UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



þ☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31, 2018~~June 30, 2019



o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from		to

Commission file number 333-222275

HighPoint Resources Corporation

(Exact name of registrant as specified in its charter)



Delaware		82-3620361
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

555 17th Street, Suite 3700

Denver, Colorado80202

(Address of principal executive offices, including zip code)

(303) 293-9100

(Registrant's telephone number, including area code)



~~1099 18th Street, Suite 2300~~ ~~Denver, Colorado~~ Securities registered pursuant to Section 12(b) of the Act:
	~~80202~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~
Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $0.001 par value	HPR	New York Stock Exchange

~~(303) 293-9100~~

~~(Registrant's telephone number, including area code)~~

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. xþ Yes o No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). xþ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes x☑ No

There were ~~212,008,080~~213,885,715 shares of $0.001 par value common stock outstanding on ~~April 24, 2018~~July 22, 2019.

INDEX TO FINANCIAL STATEMENTS




PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	41	42

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42	43
Item 3.	Defaults Upon Senior Securities	42	43
Item 4.	Mine Safety Disclosures	42	43
Item 5.	Other Information	42	43
Item 6.	Exhibits	42	43
SIGNATURES		44	45

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

HIGHPOINT RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	March 31, 2018			December 31, 2017			June 30, 2019			December 31, 2018
	(in thousands, except share data)						(in thousands, except share data)
Assets:
Current assets:
Current Assets:
Cash and cash equivalents	$	224,692		$	314,466		$	16,112		$	32,774
Accounts receivable, net of allowance for doubtful accounts	50,268			51,415			54,440			72,943
Derivative assets							12,164			81,166
Prepayments and other current assets	2,393			1,782			4,999			2,898
Total current assets	277,353			367,663			87,715			189,781
Property and equipment - at cost, successful efforts method for oil and gas properties:
Proved oil and gas properties	1,568,921			1,361,168			2,432,896			2,195,310
Unproved oil and gas properties, excluded from amortization	708,917			84,676			468,885			468,208
Furniture, equipment and other	18,921			17,899			28,987			20,662
	2,296,759			1,463,743			2,930,768			2,684,180
Accumulated depreciation, depletion, amortization and impairment	(485,317		)	(444,863		)	(793,104		)	(654,657		)
Total property and equipment, net	1,811,442			1,018,880			2,137,664			2,029,523
Deferred financing costs and other noncurrent assets	3,679			4,163
Derivative assets							7,062			27,289
Other noncurrent assets							6,247			5,867
Total	$	2,092,474		$	1,390,706		$	2,238,688		$	2,252,460
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable and other accrued liabilities	$	135,925		$	84,055
Current Liabilities:
Accounts payable and accrued liabilities							$	119,809		$	131,379
Amounts payable to oil and gas property owners	30,852			16,594			32,869			55,792
Production taxes payable	35,533			26,876			51,086			59,155
Derivative liabilities	35,866			20,940
Current portion of long-term debt	2,212			469			—			1,859
Total current liabilities	240,388			148,934			203,764			248,185
Long-term debt, net of debt issuance costs	616,244			617,744			768,149			617,387
Asset retirement obligations	23,907			16,097			22,396			27,330
Deferred income taxes	137,111			—			109,933			139,534
Derivatives and other noncurrent liabilities	14,484			9,377
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock, $0.001 par value; authorized 400,000,000 and 300,000,000 shares at March 31, 2018 and December 31, 2017, respectively; 212,008,260 and 110,363,539 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively, with 2,657,535 and 1,394,868 shares subject to restrictions, respectively	209			109
Other noncurrent liabilities							18,053			7,926
Commitments and contingencies (Note 12)
Stockholders' Equity:
Common stock, $0.001 par value; authorized 400,000,000 shares; 213,898,734 and 212,477,101 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively, with 3,406,134 and 2,912,166 shares subject to restrictions, respectively							210			210
Additional paid-in capital	1,766,130			1,279,507			1,774,164			1,771,730
Retained earnings (accumulated deficit)	(705,999		)	(681,062		)	(657,981		)	(559,842		)
Treasury stock, at cost: zero shares at March 31, 2018 and December 31, 2017	—			—
Treasury stock, at cost: zero shares at June 30, 2019 and December 31, 2018							—			—
Total stockholders' equity	1,060,340			598,554			1,116,393			1,212,098
Total	$	2,092,474		$	1,390,706		$	2,238,688		$	2,252,460

See notes to Unaudited Consolidated Financial Statements.

