purposes. Generally, these contracts have consisted of various combinations of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. The production that we hedge has varied from year to year depending on our levels of debt, financial strength and expectation of future commodity prices. Under the terms of our Successor Bank Credit Agreement, at any point in time within the initial measurement period of August 1, 2020 through July 31, 2021, we are required to have hedges in place covering a minimum of 65% of our anticipated crude oil production and 35% of our anticipated crude oil production for the second measurement period of August 1, 2021 through July 31, 2022. We have until December 31, 2020 to enter into transactions for the initial measurement period to be in compliance. We manage and control market and counterparty credit risk through established internal control procedures that are reviewed on an ongoing basis. We attempt to minimize credit risk exposure to counterparties through formal credit policies, monitoring procedures and diversification, and all of our commodity derivative contracts are with parties that are lenders under our Successor Bank Credit Agreement (or affiliates of such lenders). As of September 30, 2020 , all of our outstanding derivative contracts were subject to enforceable master netting arrangements whereby payables on those contracts can be offset against receivables from separate derivative contracts with the same counterparty. It is our policy to classify derivative assets and liabilities on a gross basis on our balance sheets, even if the contracts are subject to enforceable master netting arrangements. |
Fair Value Measurements | The FASC Fair Value Measurement topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (often referred to as the “exit price”). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the income approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We are able to classify fair value balances based on the observability of those inputs. The FASC establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: • Level 1 – Quoted prices in active markets for identical assets or liabilities as of the reporting date. • Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded oil derivatives that are based on NYMEX and regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless collars and the sold put features of our three-way collars are valued using the Black-Scholes model, an industry standard option valuation model that takes into account inputs such as contractual prices for the underlying instruments, maturity, quoted forward prices for commodities, interest rates, volatility factors and credit worthiness, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. • Level 3 – Pricing inputs include significant inputs that are generally less observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. As of December 31, 2019, instruments in this category included non-exchange-traded three-way collars that were based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). The valuation models utilized for three-way collars were consistent with the methodologies described above; however, the implied volatilities utilized in the valuation of Level 3 instruments were developed using a benchmark, which was considered a significant unobservable input. We adjust the valuations from the valuation model for nonperformance risk, using our estimate of the counterparty’s credit quality for asset positions and our credit quality for liability positions. We use multiple sources of third-party credit data in determining counterparty nonperformance risk, including credit default swaps. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of cash, cash equivalents, and restricted cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows: Successor Predecessor In thousands Sept. 30, 2020 Dec. 31, 2019 Cash and cash equivalents $ 21,860 $ 516 Restricted cash, current 10,662 — Restricted cash included in other assets 38,888 32,529 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 71,410 $ 33,045 |
Schedule of earnings per share, basic and diluted reconciliation | The following tables set forth the reconciliations of net income (loss) and weighted average shares used for purposes of calculating the basic and diluted net income (loss) per common share for the periods indicated: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Numerator Net income (loss) – basic $ 2,758 $ (809,120 ) $ 72,862 Effect of potentially dilutive securities Interest on convertible senior notes including amortization of discount, net of tax — — 5,101 Net income (loss) – diluted $ 2,758 $ (809,120 ) $ 77,963 Denominator Weighted average common shares outstanding – basic 50,000 497,398 455,487 Effect of potentially dilutive securities Restricted stock and performance-based equity awards — — 865 Convertible senior notes (1) — — 90,853 Weighted average common shares outstanding – diluted 50,000 497,398 547,205 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Numerator Net income (loss) – basic $ 2,758 $ (1,432,578 ) $ 193,880 Effect of potentially dilutive securities Interest on convertible senior notes including amortization of discount, net of tax — — 5,649 Net income (loss) – diluted $ 2,758 $ (1,432,578 ) $ 199,529 Denominator Weighted average common shares outstanding – basic 50,000 495,560 453,287 Effect of potentially dilutive securities Restricted stock and performance-based equity awards — — 2,489 Convertible senior notes (1) — — 34,278 Weighted average common shares outstanding – diluted 50,000 495,560 490,054 (1) Shares shown under “convertible senior notes” represent the impact over the Predecessor periods of the approximately 90.9 million shares of the Predecessor’s common stock issuable upon full conversion of the convertible senior notes which were issued on June 19, 2019. |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income (loss) per share, as their effect would have been antidilutive: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Stock appreciation rights — — 2,011 Restricted stock and performance-based equity awards — 165 7,996 Convertible senior notes — 82,445 — Warrants (1) 5,526 — — Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Stock appreciation rights — 1,007 2,043 Restricted stock and performance-based equity awards — 7,280 5,859 Convertible senior notes — 87,888 — Warrants (1) 5,526 — — |
Fresh Start Accounting (Tables)
Fresh Start Accounting (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Reconciliation of Reorganization Value [Table Text Block] | The following table reconciles the enterprise value to the equity value of the Successor as of the Emergence Date: In thousands Sept. 18, 2020 Enterprise value $ 1,280,856 Plus: Cash and cash equivalents 45,585 Less: Total debt (231,022 ) Equity value $ 1,095,419 The following table reconciles enterprise value to reorganization value of the Successor (i.e., value of the reconstituted entity) and total reorganization value: In thousands Sept. 18, 2020 Enterprise value $ 1,280,856 Plus: Cash and cash equivalents 45,585 Plus: Current liabilities excluding current maturities of long-term debt 239,738 Plus: Non-interest bearing noncurrent liabilities 185,228 Reorganization value of the reconstituted Successor $ 1,751,407 |
ScheduleOfReorganizationAdjustmentsTableTextBlock [Table Text Block] | The following table summarizes the losses (gains) on reorganization items, net: Predecessor Period from July 1, 2020 through In thousands Sept. 18, 2020 Gain on settlement of liabilities subject to compromise $ (1,024,864 ) Fresh start accounting adjustments 1,834,423 Professional service provider fees and other expenses 11,267 Success fees for professional service providers 9,700 Loss on rejected contracts and leases 10,989 Valuation adjustments to debt classified as subject to compromise 757 DIP credit agreement fees 3,107 Acceleration of Predecessor stock compensation expense 4,601 Total reorganization items, net $ 849,980 Payments of professional service provider fees and success fees of $ 12.7 million and fees of $ 3.1 million related to the Senior Secured Superpriority Debtor-in-Possession Credit Agreement (“DIP Facility”) were included in cash outflows from operating activities and financing activities, respectively, in our Unaudited Condensed Consolidated Statements of Cash Flows for the period January 1, 2020 through September 18, 2020. |