HIGHPOINT RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2019			2018			2019			2018
	(in thousands, except share and per share data)						(in thousands, except share and per share data)
Operating Revenues:
Oil, gas and NGL production	$	80,831		$	50,425		$	107,486		$	110,118		$	209,191		$	190,949
Other operating revenues, net	(21		)	111			98			280			373			259
Total operating revenues	80,810			50,536			107,584			110,398			209,564			191,208
Operating Expenses:
Lease operating expense	6,251			5,862			10,772			7,594			22,049			13,845
Gathering, transportation and processing expense	419			489			1,742			1,012			3,465			1,431
Production tax expense	5,175			322			8,905			9,684			12,798			14,859
Exploration expense	13			27			12			7			37			20
Impairment, dry hole costs and abandonment expense	317			8,074			995			108			1,317			425
(Gain) loss on sale of properties	408			(92		)	2,906			564			2,901			972
Depreciation, depletion and amortization	40,985			38,340			72,612			52,175			145,222			93,160
Unused commitments	4,538			4,572			4,352			4,572			8,821			9,110
General and administrative expense	10,107			9,349			12,401			11,624			25,061			21,731
Merger transaction expense	4,763			—			—			1,277			2,414			6,040
Other operating expenses, net	39			(573		)	4			9			(20		)	48
Total operating expenses	73,015			66,370			114,701			88,626			224,065			161,641
Operating Income (Loss)	7,795			(15,834		)	(7,117		)	21,772			(14,501		)	29,567
Other Income and Expense:
Interest and other income	691			206			154			701			468			1,392
Interest expense	(13,090		)	(13,951		)	(14,381		)	(13,093		)	(28,060		)	(26,183		)
Commodity derivative gain (loss)	(20,333		)	16,464			19,544			(56,286		)	(85,647		)	(76,619		)
Total other income and expense	(32,732		)	2,719			5,317			(68,678		)	(113,239		)	(101,410		)
Income (Loss) before Income Taxes	(24,937		)	(13,115		)	(1,800		)	(46,906		)	(127,740		)	(71,843		)
(Provision for) Benefit from Income Taxes	—			—			(110		)	—			29,601			—
Net Income (Loss)	$	(24,937	)	$	(13,115	)	$	(1,910	)	$	(46,906	)	$	(98,139	)	$	(71,843	)
Net Income (Loss) Per Common Share, Basic	$	(0.20	)	$	(0.18	)	$	(0.01	)	$	(0.22	)	$	(0.47	)	$	(0.43	)
Net Income (Loss) Per Common Share, Diluted	$	(0.20	)	$	(0.18	)	$	(0.01	)	$	(0.22	)	$	(0.47	)	$	(0.43	)
Weighted Average Common Shares Outstanding, Basic	123,595,553			74,543,780			210,377,152			209,393,002			210,155,678			166,731,287
Weighted Average Common Shares Outstanding, Diluted	123,595,553			74,543,780			210,377,152			209,393,002			210,155,678			166,731,287

See notes to Unaudited Consolidated Financial Statements.

HIGHPOINT RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME (LOSS)~~CASH FLOWS

(UNAUDITED)

Three Months Ended March 31,
2018 2017
(in thousands)
Net Income (Loss) $ (24,937 ) $ (13,115 )
Other comprehensive income (loss) —
—
Comprehensive Income (Loss) $ (24,937 ) $ (13,115 )



	Six Months Ended June 30,
	2019			2018
	(in thousands)
Operating Activities:
Net Income (Loss)	$	(98,139	)	$	(71,843	)
Adjustments to reconcile to net cash provided by operations:
Depreciation, depletion and amortization	145,222			93,160
Deferred income taxes	(29,601		)	—
Impairment, dry hole costs and abandonment expense	1,317			425
Commodity derivative (gain) loss	85,647			76,619
Settlements of commodity derivatives	3,656			(23,848		)
Stock compensation and other non-cash charges	6,980			3,490
Amortization of deferred financing costs	1,275			1,131
(Gain) loss on sale of properties	2,901			972
Change in operating assets and liabilities:
Accounts receivable	18,475			(4,197		)
Prepayments and other assets	(1,463		)	(1,089		)
Accounts payable, accrued and other liabilities	(6,733		)	(36,033		)
Amounts payable to oil and gas property owners	(22,923		)	25,532
Production taxes payable	(8,069		)	4,568
Net cash provided by (used in) operating activities	98,545			68,887
Investing Activities:
Additions to oil and gas properties, including acquisitions	(258,153		)	(220,816		)
Additions of furniture, equipment and other	(3,574		)	(470		)
Repayment of debt associated with merger, net of cash acquired	—			(53,357		)
Proceeds from sale of properties	1,334			194
Other investing activities	(1,432		)	336
Net cash provided by (used in) investing activities	(261,825		)	(274,113		)
Financing Activities:
Proceeds from debt	150,000			—
Principal payments on debt	(1,859		)	(232		)
Other financing activities	(1,523		)	(1,629		)
Net cash provided by (used in) financing activities	146,618			(1,861		)
Increase (Decrease) in Cash and Cash Equivalents	(16,662		)	(207,087		)
Beginning Cash and Cash Equivalents	32,774			314,466
Ending Cash and Cash Equivalents	$	16,112		$	107,379

See notes to Unaudited Consolidated Financial Statements.

HIGHPOINT RESOURCES CORPORATION

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(UNAUDITED)~~

Three Months Ended March 31,
2018 2017
(in thousands)
Operating Activities:
Net Income (Loss) $ (24,937 ) $ (13,115 )
Adjustments to reconcile to net cash provided by operations:
Depreciation, depletion and amortization 40,985
38,340
Impairment, dry hole costs and abandonment expense 317
8,074
Commodity derivative (gain) loss 20,333
(16,464 )
Settlements of commodity derivatives (8,388 ) 3,632
Stock compensation and other non-cash charges 835
1,968
Amortization of deferred financing costs 563
558
(Gain) loss on sale of properties 408
(92 )
Change in operating assets and liabilities:
Accounts receivable 9,166
3,587
Prepayments and other assets (111 ) (1,047 )
Accounts payable, accrued and other liabilities 822
8,965
Amounts payable to oil and gas property owners 9,609
1,090
Production taxes payable 4,715
2,602
Net cash provided by (used in) operating activities 54,317
38,098
Investing Activities:
Additions to oil and gas properties, including acquisitions (88,854 ) (57,963 )
Additions of furniture, equipment and other (122 ) (11 )
Repayment of debt associated with merger, net of cash acquired (53,357 ) —
Proceeds from sale of properties and other investing activities (157 ) 11,225
Net cash provided by (used in) investing activities (142,490 ) (46,749 )
Financing Activities:
Principal payments on debt (116 ) (112 )
Proceeds from sale of common stock, net of offering costs —
(224 )
Deferred financing costs and other (1,485 ) (967 )
Net cash provided by (used in) financing activities (1,601 ) (1,303 )
Increase (Decrease) in Cash and Cash Equivalents (89,774 ) (9,954 )
Beginning Cash and Cash Equivalents 314,466
275,841
Ending Cash and Cash Equivalents $ 224,692
$ 265,887

~~See notes to Unaudited Consolidated Financial Statements.~~

~~HIGHPOINT RESOURCES CORPORATION~~

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

(In thousands)


	Common Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Treasury Stock			Total Stockholders' Equity			Common Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Treasury Stock			Total Stockholders' Equity
Balance at December 31, 2016	$	74	$	1,113,797		$	(542,328	)	$	—		$	571,543
Cumulative effect of accounting change	—		180			(509		)	—			(329		)
Exercise of options, restricted stock activity and shares exchanged for exercise and tax withholding	1		—			—			(1,253		)	(1,252		)
Balance at December 31, 2017															$	109	$	1,279,507		$	(681,062	)	$	—		$	598,554
Restricted stock activity and shares exchanged for tax withholding															—		—			—			(1,462		)	(1,462		)
Stock-based compensation	—		7,099			—			—			7,099			—		4,185			—			—			4,185
Retirement of treasury stock	—		(1,253		)	—			1,253			—
Exchange of senior notes for shares of common stock	11		48,981			—			—			48,992
Issuance of common stock, net of offering costs	23		110,703			—			—			110,726
Net income (loss)	—		—			(138,225		)	—			(138,225		)
Balance at December 31, 2017	109		1,279,507			(681,062		)	—			598,554
Exercise of options, restricted stock activity and shares exchanged for exercise and tax withholding	—		—			—			(1,462		)	(1,462		)
Stock-based compensation ⁽¹⁾	—		4,185			—			—			4,185
Retirement of treasury stock	—		(1,462		)	—			1,462			—			—		(1,462		)	—			1,462			—
Issuance of common stock, merger	100		483,900			—			—			484,000			100		483,900			—			—			484,000
Net income (loss)	—		—			(24,937		)	—			(24,937		)	—		—			(24,937		)	—			(24,937		)
Balance at March 31, 2018	$	209	$	1,766,130		$	(705,999	)	$	—		$	1,060,340		$	209	$	1,766,130		$	(705,999	)	$	—		$	1,060,340
Restricted stock activity and shares exchanged for tax withholding															—		—			—			(28		)	(28		)
Stock-based compensation															—		1,797			—			—			1,797
Retirement of treasury stock															—		(28		)	—			28			—
Net income (loss)															—		—			(46,906		)	—			(46,906		)
Balance at June 30, 2018															$	209	$	1,767,899		$	(752,905	)	$	—		$	1,015,203
Restricted stock activity and shares exchanged for tax withholding															1		—			—			(43		)	(42		)
Stock-based compensation															—		1,996			—			—			1,996
Retirement of treasury stock															—		(43		)	—			43			—
Net income (loss)															—		—			(29,360		)	—			(29,360		)
Balance at September 30, 2018															$	210	$	1,769,852		$	(782,265	)	$	—		$	987,797
Restricted stock activity and shares exchanged for tax withholding															—		—			—			(2		)	(2		)
Stock-based compensation															—		1,880			—			—			1,880
Retirement of treasury stock															—		(2		)	—			2			—
Net income (loss)															—		—			222,423			—			222,423
Balance at December 31, 2018															$	210	$	1,771,730		$	(559,842	)	$	—		$	1,212,098
Restricted stock activity and shares exchanged for tax withholding															—		—			—			(1,484		)	(1,484		)
Stock-based compensation															—		2,090			—			—			2,090
Retirement of treasury stock															—		(1,484		)	—			1,484			—
Net income (loss)															—		—			(96,229		)	—			(96,229		)
Balance at March 31, 2019															$	210	$	1,772,336		$	(656,071	)	$	—		$	1,116,475
Restricted stock activity and shares exchanged for tax withholding															—		—			—			(22		)	(22		)
Stock-based compensation															—		1,850			—			—			1,850
Retirement of treasury stock															—		(22		)	—			22			—
Net income (loss)															—		—			(1,910		)	—			(1,910		)
Balance at June 30, 2019															$	210	$	1,774,164		$	(657,981	)	$	—		$	1,116,393

See notes to Unaudited Consolidated Financial Statements.