Schedule of Fresh-Start Adjustments [Table Text Block] | The following illustrates the effects on the Company’s consolidated balance sheet due to the reorganization and fresh start accounting adjustments. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities, and warrants. As of September 18, 2020 In thousands Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Assets Current assets Cash and cash equivalents $ 73,372 $ (27,787 ) (1) $ — $ 45,585 Restricted cash — 10,662 (2) — 10,662 Accrued production receivable 112,832 — — 112,832 Trade and other receivables, net 36,221 — — 36,221 Derivative assets 32,635 — — 32,635 Other current assets 12,968 (539 ) (3) — 12,429 Total current assets 268,028 (17,664 ) — 250,364 Property and equipment Oil and natural gas properties (using full cost accounting) Proved properties 11,723,546 — (10,941,313 ) 782,233 Unevaluated properties 650,553 — (538,570 ) 111,983 CO 2 properties 1,198,515 — (1,011,169 ) 187,346 Pipelines 2,339,864 — (2,207,246 ) 132,618 Other property and equipment 201,565 — (104,152 ) 97,413 Less accumulated depletion, depreciation, amortization and impairment (12,864,141 ) — 12,864,141 — Net property and equipment 3,249,902 — (1,938,309 ) (10) 1,311,593 Operating lease right-of-use assets 1,774 — 69 (10) 1,843 Derivative assets 501 — — 501 Intangible assets, net 20,405 — 79,678 (11) 100,083 Other assets 81,809 8,241 (4) (3,027 ) (12) 87,023 Total assets $ 3,622,419 $ (9,423 ) $ (1,861,589 ) $ 1,751,407 As of September 18, 2020 In thousands Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Liabilities and Stockholders’ Equity Current liabilities Accounts payable and accrued liabilities $ 67,789 $ 102,793 (5) $ 3,738 (13) $ 174,320 Oil and gas production payable 39,372 16,705 (6) — 56,077 Derivative liabilities 8,613 — — 8,613 Current maturities of long-term debt — 73,199 (6) 364 (14) 73,563 Operating lease liabilities — 757 (6) (29 ) (10) 728 Total current liabilities 115,774 193,454 4,073 313,301 Long-term liabilities Long-term debt, net of current portion 140,000 42,610 (6) (25,151 ) (14) 157,459 Asset retirement obligations 2,727 180,408 (6) (24,697 ) (10) 158,438 Derivative liabilities 295 — — 295 Deferred tax liabilities, net — 417,951 (6)(15) (414,120 ) (15) 3,831 Operating lease liabilities — 515 (6) 10 (10) 525 Other liabilities — 3,540 (6) 18,599 (16) 22,139 Total long-term liabilities not subject to compromise 143,022 645,024 (445,359 ) 342,687 Liabilities subject to compromise 2,823,506 (2,823,506 ) (6) — — Commitments and contingencies (Note 12) Stockholders’ equity Predecessor preferred stock — — — — Predecessor common stock 510 (510 ) (7) — — Predecessor paid-in capital in excess of par 2,764,915 (2,764,915 ) (7) — — Predecessor treasury stock, at cost (6,202 ) 6,202 (7) — — Successor preferred stock — — — — Successor common stock — 50 (8) — 50 Successor paid-in-capital in excess of par — 1,095,369 (8) — 1,095,369 Accumulated deficit (2,219,106 ) 3,639,409 (9) (1,420,303 ) (17) — Total stockholders ’ equity 540,117 1,975,605 (1,420,303 ) 1,095,419 Total liabilities and stockholders’ equity $ 3,622,419 $ (9,423 ) $ (1,861,589 ) $ 1,751,407 Reorganization Adjustments (1) Represents the net cash payments that occurred on the Emergence Date as follows: In thousands Sources: Cash proceeds from Successor Bank Credit Agreement $ 140,000 140,000 Uses: Payment in full of DIP Facility and pre-petition revolving bank credit facility (140,000 ) Retained professional service provider fees paid to escrow account (10,662 ) Non-retained professional service provider fees paid (7,420 ) Accrued interest and fees on DIP Facility (1,464 ) Debt issuance costs related to Successor Bank Credit Agreement (8,241 ) (167,787 ) Net uses $ (27,787 ) (2) Represents the transfer of funds to a restricted cash account utilized for the payment of fees to retained professional service providers assisting in the bankruptcy process. (3) Represents the write-off of costs related to the DIP Facility and a run-off policy for directors and officers’ insurance coverage, partially offset by the recording of prepaid amounts for non-retained professional service provider fees. (4) Represents debt issuance costs related to the Successor Bank Credit Agreement. (5) Adjustments to accounts payable and accrued liabilities as follows: In thousands Accrual of professional service provider fees $ 2,826 Payment of accrued interest and fees on DIP Facility (1,464 ) Reinstatement of accounts payable and accrued liabilities from liabilities subject to compromise 101,431 Accounts payable and accrued liabilities $ 102,793 (6) Liabilities subject to compromise were settled as follows in accordance with the Plan: In thousands Liabilities subject to compromise prior to the Emergence Date: Settled liabilities subject to compromise Senior secured second lien notes $ 1,629,417 Convertible senior notes 234,055 Senior subordinated notes 251,480 Total settled liabilities subject to compromise 2,114,952 Reinstated liabilities subject to compromise Current maturities of long-term debt 73,199 Accounts payable and accrued liabilities 101,431 Oil and gas production payable 16,705 Operating lease liabilities, current 757 Long-term debt, net of current portion 42,610 Asset retirement obligations 180,408 Deferred tax liabilities 289,389 Operating lease liabilities, long-term 515 Other long-term liabilities 3,540 Total reinstated liabilities subject to compromise 708,554 Total liabilities subject to compromise 2,823,506 Issuance of New Common Stock to second lien note holders (1,014,608 ) Issuance of New Common Stock to convertible note holders (53,400 ) Issuance of series A warrants to convertible note holders (15,683 ) Issuance of series B warrants to senior subordinated note holders (6,398 ) Reinstatement of liabilities subject to compromise (708,553 ) Gain on settlement of liabilities subject to compromise $ 1,024,864 (7) Represents the cancellation of the Predecessor’s common stock, treasury stock, and related components of the Predecessor’s paid-in capital in excess of par. Paid-in capital in excess of par includes $4.6 million as a result of terminated Predecessor stock compensation plans. (8) Represents the Successor’s common stock and additional paid-in capital as follows: In thousands Capital in excess of par value of 47,499,999 issued and outstanding shares of New Common Stock issued to holders of the senior secured second lien note claims $ 1,014,608 Capital in excess of par value of 2,500,000 issued and outstanding shares of New Common Stock issued to holders of the convertible senior note claims 53,400 Fair value of series A warrants issued to convertible senior note holders 15,683 Fair value of series B warrants issued to senior subordinated note holders 6,398 Fair value of series B warrants issued to Predecessor equity holders 5,330 Total change in Successor common stock and additional paid-in-capital 1,095,419 Less: Par value of Successor common stock (50 ) Change in Successor additional paid-in-capital $ 1,095,369 (9) Reflects the cumulative net impact of the effects on accumulated deficit as follows: In thousands Cancellation of Predecessor common stock, paid-in capital in excess of par, and treasury stock $ 2,763,824 Gain on settlement of liabilities subject to compromise 1,024,864 Acceleration of Predecessor stock