~~(1)~~	~~As of March 31, 2018, includes the modification of the 2016 Program and 2017 Program from performance-based liability awards to service-based equity awards. See Note 11 for additional information.~~

HIGHPOINT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~March 31, 2018~~June 30, 2019

1. Organization

HighPoint Resources Corporation, a Delaware corporation, together with its wholly-owned ~~subsidiaries~~subsidiary (collectively, the "Company"), is an independent oil and gas company engaged in the exploration, development and production of oil, natural gas and natural gas liquids ("NGLs"). The Company became the successor to Bill Barrett Corporation ("Bill Barrett"), on March 19, 2018, upon closing of the transactions contemplated by the Agreement and Plan of Merger, dated December 4, 2017 (the "Merger Agreement"), pursuant to which Bill Barrett combined with Fifth Creek Energy Operating Company, LLC ("Fifth Creek") (the "Merger"). As a result of the Merger, Bill Barrett became a wholly-owned subsidiary of HighPoint Resources Corporation and subsequently Bill Barrett changed its name to HighPoint Operating Corporation. The Company currently conducts its activities principally in the Denver Julesburg Basin ("DJ Basin") in Colorado. Except where the context indicates otherwise, references herein to the "Company" with respect to periods prior to the completion of the Merger refer to Bill Barrett and its subsidiaries.

2. Summary of Significant Accounting Policies

Basis of Presentation. The accompanying Unaudited Consolidated Financial Statements include the accounts of the Company. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements include all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly, in all material respects, the Company's interim results. However, operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. The Company's Annual Report on Form 10-K ~~filed by the Company's predecessor Bill Barrett~~ for the year ended December 31, ~~2017~~2018 includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report on Form 10-Q. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated financial statements included in the ~~Bill Barrett 2017~~ Annual Report on ~~Form10-K.~~Form 10-K.

~~The Unaudited Consolidated Statement of Operations for the three months ended March 31, 2018 reflects seventy-eight days of Bill Barrett operations and twelve days of the merged entities' operations.~~

Use of Estimates. In the course of preparing the Company's financial statements in accordance with GAAP, management makes various assumptions, judgments and estimates to determine the reported amount of assets, liabilities, revenues and expenses and in the disclosure of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts initially established.

Areas requiring the use of assumptions, judgments and estimates relate to volumes of oil, natural gas and NGL reserves used in calculating depreciation, depletion and amortization ("DD&A"), the amount of expected future cash flows used in determining possible impairments of oil and gas properties and the amount of future capital costs used in these calculations. Assumptions, judgments and estimates also are required in determining the fair values of assets acquired and liabilities assumed in business combinations, asset retirement obligations, right-of-use assets and lease liabilities, deferred tax assets, the timing of dry hole costs, impairments of proved and unproved oil and gas properties ~~valuing deferred tax assets~~ and ~~estimating~~ fair values of derivative instruments and stock-based payment awards.

Accounts Receivable. Accounts receivable is comprised of the following:



	As of June 30, 2019			As of December 31, 2018
	(in thousands)
Oil, gas and NGL sales	$	42,248		$	44,860
Due from joint interest owners	11,293			27,435
Other	900			754
Allowance for doubtful accounts	(1		)	(106		)
Total accounts receivable	$	54,440		$	72,943

As of March 31, 2018 As of December 31, 2017
(in thousands)
Oil, gas and NGL sales $ 41,056
$ 36,569
Due from joint interest owners 9,081
14,779
Other 132
270
Allowance for doubtful accounts (1 ) (203 )
Total accounts receivable $ 50,268
$ 51,415

Oil and Gas Properties. The Company's oil, gas and NGL exploration and production activities are accounted for using the successful efforts method. Under this method, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending determination of whether the well has found proved reserves. If an exploratory well does not find proved reserves, the costs of drilling the well are charged to expense and remain within cash flows from investing activities in the Unaudited Consolidated Statements of Cash Flows. If an exploratory well does find proved reserves, the costs remain capitalized and are included within additions to oil and gas properties and remain within cash flows from investing activities in the Unaudited Consolidated Statements of Cash Flows. The costs of development wells are capitalized whether proved reserves are added or not. Oil and gas lease acquisition costs are also capitalized. Upon sale or retirement of depreciable or depletable property, the cost and related accumulated DD&A are eliminated from the accounts and the resulting gain or loss is recognized.

Other exploration costs, including certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts.

Unproved oil and gas property costs are transferred to proved oil and gas properties if the properties are subsequently determined to be productive or are assigned proved reserves. Proceeds from sales of partial interests in unproved leases are accounted for as a recovery of cost without recognizing any gain until all costs are recovered. Unproved oil and gas properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks, future plans to develop acreage, recent sales prices of comparable properties and other relevant matters.

~~Materials and supplies consist primarily of tubular goods and well equipment to be used in future drilling operations or repair operations and are carried at the lower of cost or market value.~~

The following table sets forth the net capitalized costs and associated accumulated DD&A and non-cash impairments relating to the Company's oil, natural gas and NGL producing activities:



	As of June 30, 2019			As of December 31, 2018
	(in thousands)
Proved properties	$	670,270		$	663,485
Wells and related equipment and facilities	1,647,456			1,438,092
Support equipment and facilities	90,690			75,392
Materials and supplies	24,480			18,341
Total proved oil and gas properties	$	2,432,896		$	2,195,310
Unproved properties	321,206			328,409
Wells and facilities in progress	147,679			139,799
Total unproved oil and gas properties, excluded from amortization	$	468,885		$	468,208
Accumulated depreciation, depletion, amortization and impairment	(785,345		)	(642,645		)
Total oil and gas properties, net	$	2,116,436		$	2,020,873

As of March 31, 2018 As of December 31, 2017
(in thousands)
Proved properties $ 340,584
$ 230,800
Wells and related equipment and facilities 1,173,470
1,088,692
Support equipment and facilities 49,233
38,776
Materials and supplies 5,634
2,900
Total proved oil and gas properties ⁽¹⁾
$ 1,568,921
$ 1,361,168
Unproved properties ⁽¹⁾
626,487
18,832
Wells and facilities in progress 82,430
65,844
Total unproved oil and gas properties, excluded from amortization $ 708,917
$ 84,676
Accumulated depreciation, depletion, amortization and impairment (473,428 ) (433,234 )
Total oil and gas properties, net $ 1,804,410
$ 1,012,610


~~(1)~~	~~Includes properties acquired in the Merger of $105.7 million of proved oil and gas properties and $607.5 million of unproved properties. See Note 4 for additional information regarding the Merger.~~

The Company reviews oil and natural gas properties for impairment on a quarterly basis or whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. The Company estimates the expected undiscounted future net cash flows of its oil and gas properties using proved and risked probable and possible reserves based on an analysis of quantitative and qualitative factors existing as of the balance sheet date including the Company's development plans and best estimate of future production, commodity pricing, reserve risking, gathering and transportation deductions, production tax rates, lease operating expenses and future development costs. The Company compares such undiscounted future net cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. If the undiscounted future net cash flows exceed the carrying amount of the oil and gas properties, no impairment is taken. If the carrying amount of a property exceeds the undiscounted future net cash flows, the Company will impair the carrying value to fair ~~value based on an analysis of quantitative and qualitative factors existing as of the balance sheet date. The Company does not believe that the undiscounted future net cash flows of its oil and gas~~

~~properties represent the applicable market~~ value. The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the projected cash flows.

In addition, oil and gas properties are assessed for impairment once they meet the criteria to be classified as held for sale. Assets held for sale are carried at the lower of carrying cost or fair value less costs to sell. The fair value of the assets is determined using a market approach, based on an estimated selling price, as evidenced by current marketing activities, if possible. If an estimated selling price is not available, the Company utilizes the income valuation technique, which involves calculating the present value of future net cash flows as discussed above. If the carrying amount of the assets exceeds the fair value less costs to sell, an impairment will result to reduce the value of the properties down to fair value less costs to sell.

~~The Company recognized non-cash impairment charges, which were included within impairment, dry hole costs and abandonment expense in the Unaudited Consolidated Statements of Operations, as follows:~~

Three Months Ended March 31,
2018 2017
(in thousands)
Impairment of unproved oil and gas properties ⁽¹⁾
$ —

$ 8,010
Dry hole costs —
2
Abandonment expense and lease expirations 317
62
Total impairment, dry hole costs and abandonment expense $ 317
$ 8,074


~~(1)~~	The Company recognized impairment related to unproved oil and gas properties in the Cottonwood Gulch area of the Piceance Basin during the three months ended March 31, 2017. The Company had no current plan to develop this acreage.

The provision for DD&A of oil and gas properties is calculated on a field-by-field basis using the unit-of-production method. Natural gas and NGLs are converted to an oil equivalent, Boe, at the standard rate of six Mcf to one Boe and forty-two gallons to one Boe, respectively. Estimated future dismantlement, restoration and abandonment costs are taken into consideration by this calculation.

Accounts Payable and ~~Other~~ Accrued Liabilities. Accounts payable and ~~other~~ accrued liabilities are comprised of the following:



	As of June 30, 2019		As of December 31, 2018
	(in thousands)
Accrued drilling, completion and facility costs	$	75,984	$	69,830
Accrued lease operating, gathering, transportation and processing expenses	7,398		6,970
Accrued general and administrative expenses	7,326		8,774
Accrued interest payable	6,852		6,758
Accrued merger transaction expenses	—		550
Trade payables	13,757		31,057
Operating lease liability	730		—
Other	7,762		7,440
Total accounts payable and accrued liabilities	$	119,809	$	131,379

As of March 31, 2018 As of December 31, 2017
(in thousands)
Accrued drilling, completion and facility costs $ 72,049
$ 35,856
Accrued lease operating, gathering, transportation and processing expenses 7,557
4,360
Accrued general and administrative expenses 8,779
11,134
Accrued interest payable 18,615
6,484
Accrued merger transaction expenses 6,169
8,278
Accrued hedge settlements 3,408
65
Prepayments from partners 1,461
2,524
Trade payables 13,069
10,067
Other 4,818
5,287
Total accounts payable and other accrued liabilities $ 135,925
$ 84,055

Environmental Liabilities. Environmental expenditures that relate to an existing condition caused by past operations and that do not contribute to current or future revenue generation are expensed. Environmental liabilities are accrued when environmental assessments and/or clean-ups are probable, and the costs can be reasonably estimated. ~~Recent case~~Under Wyoming law, ~~in Wyoming has~~the Company is exposed us to potential obligations for plugging and abandoning wells, and associated reclamation, for assets that were

sold to other industry parties in prior ~~years that~~years. When such third parties are ~~now~~unable to fulfill their contractual obligations to the Company as provided for in ~~default. Regulatory agencies~~purchase and sale agreements, landowners, ~~have demanded~~as well as the Bureau of Land Management, may demand that the Company perform such activities.