compensation expense (4,601 ) Recognition of tax expenses related to reorganization adjustments (128,556 ) Professional service provider fees recognized at emergence (9,700 ) Issuance of series B warrants to Predecessor equity holders (5,330 ) Other (1,092 ) Net impact to Predecessor accumulated deficit $ 3,639,409 Fresh Start Adjustments (10) Reflects fair value adjustments to our (i) oil and natural gas properties, CO 2 properties, pipelines, and other property and equipment, as well as the elimination of accumulated depletion, depreciation, and amortization, (ii) operating lease right-of-use assets and liabilities, and (iii) asset retirement obligations. (11) Reflects fair value adjustments to our long-term CO 2 customer contracts. (12) Reflects fair value adjustments to our other assets as follows: In thousands Fair value adjustment for CO 2 and oil pipeline line-fill $ (3,698 ) Fair value adjustments for escrow accounts 671 Fair value adjustments to other assets $ (3,027 ) (13) Reflects fair value adjustments to accounts payable and accrued liabilities as follows: In thousands Fair value adjustment for the current portion of an unfavorable vendor contract $ 3,500 Fair value adjustment for the current portion of Predecessor asset retirement obligation 689 Write-off accrued interest on NEJD pipeline financing (451 ) Fair value adjustments to accounts payable and accrued liabilities $ 3,738 (14) Represents adjustments to current and long-term maturities of debt associated with pipeline lease financings. The cumulative effect is as follows: In thousands Fair value adjustment for Free State pipeline lease financing $ (24,699 ) Fair value adjustment for NEJD pipeline lease financing (88 ) Fair value adjustments to current and long-term maturities of debt $ (24,787 ) Our pipeline lease financings were restructured in late October 2020 (see Note 6 , Long-Term Debt – Pipeline Financing Transactions ). (15) Represents (i) adjustment to deferred taxes, including the recognition of tax expenses related to reorganization adjustments as a result of the cancellation of debt and retaining tax attributes for the Successor and the reinstatement of deferred tax liabilities subject to compromise totaling $128.6 million and (ii) adjustments to deferred tax liabilities related to fresh start accounting of $414.1 million . (16) Represents a fair value adjustment for the long-term portion of an unfavorable vendor contract. (17) Represents the cumulative effect of the fresh start accounting adjustments discussed above. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Lease Costs | The following tables summarize the components of lease costs and sublease income: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Income Statement Presentation Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Operating lease cost General and administrative expenses $ 8 $ 1,715 $ 1,187 Lease operating expenses 19 121 — CO 2 operating and discovery expenses 2 11 — $ 29 $ 1,847 $ 1,187 Finance lease cost Amortization of right-of-use assets Depletion, depreciation, and amortization $ 1 $ 5 $ 54 Interest on lease liabilities Interest expense — 2 2 Total finance lease cost $ 1 $ 7 $ 56 Sublease income General and administrative expenses $ 100 $ 790 $ 964 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Income Statement Presentation Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Operating lease cost General and administrative expenses $ 8 $ 5,683 $ 6,014 Lease operating expenses 19 214 — CO 2 operating and discovery expenses 2 37 — $ 29 $ 5,934 $ 6,014 Finance lease cost Amortization of right-of-use assets Depletion, depreciation, and amortization $ 1 $ 9 $ 1,188 Interest on lease liabilities Interest expense — 3 40 Total finance lease cost $ 1 $ 12 $ 1,228 Sublease income General and administrative expenses $ 100 $ 2,584 $ 3,331 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following tables summarize our revenues by product type: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Oil sales $ 22,311 $ 152,136 $ 292,100 Natural gas sales 10 954 1,092 CO 2 sales and transportation fees 967 6,517 8,976 Oil marketing sales 151 3,332 5,468 Total revenues $ 23,439 $ 162,939 $ 307,636 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Oil sales $ 22,311 $ 489,251 $ 912,636 Natural gas sales 10 2,850 5,554 CO 2 sales and transportation fees 967 21,049 25,532 Oil marketing sales 151 8,543 8,274 Total revenues $ 23,439 $ 521,693 $ 951,996 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Components of Long-Term Debt | The table below reflects long-term debt outstanding as of the dates indicated: Successor Predecessor In thousands Sept. 30, 2020 Dec. 31, 2019 Successor Senior Secured Bank Credit Agreement $ 85,000 $ — Predecessor Senior Secured Bank Credit Agreement — — 9% Senior Secured Second Lien Notes due 2021 — 614,919 9¼% Senior Secured Second Lien Notes due 2022 — 455,668 7¾% Senior Secured Second Lien Notes due 2024 — 531,821 7½% Senior Secured Second Lien Notes due 2024 — 20,641 6⅜% Convertible Senior Notes due 2024 — 245,548 6⅜% Senior Subordinated Notes due 2021 — 51,304 5½% Senior Subordinated Notes due 2022 — 58,426 4⅝% Senior Subordinated Notes due 2023 — 135,960 Pipeline financings 90,815 167,439 Capital lease obligations 152 — Total debt principal balance 175,967 2,281,726 Debt discount — (101,767 ) Future interest payable — 164,914 Debt issuance costs — (10,009 ) Total debt, net of debt issuance costs and discount 175,967 2,334,864 Less: current maturities of long-term debt (73,511 ) (102,294 ) Long-term debt $ 102,456 $ 2,232,570 |
Commodity Derivative Contracts
Commodity Derivative Contracts (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Commodity derivative contracts not classified as hedging instruments | The following table summarizes our commodity derivative contracts as of September 30, 2020 , none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic: Months Index Price Volume (Barrels per day) Contract Prices ($/Bbl) Range (1) Weighted Average Price Swap Sold Put Floor Ceiling Oil Contracts: 2020 Fixed-Price Swaps Oct – Dec NYMEX 13,500 $ 36.25 – 61.00 $ 40.52 $ — $ — $ — Oct – Dec Argus LLS 7,500 35.00 – 64.26 51.67 — — — 2020 Three-Way Collars (2) Oct – Dec NYMEX 9,500 $ 55.00 – 82.65 $ — $ 47.93 $ 57.00 $ 63.25 Oct – Dec Argus LLS 5,000 58.00 – 87.10 — 52.80 61.63 70.35 2021 Fixed-Price Swaps Jan – Dec NYMEX 8,000 $ 41.70 – 45.20 $ 43.41 $ — $ — $ — 2022 Fixed-Price Swaps Jan – June NYMEX 6,000 $ 42.90 – 45.50 $ 43.75 $ — $ — $ — (1) Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For three-way collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. (2) A three-way collar is a costless collar contract combined with a sold put feature (at a lower price) with the same counterparty. The value received for the sold put is used to enhance the contracted floor and ceiling price of the related collar. At the contract settlement date, (1) if the index price is higher than the ceiling price, we pay the counterparty the difference between the index price and ceiling price for the contracted volumes, (2) if the index price is between the floor and ceiling price, no settlements occur, (3) if the index price is lower than the floor price but at or above the sold put price, the counterparty pays us the difference between the index price and the floor price for the contracted volumes and (4) if oil prices average less than the sold put price, our receipts on settlement would be limited to the difference between the floor price and the sold put price for the contracted volumes. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value hierarchy of financial assets and liabilities | The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of the periods indicated: Fair Value Measurements Using: In thousands Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total September 30, 2020 (Successor) Assets Oil derivative contracts – current $ — $ 26,778 $ — $ 26,778 Oil derivative contracts – long-term — 1,147 — 1,147 Total Assets $ — $ 27,925 $ — $ 27,925 Liabilities Oil derivative contracts – current $ — $ (5,739 ) $ — $ (5,739 ) Oil derivative contracts – long-term — (584 ) — (584 ) Total Liabilities $ — $ (6,323 ) $ — $ (6,323 ) December 31, 2019 (Predecessor) Assets Oil derivative contracts – current $ — $ 8,503 $ 3,433 $ 11,936 Total Assets $ — $ 8,503 $ 3,433 $ 11,936 Liabilities Oil derivative contracts – current $ — $ (6,522 ) $ (1,824 ) $ (8,346 ) Total Liabilities $ — $ (6,522 ) $ (1,824 ) $ (8,346 ) |