Revenue Recognition. All of the Company's sales of oil, gas and NGLs are made under contracts with customers, whereby revenues are recognized when the Company satisfies its performance obligations and the customer obtains control of the product. Performance obligations under the Company's contracts with customers are typically satisfied at a point-in-time through monthly delivery of oil, gas and/or NGLs. Accordingly, at the end of the reporting period, the Company does not have any unsatisfied performance obligations. The Company's contracts with customers typically include variable consideration based on monthly pricing tied to local indices and volumes delivered in the current month. The nature of the Company's contracts with customers does not require the Company to constrain variable consideration for accounting purposes. As of ~~March 31, 2018,~~June 30, 2019, the Company had open contracts with customers with terms of 1 month to 2019 years, as well as evergreen contracts that renew on a periodic basis if not canceled by the Company or the customer. The Company's contracts with customers typically require payment within one month of delivery.

Under the Company's contracts with customers, natural gas and its components, including NGLs, are either sold to a midstream entity (which processes the natural gas and subsequently sells the resulting residue gas and NGLs) or are sold to a gas or NGL purchaser after being processed by a third party for a fee. Regardless of the contract structure type, the terms of these contracts compensate the Company for the value of the residue gas and NGLs at current market prices for each product. The Company's oil is sold to anmultiple oil ~~purchaser~~purchasers at specific delivery points at or near the wellhead. All costs incurred to gather, transport and/or process the Company's oil, gas and NGLs after control has transferred to the customer are considered components of the consideration received from the customer and ~~thus~~therefore are recorded in oil, gas and NGL production revenues in the Unaudited Consolidated Statements of Operations. All costs incurred prior to the transfer of control to the customer are included in gathering, transportation and processing expense in the Unaudited Consolidated Statements of Operations.

Gas imbalances from the sale of natural gas are recorded on the basis of gas actually sold by the Company. If the Company's aggregate sales volumes for a well are greater (or less) than its proportionate share of production from the well, a liability (or receivable) is established to the extent there are insufficient proved reserves available to make-up the overproduced (or underproduced) imbalance. Imbalances have not been significant in the periods presented.

Derivative Instruments and Hedging Activities. The Company periodically uses derivative financial instruments to achieve a more predictable cash flow from its oil, natural gas and NGL sales by reducing its exposure to price fluctuations. Derivative instruments are recorded at fair market value and are included in the Unaudited Consolidated Balance Sheets as assets or liabilities.

Income Taxes. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when assets are recovered or liabilities are settled. Deferred income taxes also include tax credits and net operating losses that are available to offset future income taxes. Deferred income taxes are measured by applying currently enacted tax rates. ~~Deferred~~A valuation allowance is recorded if it is more likely than not that all or some portion of the Company's deferred tax assets ~~are~~will not be realized. The Company regularly ~~reviewed,~~assesses the realizability of the deferred tax assets considering all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, ~~taxable~~planning strategies and results of recent operations. The assumptions about future taxable income require significant judgment to determine ~~whether it~~if a valuation allowance is ~~more likely than not that~~required. Changes to the ~~deferred~~Company's development plans, changes in market prices for hydrocarbons, changes in operating results, or other factors could change the valuation allowance in future periods, resulting in recognition of a tax ~~asset will be realized.~~expense or benefit.

The Company accounts for uncertainty in income taxes for tax positions taken or expected to be taken in a tax return. Only tax positions that meet the more-likely-than-not recognition threshold are recognized. The Company does not have any uncertain tax positions recorded as of ~~March 31, 2018.~~June 30, 2019.

Comprehensive Income. The Company has no elements of other comprehensive income, therefore, the Company's net income (loss) on the Unaudited Consolidated Statements of Operations represents comprehensive income.

Earnings/Loss Per Share. Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding during each period. Diluted net income (loss) per common share is calculated by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding and other dilutive securities. Potentially dilutive securities for the diluted net income per common share calculations consist of nonvested ~~equity~~ shares of ~~common stock and in-the-money outstanding stock options to purchase the Company's~~ common stock. As the Company was in a net loss position, all potentially dilutive securities were anti-dilutive for the three and six months ended ~~March 31, 2018~~June 30, 2019 and ~~2017.~~2018.

The following table sets forth the calculation of basic and diluted income (loss) per share:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(in thousands, except per share amounts)
Net income (loss)	$	(1,910	)	$	(46,906	)	$	(98,139	)	$	(71,843	)
Basic weighted-average common shares outstanding in period	210,377			209,393			210,156			166,731
Diluted weighted-average common shares outstanding in period	210,377			209,393			210,156			166,731
Basic net income (loss) per common share	$	(0.01	)	$	(0.22	)	$	(0.47	)	$	(0.43	)
Diluted net income (loss) per common share	$	(0.01	)	$	(0.22	)	$	(0.47	)	$	(0.43	)

Three Months Ended March 31,
2018 2017
(in thousands, except per share amounts)
Net income (loss) $ (24,937 ) $ (13,115 )
Basic weighted-average common shares outstanding in period 123,596
74,544
Diluted weighted-average common shares outstanding in period 123,596
74,544
Basic net income (loss) per common share $ (0.20 ) $ (0.18 )
Diluted net income (loss) per common share $ (0.20 ) $ (0.18 )

New Accounting Pronouncements. In ~~May 2017,~~August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2017-09,~~ ~~Stock Compensation-Scope of Modification Accounting~~2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of this update is to ~~provide clarity and reduce both diversity in practice and cost and complexity when applying a change to~~improve the ~~terms or conditions~~effectiveness of ~~a share-based payment award.~~fair value measurement disclosures. ASU ~~2017-09~~2018-13 is effective for annual periods beginning after December 15, ~~2017,~~2019 and interim periods within those annual periods. The standard will only impact the Company's disclosures.

In June 2018, the FASB issued ASU 2018-07, Stock Compensation-Improvements to Non-employee Share-Based Payment Accounting. The objective of this update was to simplify several aspects of the accounting for non-employee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation- Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. ASU 2018-07 was effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The standard was adopted ~~for this interim period ended March 31, 2018~~on January 1, 2019 and did not have a material impact on the Company's disclosures and financial statements.

In ~~January 2017,~~June 2016, the FASB issued ASU ~~2017-01,~~ ~~Business Combinations: Clarifying the definition of a business~~2016-13, Financial Instruments, Credit Losses. The objective of this update is to ~~clarify~~amend current impairment guidance by adding an impairment model (known as the ~~definition~~current expected credit loss model ("CECL")) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of ~~a business with~~lifetime expected credit losses, which the ~~objective~~FASB believes will result in more timely recognition of ~~adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.~~such losses. ASU ~~2017-01~~2016-13 is effective for annual and interim periods beginning after December 15, 2017. The standard was adopted prospectively for this interim period ended March 31, 2018 and did not have a material impact on the Company's disclosures and financial statements. The accounting treatment of the Merger was not affected by this guidance. See Note 4 for additional information regarding the Merger.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments. The objective of this update is to address eight specific cash flow issues in order to reduce the existing diversity in practice. ASU 2016-15 is effective for the~~ annual periods beginning after December 15, ~~2017,~~2019 and interim periods within those annual periods. The Company does not believe the standard ~~was adopted for this interim period ended March 31, 2018 and did not~~will have a material impact on the Company's ~~disclosures and~~ financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases,followed by additional accounting standards updates that provided additional practical expedients and policy election options (collectively, Accounting Standards Codification Topic 842 ("ASC 842")). The objective of ~~this update is~~ASC 842 was to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and ~~disclosing~~disclose key information about leasing arrangements. ~~ASU 2016-02 is~~ASC 842 was effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. The Company ~~has performed an initial assessment by compiling and analyzing contracts and leasing arrangements that may be affected. The Company is still evaluating the impact of adopting this standard.~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers.~~ The objective of this update is to clarify the principles for recognizing revenue and to develop a common revenue standard. The FASB subsequently issued ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, which provided additional implementation guidance and deferred theadopted ASC 842 effective date of ASU 2014-09. The standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. The standard was adopted for this interim period ended March 31, 2018January 1, 2019 using the modified retrospective ~~transition~~ method and elected the option to not apply ASC 842 to comparative periods. The Company also elected the following practical expedients:

not to recognize lease assets or liabilities on the balance sheet when lease terms are less than 12 months,

carryforward previous conclusions related to current lease classification under the previous lease accounting standard to lease classification for these existing leases under ASC 842,

exclude from evaluation under ASC 842 land easements that existed or expired before adoption of ASC 842, and

to combine lease and non-lease components for certain asset classes.

The adoption of ASC 842 resulted in the recognition of right-of-use assets of $8.6 million, and current and noncurrent lease liabilities of $0.3 million and $13.7 million, respectively, on the Unaudited Consolidated Balance Sheet as of January 1, 2019. The difference between the right-of-use assets and the total lease liability was related to lease incentives and deferred rent balances of $5.4 million, which ~~was applied~~were required to ~~contracts in place at~~be netted against the right-of-use assets as of the implementation date of ~~adoption.~~January 1, 2019. The ~~Company is netting some additional gathering, transportation~~Company's leases included office leases and ~~processing expenses against its oil, gas and NGL production revenues. However, the cash flow and timing~~other equipment, all classified as operating leases. The adoption of ~~the Company's revenue is not impacted and there is therefore~~ASC 842 had no impact on the Company's ~~net income (loss)~~Unaudited Consolidated Statements of Operations or ~~net income (loss) per common share. The standard also requires additional footnote disclosures.~~Cash Flows. See ~~the "Revenue Recognition"~~ ~~section above~~Note 11 for additional ~~disclosures.~~information.