Changes in fair value of Level 3 assets and liabilities | The following tables summarize the changes in the fair value of our Level 3 assets and liabilities: Successor Predecessor Period from Sept. 19, 2020 through Period from July 1, 2020 through Three Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Fair value of Level 3 instruments, beginning of period $ — $ — $ 6,073 Transfers out of Level 3 — — — Fair value gains on commodity derivatives — — 6,450 Receipts on settlements of commodity derivatives — — (1,323 ) Fair value of Level 3 instruments, end of period $ — $ — $ 11,200 The amount of total gains for the period included in earnings attributable to the change in unrealized gains relating to assets or liabilities still held at the reporting date $ — $ — $ 6,234 Successor Predecessor Period from Sept. 19, 2020 through Period from Jan. 1, 2020 through Nine Months Ended In thousands Sept. 30, 2020 Sept. 18, 2020 Sept. 30, 2019 Fair value of Level 3 instruments, beginning of period $ — $ 1,609 $ 13,624 Transfers out of Level 3 — (1,609 ) — Fair value gains on commodity derivatives — — 90 Receipts on settlements of commodity derivatives — — (2,514 ) Fair value of Level 3 instruments, end of period $ — $ — $ 11,200 The amount of total gains for the period included in earnings attributable to the change in unrealized gains relating to assets or liabilities still held at the reporting date $ — $ — $ 6,540 |
Additional Balance Sheet Deta_2
Additional Balance Sheet Details (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Table Text Block [Abstract] | |
Trade and Other Receivables, Net | Trade and Other Receivables, Net Successor Predecessor In thousands Sept. 30, 2020 Dec. 31, 2019 Trade accounts receivable, net $ 9,447 $ 12,630 Commodity derivative settlement receivables 7,606 675 Federal income tax receivable, net 1,600 2,987 Other receivables 16,135 2,026 Total $ 34,788 $ 18,318 |
Basis of Presentation (Cash, Ca
Basis of Presentation (Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | |||||
Cash and cash equivalents | $ 21,860 | $ 516 | |||
Restricted cash, current | 10,662 | 0 | |||
Restricted cash included in other assets | 38,888 | 32,529 | |||
Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows | $ 71,410 | $ 95,114 | $ 33,045 | $ 33,047 | $ 54,949 |
Basis of Presentation (Reconcil
Basis of Presentation (Reconciliation of Net Income (Loss) and Weighted Average Shares Table) (Details) shares in Thousands, $ in Thousands | Sep. 30, 2020USD ($)shares | Sep. 18, 2020USD ($)shares | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($)shares | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 18, 2020USD ($)shares | Sep. 30, 2019USD ($)shares | |
Numerator | ||||||||||
Net income (loss) - basic | $ | $ 2,758 | $ (809,120) | $ (697,474) | $ 74,016 | $ 72,862 | $ 146,692 | $ (25,674) | $ (1,432,578) | $ 193,880 | |
Interest on convertible senior notes including amortization of discount, net of tax | $ | 0 | 0 | 5,101 | 0 | 5,649 | |||||
Net income (loss) - diluted | $ | $ 2,758 | $ (809,120) | $ 77,963 | $ (1,432,578) | $ 199,529 | |||||
Denominator | ||||||||||
Weighted average common shares outstanding - basic | 50,000 | 497,398 | 455,487 | 495,560 | 453,287 | |||||
Restricted stock and performance-based equity awards | 0 | 0 | 865 | 0 | 2,489 | |||||
Convertible senior notes | 0 | 0 | 90,853 | [1] | 0 | 34,278 | ||||
Weighted average common shares outstanding - diluted | 50,000 | 497,398 | 547,205 | 495,560 | 490,054 | |||||
Predecessor common shares issuable upon conversion of convertible senior notes | 90,900 | 90,900 | ||||||||
[1] | hares shown under “convertible senior notes” represent the impact over the Predecessor periods of the approximately 90.9 million shares of the Predecessor’s common stock issuable upon full conversion of the convertible senior notes which were issued on June 19, 2019. |
Basis of Presentation (Antidilu
Basis of Presentation (Antidilutive Securities) (Details) - shares shares in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 | Sep. 18, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Shares issuable upon exercise of series A and B warrants | 5,500 | |||||
Stock appreciation rights | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 | 2,011 | 1,007 | 2,043 | |
Restricted stock and performance-based equity awards | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 165 | 7,996 | 7,280 | 5,859 | |
Convertible senior notes | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 82,445 | 0 | 87,888 | 0 | |
Warrants | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 5,526 | [1] | 0 | 0 | 0 | 0 |
[1] | Shares shown under “warrants” represent the impact over the Successor periods of the approximately 5.5 million shares of the Successor’s common stock issuable upon full exercise of the series A and series B warrants which were issued pursuant to the Plan to the Predecessor’s convertible senior notes, senior subordinated notes, and equity holders. |
Basis of Presentation (Plan of
Basis of Presentation (Plan of Reorganization) (Details Textuals) - USD ($) | Sep. 18, 2020 | Sep. 30, 2020 | Jul. 28, 2020 | Dec. 31, 2019 |
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Principal amount of debt cancelled | $ 2,100,000,000 | |||
Successor common stock, shares authorized | 250,000,000 | 250,000,000 | 750,000,000 | |
Successor common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |
Successor preferred stock, shares authorized | 50,000,000 | 50,000,000 | 25,000,000 | |
Successor preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |
Lender commitments | $ 575,000,000 | |||
Management Incentive Plan | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Equity percentage under plan of reorganization | 10.00% | |||
Series A Warrants | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Equity percentage under plan of reorganization | 5.00% | |||
Number of warrants outstanding | 2,631,579 | |||
Exercise price of warrants | $ 32.59 | |||
Series B Warrants | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Number of warrants outstanding | 2,894,740 | |||
Exercise price of warrants | $ 35.41 | |||
Lenders under Predecessor Credit Facility | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Consenting percentage | 100.00% | |||
Second Lien Note Holders | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Consenting percentage | 67.10% | |||
Common stock, shares outstanding | 47,499,999 | |||
Equity percentage under plan of reorganization | 95.00% | |||
Convertible Note Holders | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Consenting percentage | 73.10% | |||
Common stock, shares outstanding | 2,500,000 | |||
Equity percentage under plan of reorganization | 5.00% | |||
Convertible Note Holders | Series A Warrants | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Percentage of warrants | 100.00% | |||
Subordinated Note Holders | Series B Warrants | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Equity percentage under plan of reorganization | 3.00% | |||
Percentage of warrants | 54.55% | |||
Equity Holders | Series B Warrants | ||||
Plan Of Chapter 11 Reorganization [Line Items] | ||||
Equity percentage under plan of reorganization | 2.50% | |||
Percentage of warrants | 45.45% |
Basis of Presentation (Details
Basis of Presentation (Details Textuals) shares in Millions | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($)$ / Barrel | Sep. 18, 2020USD ($)Rate | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($)shares | Sep. 18, 2020USD ($)Rate | Sep. 30, 2019USD ($)shares | Sep. 18, 2020$ / MMBTU$ / BarrelRate | Jun. 30, 2020$ / MMBTU$ / Barrel | Mar. 31, 2020USD ($)$ / MMBTU$ / Barrel |
Oil and Gas, Average Sale Price and Production Cost Per Unit [Line Items] | |||||||||||
Debt Instrument, Convertible, Number of Equity Instruments | shares | 90.9 | 90.9 | |||||||||
Impairment of unevaluated costs | $ 244,900,000 | ||||||||||
Write-down of oil and natural gas properties | $ 0 | $ 261,677,000 | $ 662,400,000 | 72,500,000 | $ 0 | $ 996,658,000 | $ 0 | ||||
Average price | $ / Barrel | 20 | ||||||||||
Carrying value of long-lived assets | $ 1,300,000,000 | 1,300,000,000 | $ 1,300,000,000 | ||||||||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 | ||||||||
Series A Warrants | |||||||||||
Oil and Gas, Average Sale Price and Production Cost Per Unit [Line Items] | |||||||||||
Plan Of Reorganization Equity Securities Percentage | Rate | 5.00% | 5.00% | 5.00% | ||||||||
Subordinated Note Holders | Series B Warrants | |||||||||||
Oil and Gas, Average Sale Price and Production Cost Per Unit [Line Items] | |||||||||||
Plan Of Reorganization Equity Securities Percentage | Rate | 3.00% | 3.00% | 3.00% | ||||||||
Oil | |||||||||||
Oil and Gas, Average Sale Price and Production Cost Per Unit [Line Items] | |||||||||||
Average price | $ / Barrel | 40.08 | 44.74 | 55.17 | ||||||||
Natural gas | |||||||||||
Oil and Gas, Average Sale Price and Production Cost Per Unit [Line Items] | |||||||||||
Average price | $ / MMBTU | 1.72 | 1.91 | 1.68 |
Fresh Start Accounting - Enterp
Fresh Start Accounting - Enterprise Value to Equity Value (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Enterprise value | $ 1,280,856 |
Plus: Cash and cash equivalents | 45,585 |
Less: Total debt | (231,022) |
Equity value | $ 1,095,419 |
Fresh Start Accounting - Reconc
Fresh Start Accounting - Reconciliation of Reorganization Value (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Enterprise value | $ 1,280,856 |
Plus: Cash and cash equivalents | 45,585 |
Plus: Current liabilities excluding current maturities of long-term debt | 239,738 |
Plus: Non-interest bearing noncurrent liabilities | 185,228 |
Reorganization value of the reconstituted Successor | $ 1,751,407 |
Fresh Start Accounting - Reorga
Fresh Start Accounting - Reorganization Items (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 | Sep. 18, 2020 | Sep. 30, 2019 |
Reorganizations [Abstract] | |||||
Gain on settlement of liabilities subject to compromise | $ (1,024,864) | ||||
Fresh start accounting adjustments | 1,834,423 | ||||
Professional service provider fees and other expenses | 11,267 | ||||
Success fees for professional service providers | 9,700 | ||||
Loss on rejected contracts and leases | 10,989 | ||||
Valuation adjustments to debt classified as subject to compromise | 757 | ||||
DIP credit agreement fees | 3,107 | $ 3,100 | |||
Acceleration of Predecessor stock compensation expense | 4,601 | ||||
Total reorganization items, net | $ 0 | $ 849,980 | $ 0 | $ 849,980 | $ 0 |
Fresh Start Accounting - Conden
Fresh Start Accounting - Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Dec. 31, 2019 |
Cash and cash equivalents | $ 73,372 | ||
Accrued production receivable | 112,832 | ||
Trade and other receivables, net | 36,221 | ||
Derivative assets | 32,635 | ||
Other current assets | 12,968 | ||
Total current assets | 268,028 | ||
Proved properties | 11,723,546 | ||
Unevaluated properties | 650,553 | ||
CO2 properties | 1,198,515 | ||
Pipelines | 2,339,864 | ||
Other property and equipment | $ 97,770 | 201,565 | $ 212,334 |
Less accumulated depletion, depreciation, amortization and impairment | (12,864,141) | ||
Net property and equipment | 3,249,902 | ||
Operating lease right-of-use assets | 1,774 | ||
Derivative assets | 501 | ||
Intangible assets, net | 20,405 | ||
Other assets | 81,809 | ||
Total assets | 3,622,419 | ||
Accounts payable and accrued liabilities | 67,789 | ||
Oil and gas production payable | 39,372 | ||
Oil and gas production payable | 16,705 | ||
Derivative liabilities | 8,613 | ||
Total current liabilities | 115,774 | ||
Long-term debt, net of current portion | 140,000 | ||
Asset retirement obligations | 2,727 | ||
Derivative liabilities | 295 | ||
Total long-term liabilities not subject to compromise | 143,022 | ||
Liabilities subject to compromise | 2,823,506 | ||
Predecessor common stock | 510 | ||
Predecessor paid-in capital in excess of par | 2,764,915 | ||
Predecessor treasury stock, at cost | (6,202) | ||
Successor common stock | 50 | ||
Successor paid-in capital in excess of par | 1,095,369 | ||
Accumulated deficit | (2,219,106) | ||
Total stockholders' equity | 540,117 | ||
Total liabilities and stockholders' equity | 3,622,419 | ||
Accounts payable and accrued liabilities | 102,793 | ||
Liabilities subject to compromise | 2,823,506 | ||
Total assets | (1,861,589) | ||
Long-term debt, net of current portion | (25,151) | ||
Asset retirement obligations | (24,697) | ||
Deferred tax liabilities, net | (414,120) | ||
Operating lease liabilities | 10 | ||
Other liabilities | 18,599 | ||
Total long-term liabilities | (445,359) | ||
Accumulated deficit | (1,420,303) | ||
Total stockholders' equity | (1,420,303) | ||
Total liabilities and stockholders' equity | (1,861,589) | ||
Cash and cash equivalents | 45,585 | ||
Restricted cash | 10,662 | ||
Accrued production receivable | 112,832 | ||
Trade and other receivables, net | 36,221 | ||
Derivative assets | 32,635 | ||
Other current assets | 12,429 | ||
Total current assets | 250,364 | ||
Proved properties | 782,233 | ||
Unevaluated properties | 111,983 | ||
CO2 properties | 187,346 | ||
Pipelines | 132,618 | ||
Other property and equipment | 97,413 | ||
Less accumulated depletion, depreciation, amortization and impairment | 0 | ||
Net property and equipment | 1,311,593 | ||
Operating lease right-of-use assets | 1,843 | ||
Derivative assets | 501 | ||
Intangible assets, net | 100,083 | ||
Other assets | 87,023 | ||
Total assets | 1,751,407 | ||
Accounts payable and accrued liabilities | 174,320 | ||
Oil and gas production payable | 56,077 | ||
Derivative liabilities | 8,613 | ||
Current maturities of long-term debt | 73,563 | ||
Operating lease liabilities | 728 | ||
Total current liabilities | 313,301 | ||
Long-term debt, net of current portion | 157,459 | ||
Asset retirement obligations | 158,438 | ||
Derivative liabilities | 295 | ||
Deferred tax liabilities, net | 3,831 | ||
Operating lease liabilities | 525 | ||
Other liabilities | 22,139 | ||
Total long-term liablities not subject to compromise | 342,687 | ||
Successor common stock | 50 | ||
Successor paid-in-capital in excess of par | 1,095,369 | ||
Equity value | 1,095,419 | ||
Total liabilities and stockholders' equity | 1,751,407 | ||
Reorganization Adjustments | |||
Cash and cash equivalents | (27,787) | ||
Restricted cash | 10,662 | ||
Other current assets | (539) | ||
Total current assets | (17,664) | ||
Operating lease right-of-use assets | 0 | ||
Other assets | 8,241 | ||
Total assets | (9,423) | ||
Total current liabilities | 193,454 | ||
Total long-term liabilities not subject to compromise | 645,024 | ||
Predecessor common stock | (510) | ||
Predecessor paid-in capital in excess of par | (2,764,915) | ||
Predecessor treasury stock, at cost | 6,202 | ||
Successor common stock | 50 | ||
Successor paid-in capital in excess of par | 1,095,369 | ||
Accumulated deficit | 3,639,409 | ||
Total stockholders' equity | 1,975,605 | ||
Total liabilities and stockholders' equity | (9,423) | ||
Current maturities of long-term debt | 73,199 | ||
Operating lease liabilities | 757 | ||
Long-term debt, net of current portion | 42,610 | ||
Asset retirement obligation | 180,408 | ||
Deferred tax liabilities, net | 417,951 | ||
Operating lease liabilities | 515 | ||
Other liabilities | 3,540 | ||
Liabilities subject to compromise | (2,823,506) | ||
Fresh Start Adjustments | |||
Trade and other receivables, net | 0 | ||
Total current assets | 0 | ||
Proved properties | (10,941,313) | ||
Unevaluated properties | (538,570) | ||
CO2 properties | (1,011,169) | ||
Pipelines | (2,207,246) | ||
Other property and equipment | (104,152) | ||
Less accumulated depletion, depreciation, amortization and impairment | 12,864,141 | ||
Net property and equipment | (1,938,309) | ||
Operating lease right-of-use assets | 69 | ||
Intangible assets, net | 79,678 | ||
Other assets | (3,027) | ||
Accounts payable and accrued liabilities | 3,738 | ||
Current maturities of long-term debt | 364 | ||
Operating lease liabilities | (29) | ||
Total current liabilities | $ 4,073 |
Fresh Start Accounting - Net Ca
Fresh Start Accounting - Net Cash Payments (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Cash proceeds from Successor Bank Credit Agreement | $ 140,000 |
Total cash proceeds | 140,000 |
Payment in full of DIP Facility and pre-petition revolving bank credit agreement | (140,000) |
Retained professional service provider fees paid to escrow account | (10,662) |
Non-retained professional service provider fees paid | (7,420) |
Payment of accrued interest and fees on DIP Facility | (1,464) |
Debt issuance costs related to Successor Bank Credit Agreement | (8,241) |
Total cash uses | (167,787) |
Net uses | $ (27,787) |
Fresh Start Accounting - Accoun
Fresh Start Accounting - Accounts Payable and Accrued Liabilities (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Accrued of professional service provider fees | $ 2,826 |
Payment of accrued interest and fees on DIP Facility | (1,464) |
Reinstatement of accounts payable and accrued liabilities from liabilities subject to compromise | 101,431 |
Accounts payable and accrued liabilities | $ 102,793 |
Fresh Start Accounting - Liabil
Fresh Start Accounting - Liabilities Subject to Compromise (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Senior secured second lien notes | $ 1,629,417 |
Convertible senior notes | 234,055 |
Senior subordinated notes | 251,480 |
Total settled liabilities subject to compromise | 2,114,952 |
Accounts payable and accrued liabilities | 101,431 |
Oil and gas production payable | 16,705 |
Deferred tax liabilities | 289,389 |
Reinstated Liabilities Subject to Compromise | 708,554 |
Liabilities Subject to Compromise | 2,823,506 |
Issuance of New Common Stock to second lien note holders | (1,014,608) |
Issuance of New Common Stock to convertible note holders | (53,400) |
Issuance of series A warrants to convertible note holders | (15,683) |
Issuance of series B warrants to senior subordinated note holders | (6,398) |
Reinstatement of liabilities subject to compromise | (708,553) |
Gain on settlement of liabilities subject to compromise | $ 1,024,864 |
Fresh Start Accounting - Succes
Fresh Start Accounting - Successor's Common Stock and Additional Paid-In Capital (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Capital in excess of par value of 47,499,999 issues and outstanding shares of New Common Stock issued to holders of the senior secured second lien note claims | $ 1,014,608 |
Capital in excess of par value of 2,500,000 issued and outstanding shares of New Common Stock issued to holders of the convertible senior note claims | 53,400 |
Fair value of series A warrants issued to convertible senior note holders | 15,683 |
Fair value of series B warrants issued to senior subordinated note holders | 6,398 |
Fair value of series B warrants issued to Predecessor equity holders | 5,330 |
Total change in Successor common stock and additional paid-in-capital | 1,095,419 |
Less: Par value of Successor common stock | (50) |
Change in Successor additional paid-in-capital | $ 1,095,369 |
Fresh Start Accounting - Accumu
Fresh Start Accounting - Accumulated Deficit Adjustments (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Cancellation of Predecessor common stock, paid-in-capital in excess of par, and treasury stock | $ 2,763,824 |
Gain on settlement of liabilities subject to compromise | 1,024,864 |
Acceleration of Predecessor stock compensation expense | (4,601) |
Recognition of tax expenses related to reorganization adjustments | (128,556) |
Provider service provider fees recognized at emergence | (9,700) |
Issuance of series B warrants to Predecessor equity holders | (5,330) |
Other | (1,092) |
Net impact to Predecessor accumulated deficit | $ 3,639,409 |
Fresh Start Accounting - Fair V
Fresh Start Accounting - Fair Value Other Assets (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Fresh-Start Adjustment [Line Items] | |
Fair value adjustment for CO2 and oil pipeline line-fill | $ (3,698) |
Fresh value adjustments for escrow accounts | 671 |
Fresh Start Adjustments | |
Fresh-Start Adjustment [Line Items] | |
Fair value adjustments to other assets | $ (3,027) |
Fresh Start Accounting - Fair_2
Fresh Start Accounting - Fair Value Accounts Payable and Accrued Liabilities (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Fresh-Start Adjustment [Line Items] | |
Fair value adjustments for the current portion of an unfavorable vendor contract | $ 3,500 |
Fresh value adjustment for the current portion of Predecessor asset retirement obligation | 689 |
Write-off accrued interest on NEJD pipeline financing | (451) |
Fresh Start Adjustments | |
Fresh-Start Adjustment [Line Items] | |
Fair value adjustments to accounts payable and accrued liabilities | $ 3,738 |
Fresh Start Accounting - Debt A
Fresh Start Accounting - Debt Adjustments (Details) $ in Thousands | Sep. 18, 2020USD ($) |
Reorganizations [Abstract] | |
Fair value adjustment for Free State pipeline lease financing | $ (24,699) |
Fair value adjustment for NEJD pipeline lease financing | (88) |
Fair value adjustments to current and long-term maturities of debt | $ (24,787) |
Fresh Start Accounting (Details
Fresh Start Accounting (Details Textuals) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 18, 2020 | Sep. 18, 2020 | Sep. 18, 2020 |
Reorganizations [Abstract] | |||||
Decrease to deferred taxes | $ 128,600 | $ 128,600 | $ 128,600 | $ 128,600 | |
Decrease to deferred tax liabilities related to fresh start accounting adjustments | 414,120 | 414,120 | 414,120 | 414,120 | |
Reorganization Value [Line Items] | |||||
Enterprise value | 1,280,856 | 1,280,856 | 1,280,856 | 1,280,856 | |
Contractual interest expense on prepetition liabilities not recognized in statement of operations | 22,000 | ||||
Cash outflow related to payment of professional service provider fees and success fees | 12,700 | ||||
DIP credit agreement fees | 3,107 | 3,100 | |||
Capitalized costs of proved and unproved properties | $ 865,400 | 865,400 | 865,400 | 865,400 | |
Expected annual dividend yield for warrants | 0.00% | ||||
Minimum | |||||
Reorganization Value [Line Items] | |||||
Enterprise value | $ 1,100,000 | 1,100,000 | 1,100,000 | 1,100,000 | |
Useful life | 20 years | ||||
Useful life of CO2 contracts | 7 years | ||||
Maximum | |||||
Reorganization Value [Line Items] | |||||
Enterprise value | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | |
Useful life | 43 years | ||||
Useful life of CO2 contracts | 14 years | ||||
Median | |||||
Reorganization Value [Line Items] | |||||
Enterprise value | $ 1,300,000 | $ 1,300,000 | $ 1,300,000 | $ 1,300,000 | |
Series A Warrants | |||||
Reorganization Value [Line Items] | |||||
Exercise price of warrants | $ 32.59 | $ 32.59 | $ 32.59 | $ 32.59 | |
Expected volatility of warrants | 49.30% | ||||
Risk free interest rate associated with warrants | 0.30% | ||||
Term of warrants | 5 years | 5 years | 5 years | 5 years | |
Series B Warrants | |||||
Reorganization Value [Line Items] | |||||
Exercise price of warrants | $ 35.41 | $ 35.41 | $ 35.41 | $ 35.41 | |
Expected volatility of warrants | 53.60% | ||||
Risk free interest rate associated with warrants | 0.20% | ||||
Term of warrants | 3 years | 3 years | 3 years | 3 years | |
Measurement Input, Share Price [Member] | |||||
Reorganization Value [Line Items] | |||||
Implied stock price | $ 22.14 | $ 22.14 | $ 22.14 | $ 22.14 |
Leases (Lease Operating Costs)
Leases (Lease Operating Costs) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 | Sep. 18, 2020 | Sep. 30, 2019 |
Operating lease cost | $ 29 | $ 1,847 | $ 1,187 | $ 5,934 | $ 6,014 |
Finance lease cost | |||||
Amortization of right-of-use assets | 1 | 5 | 54 | 9 | 1,188 |
Interest on lease liabilities | 0 | 2 | 2 | 3 | 40 |
Total finance lease cost | 1 | 7 | 56 | 12 | 1,228 |
Sublease income | 100 | 790 | 964 | 2,584 | 3,331 |
General and administrative expenses | |||||
Operating lease cost | 8 | 1,715 | 1,187 | 5,683 | 6,014 |
Lease operating expenses | |||||
Operating lease cost | 19 | 121 | 0 | 214 | 0 |
CO2 operating and discovery expenses | |||||
Operating lease cost | $ 2 | $ 11 | $ 0 | $ 37 | $ 0 |
Predecessor Divestiture (Detail
Predecessor Divestiture (Details Textuals) - USD ($) | Sep. 30, 2020 | Mar. 04, 2020 | Sep. 18, 2020 | Sep. 30, 2019 |
Business Combinations [Abstract] | ||||
Net proceeds from sale of oil and natural gas properties | $ 880,000 | $ 40,000,000 | $ 41,322,000 | $ 10,494,000 |
Gain (loss) on disposition of oil and gas properties | $ 0 |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 | Sep. 18, 2020 | Sep. 30, 2019 |
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 23,439 | $ 162,939 | $ 307,636 | $ 521,693 | $ 951,996 |
Oil sales | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 22,311 | 152,136 | 292,100 | 489,251 | 912,636 |
Natural gas sales | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 10 | 954 | 1,092 | 2,850 | 5,554 |
CO2 sales and transportation fees | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 967 | 6,517 | 8,976 | 21,049 | 25,532 |
Oil marketing sales | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 151 | $ 3,332 | $ 5,468 | $ 8,543 | $ 8,274 |
Revenue Recognition (Details Te
Revenue Recognition (Details Textuals) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Accrued production receivable | $ 74,296 | $ 139,407 |
Long-Term Debt (Components of L
Long-Term Debt (Components of Long-Term Debt) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Successor Senior Secured Bank Credit Agreement | $ 85,000 | $ 0 |
Predecessor Senior Secured Bank Credit Agreement | 0 | 0 |
Pipeline financings | 90,815 | 167,439 |
Capital lease obligations | 152 | 0 |
Total debt principal balance | 175,967 | 2,281,726 |
Debt discount | 0 | (101,767) |
Future interest payable | 0 | 164,914 |
Debt issuance costs | 0 | (10,009) |
Total debt, net of debt issuance costs and discount | 175,967 | 2,334,864 |
Less: current maturities of long-term debt | (73,511) | (102,294) |
Long-term debt | 102,456 | 2,232,570 |
9% Senior Secured Second Lien Notes due 2021 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | 0 | 614,919 |
9 1/4% Senior Secured Second Lien Notes due 2022 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | 0 | 455,668 |
7 3/4% Senior Secured Second Lien Notes due 2024 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | 0 | 531,821 |
7 1/2% Senior Secured Second Lien Notes due 2024 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | 0 | 20,641 |
6 3/8% Convertible Senior Notes due 2024 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | 0 | 245,548 |
6 3/8% Senior Subordinated Notes due 2021 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | 0 | 51,304 |
5 1/2% Senior Subordinated Notes due 2022 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | 0 | 58,426 |
4 5/8% Senior Subordinated Notes due 2023 | ||
Debt Instrument [Line Items] | ||
Outstanding debt principal balance | $ 0 | $ 135,960 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textuals) shares in Millions | Oct. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Sep. 18, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 18, 2020USD ($) | Jun. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Sep. 18, 2020USD ($) | Sep. 30, 2019USD ($) | Aug. 07, 2020USD ($) |
Debt Instrument [Line Items] | ||||||||||
Floor interest rate | 1.00% | |||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Borrowing base | $ 575,000,000 | |||||||||
Lender commitments | $ 575,000,000 | |||||||||
Percentage reduction of borrowing base upon issuing or incurring unsecured debt, expressed as a percentage of the principal amount of unsecured debt | 25.00% | 25.00% | ||||||||
Consolidated total debt to consolidated EBITDAX requirement | 3.5 | |||||||||
Current ratio requirement | 1 | |||||||||
Weighted average interest rate | 4.00% | |||||||||
Commitment fee percentage | 0.50% | |||||||||
Interest in guarantor subsidiaries | 100.00% | |||||||||
Principal amount of debt cancelled | $ 2,100,000,000 | |||||||||
Letters of credit outstanding under DIP Facility | $ 41,300,000 | |||||||||
Debt principal of notes converted | $ 19,900,000 | |||||||||
Shares issued upon conversion of notes | shares | 7.4 | |||||||||
Debt principal balance net of debt discounts reclassified to equity | $ 13,900,000 | |||||||||
Debt repurchases, face amount | $ 30,200,000 | |||||||||
Cash paid for debt repurchases | $ 0 | 14,200,000 | $ 14,171,000 | $ 0 | ||||||
Gain on debt extinguishment | $ 0 | $ 19,000,000 | $ 0 | $ 5,874,000 | $ 18,994,000 | $ 106,220,000 | ||||
NEJD Pipeline | ||||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Payments to reacquire pipeline | $ 70,000,000 | |||||||||
Free State Pipeline | ||||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Payments to reacquire pipeline | $ 22,500,000 | |||||||||
Minimum | ||||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Percentage threshold for borrowing base property sales or hedge terminations that would prompt a borrowing base reduction | 5.00% | 5.00% | ||||||||
London Interbank Offered Rate (LIBOR) | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate margins on senior secured bank credit facility | 3.00% | |||||||||
London Interbank Offered Rate (LIBOR) | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate margins on senior secured bank credit facility | 4.00% | |||||||||
Base rate | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate margins on senior secured bank credit facility | 2.00% | |||||||||
Base rate | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate margins on senior secured bank credit facility | 3.00% | |||||||||
Letter of Credit | ||||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases | $ 100,000,000 | |||||||||
Swingline Loan | ||||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases | $ 25,000,000 | |||||||||
Dividend or Other Restricted Payment | Minimum | ||||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Borrowing base availability requirement | 20.00% | 20.00% | ||||||||
Dividend or Other Restricted Payment | Maximum | ||||||||||
Senior Secured Bank Credit Facility [Abstract] | ||||||||||
Consolidated total debt to consolidated EBITDAX requirement | 2 |
Income Taxes (Details Textuals)
Income Taxes (Details Textuals) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020Rate | Dec. 31, 2019Rate | |
Income Tax Disclosure [Abstract] | ||
Statutory tax rate | 25.00% | 25.00% |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textuals) - Minimum - USD ($) | Sep. 30, 2020 | Sep. 18, 2020 |
Stock ownership percentage threshold for holders covered under Registration Rights Agreement | 4.00% | |
Proceeds from issuance of common stock | $ 25,000,000 | |
Percentage of registrable securities | 20.00% |
Stock Compensation (Details Tex
Stock Compensation (Details Textuals) - USD ($) $ in Thousands | Jun. 03, 2020 | Jun. 30, 2020 | Sep. 18, 2020 | Jun. 30, 2020 | Sep. 30, 2020 |
Compensation Reduction [Line Items] | |||||
CEO's 2020 base salary reduction | 20.00% | ||||
Reduction in 2020 Chairman of the Board retainer fee | 20.00% | ||||
Total executives and senior managers receiving cash retention incentive | 21 | ||||
Total cash retention incentives paid to executive officers and senior managers | $ 15,200 | ||||
Repayment percentage | 100.00% | ||||
Duration of employment period required under retention agreement | 1 year | ||||
Unrecognized compensation expense | $ 18,700 | ||||
Incremental compensation expense | $ 4,100 | $ 700 | $ 3,400 | ||
Compensation expense recognized for modifications to comp. structure | 7,200 | $ 11,500 | $ 18,700 | ||
Acceleration of Predecessor stock compensation expense | $ 4,601 | ||||
CEO | |||||
Compensation Reduction [Line Items] | |||||
Reduction in 2020 variable compensation | 35.00% | ||||
CFO | |||||
Compensation Reduction [Line Items] | |||||
Reduction in 2020 variable compensation | 20.00% | ||||
Percentage based on continued employment | |||||
Compensation Reduction [Line Items] | |||||
Cash retention payment percentage allocation | 50.00% | ||||
Percentage based on metrics | |||||
Compensation Reduction [Line Items] | |||||
Cash retention payment percentage allocation | 50.00% |
Commodity Derivative Contract_2
Commodity Derivative Contracts (Commodity Derivatives Outstanding Table) (Details) | Sep. 30, 2020bbl / d$ / Barrel |
Swap | Q4 2020 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 13,500 |
Weighted average swap price | 40.52 |
Swap | Q4 2020 | NYMEX | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 36.25 |
Swap | Q4 2020 | NYMEX | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 61 |
Swap | Q4 2020 | Argus LLS | |
Derivative [Line Items] | |
Volume per day | bbl / d | 7,500 |
Weighted average swap price | 51.67 |
Swap | Q4 2020 | Argus LLS | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 35 |
Swap | Q4 2020 | Argus LLS | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 64.26 |
Swap | Year 2021 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 8,000 |
Weighted average swap price | 43.41 |
Swap | Year 2021 | NYMEX | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 41.70 |
Swap | Year 2021 | NYMEX | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 45.20 |
Swap | Q1-Q2 2022 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 6,000 |
Weighted average swap price | 43.75 |
Swap | Q1-Q2 2022 | NYMEX | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 42.90 |
Swap | Q1-Q2 2022 | NYMEX | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 45.50 |
Three-way Collar | Q4 2020 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 9,500 |
Weighted average sold put price | 47.93 |
Weighted average floor price | 57 |
Weighted average ceiling price | 63.25 |
Three-way Collar | Q4 2020 | NYMEX | Minimum | |
Derivative [Line Items] | |
Derivative, Floor Price | 55 |
Three-way Collar | Q4 2020 | NYMEX | Maximum | |
Derivative [Line Items] | |
Derivative, Cap Price | 82.65 |
Three-way Collar | Q4 2020 | Argus LLS | |
Derivative [Line Items] | |
Volume per day | bbl / d | 5,000 |
Weighted average sold put price | 52.80 |
Weighted average floor price | 61.63 |
Weighted average ceiling price | 70.35 |
Three-way Collar | Q4 2020 | Argus LLS | Minimum | |
Derivative [Line Items] | |
Derivative, Floor Price | 58 |
Three-way Collar | Q4 2020 | Argus LLS | Maximum | |
Derivative [Line Items] | |
Derivative, Cap Price | 87.10 |
Commodity Derivative Contract_3
Commodity Derivative Contracts (Details Textuals) - Crude oil - Minimum | Sep. 30, 2020 |
Initial measurement period (August 1, 2020 - July 31, 2021) | |
Derivative [Line Items] | |
Required hedge percentage | 65.00% |
Subsequent measurement period (August 1, 2021 - July 31, 2022) | |
Derivative [Line Items] | |
Required hedge percentage | 35.00% |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Hierarchy Table) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current assets | $ 26,778 | $ 11,936 |
Oil derivative contracts - noncurrent assets | 1,147 | 0 |
Total Assets | 27,925 | 11,936 |
Oil derivative contracts - current liabilities | (5,739) | (8,346) |
Oil derivative contracts - noncurrent liabilities | (584) | 0 |
Total Liabilities | (6,323) | (8,346) |
Quoted Prices in Active Markets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current assets | 0 | 0 |
Oil derivative contracts - noncurrent assets | 0 | |
Total Assets | 0 | 0 |
Oil derivative contracts - current liabilities | 0 | 0 |
Oil derivative contracts - noncurrent liabilities | 0 | |
Total Liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current assets | 26,778 | 8,503 |
Oil derivative contracts - noncurrent assets | 1,147 | |
Total Assets | 27,925 | 8,503 |
Oil derivative contracts - current liabilities | (5,739) | (6,522) |
Oil derivative contracts - noncurrent liabilities | (584) | |
Total Liabilities | (6,323) | (6,522) |
Significant Unobservable Inputs (Level 3) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current assets | 0 | 3,433 |
Oil derivative contracts - noncurrent assets | 0 | |
Total Assets | 0 | 3,433 |
Oil derivative contracts - current liabilities | 0 | (1,824) |
Oil derivative contracts - noncurrent liabilities | 0 | |
Total Liabilities | $ 0 | $ (1,824) |
Fair Value Measurements (Level
Fair Value Measurements (Level 3 Fair Value Measurements) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 18, 2020 | Sep. 30, 2019 | Sep. 18, 2020 | Sep. 30, 2019 |
Fair Value, Net Derivative Asset Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Fair value of Level 3 instruments, beginning of period | $ 0 | $ 0 | $ 6,073 | $ 1,609 | $ 13,624 |
Transfers out of Level 3 | 0 | 0 | 0 | (1,609) | 0 |
Fair value gains on commodity derivatives | 0 | 0 | 6,450 | 0 | 90 |
Receipts on settlements of commodity derivatives | 0 | 0 | (1,323) | 0 | (2,514) |
Fair value of Level 3 instruments, end of period | 0 | 0 | 11,200 | 0 | 11,200 |
The amount of total gains for the period included in earnings attributable to the change in unrealized gains relating to assets or liabilities still held at the reporting date | $ 0 | $ 0 | $ 6,234 | $ 0 | $ 6,540 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Textuals) - USD ($) $ in Millions | Sep. 18, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value Disclosures [Abstract] | |||
Fair value of debt | $ 85 | $ 1,833.1 | |
Principal amount of debt cancelled | $ 2,100 |
Commitments and Contingencies (
Commitments and Contingencies (Helium Supply Arrangement) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Term of long term supply arrangement | 20 years |
Maximum payment in event of shortfall | $ 46 |
Commitments and Contingencies_2
Commitments and Contingencies (Loss Contingencies) (Details) $ in Millions | Sep. 30, 2020USD ($) |
Loss Contingencies [Line Items] | |
Estimated litigation liability | $ 52.7 |
APMTG Helium, LLC | |
Loss Contingencies [Line Items] | |
Amount of letter of credit posted as security | 32.8 |
Total liquidated damages | |
Loss Contingencies [Line Items] | |
Estimated litigation liability | 46 |
Other costs associated with the settlement | |
Loss Contingencies [Line Items] | |
Estimated litigation liability | $ 6.7 |
Additional Balance Sheet Deta_3
Additional Balance Sheet Details (Trade and Other Receivables, Net) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Trade accounts receivable, net | $ 9,447 | $ 12,630 |
Commodity derivative settlement receivables | 7,606 | 675 |
Federal income tax receivable, net | 1,600 | 2,987 |
Other receivables | 16,135 | 2,026 |
Total | $ 34,788 | $ 18,318 |
Subsequent Events (Details Text
Subsequent Events (Details Textuals) $ in Millions | Oct. 30, 2020USD ($) |
Subsequent Event | |
Subsequent Event [Line Items] | |
Gross proceeds from land sales | $ 11 |