3. Supplemental Disclosures of Cash Flow Information

Supplemental cash flow information is as follows:



	Six Months Ended June 30,
	2019			2018
	(in thousands)
Cash paid for interest	$	26,689		$	25,058
Cash paid for income taxes	—			—
Cash paid for amounts included in the measurements of lease liabilities:
Cash paid for operating leases	595			—
Non-cash operating activities:
Right-of-use assets obtained in exchange for lease obligations
Operating leases ⁽¹⁾	14,955			—
Non-cash investing and financing activities:
Accounts payable and accrued liabilities - oil and gas properties	87,109			79,792
Change in asset retirement obligations, net of disposals	(5,022		)	7,887
Retirement of treasury stock	(1,506		)	(1,490		)
Properties exchanged in non-cash transactions	4,561			—
Issuance of common stock for Merger	—			484,000

Three Months Ended March 31,
2018 2017
(in thousands)
Cash paid for interest $ 395
$ 430
Cash paid for income taxes —
—
Supplemental disclosures of non-cash investing and financing activities:
Accrued liabilities - oil and gas properties 67,047
36,976
Change in asset retirement obligations, net of disposals 7,513
9,395
Retirement of treasury stock (1,462 ) (967 )
Properties exchanged in non-cash transactions —
11,790
Issuance of common stock for Merger 484,000
—


(1)	Excludes the reclassifications of lease incentives and deferred rent balances.

4. ~~Mergers~~Divestiture and Merger

Divestiture

On May 1, 2019, the Company completed the sale of certain non-core assets, primarily low producing or shut-in vertical wells, in the DJ Basin in exchange for the relief of $7.7 million of plugging liabilities associated with these properties. The sale resulted in a loss of $2.3 million, which was recognized in loss on sale of properties in the Company's Unaudited Consolidated Statements of Operations.

2018 Merger with Fifth Creek Energy Operating Company, LLC

On March 19, 2018, the Company completed the Merger with Fifth Creek. Assets acquired include approximately 81,000 net acres in Weld County in the DJ Basin, substantially all of which are operated, and 62 producing standard-length lateral wells and 10 producing extended-reach lateral wells.

As a result of the Merger, the Company recorded additional net proved reserves of approximately 9.3 MMBoe, of which approximately 4.7 MMBoe are proved developed reserves and 4.6 MMBoe are proved undeveloped reserves, as of March 31, 2018.

The Merger was effected through the issuance of ~~100,000,000~~100 million shares of the Company's common stock, with a fair value of $484.0 million on the date of closing, and the repayment of $53.9 million of Fifth Creek debt. In connection with the Merger, the Company incurred costs of ~~approximately $13.5~~$19.2 million ~~to date~~ of severance, consulting, advisory, legal and other merger-related fees, all of which ~~$4.8 million~~were expensed and ~~$8.7 million were~~ included in merger transaction expense in the Company's Unaudited Consolidated ~~Statement~~Statements of ~~Operations for the three months ended March 31, 2018 and in the Company's Consolidated Statement of Operations for the year ended December 31, 2017, respectively.~~Operations.

Purchase Price Allocation

The transaction ~~has been~~was accounted for as a business combination, using the acquisition method, with the Company being the acquirer for accounting purposes. The following table represents the ~~preliminary~~ allocation of the total purchase price to the identifiable assets acquired and the liabilities assumed based on the estimated fair values at the acquisition date. ~~We expect to complete the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate.~~ The following table sets forth ~~our preliminary~~the Company's purchase price allocation:



	March 19, 2018
	(in thousands)
Purchase Price:
Fair value of common stock issued	$	484,000
Plus: Repayment of Fifth Creek debt	53,900
Total purchase price	537,900

Plus Liabilities Assumed:
Accounts payable and accrued liabilities	25,782
Current unfavorable contract	2,651
Other current liabilities	13,797
Asset retirement obligations	7,361
Long-term deferred tax liability	137,707
Long-term unfavorable contract	4,449
Other noncurrent liabilities	2,354
Total purchase price plus liabilities assumed	$	732,001

Fair Value of Assets Acquired:
Cash	543
Accounts receivable	7,831
Oil and Gas Properties:
Proved oil and gas properties	105,702
Unproved oil and gas properties	609,568
Asset retirement obligations	7,361
Furniture, equipment and other	931
Other noncurrent assets	65
Total asset value	$	732,001

March 19, 2018
(in thousands)
Purchase Price:
Fair value of common stock issued $ 484,000
Plus: Repayment of Fifth Creek debt 53,900
Total purchase price 537,900

Plus Liabilities Assumed:
Accounts payable and accrued liabilities 24,469
Current unfavorable contract 2,651
Other current liabilities 13,852
Asset retirement obligations 7,361
Long-term deferred tax liability 137,111
Long-term unfavorable contract 4,449
Other noncurrent liabilities 2,354
Total purchase price plus liabilities assumed $ 730,147

Fair Value of Assets Acquired:
Cash 543
Accounts receivable 8,019
Oil and Gas Properties:
Proved oil and gas properties 105,702
Unproved oil and gas properties 607,526
Asset Retirement Obligations 7,361
Furniture, equipment and other 931
Other noncurrent assets 65
Total asset value $ 730,147

The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of proved oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital rate. The fair value of unproved properties was determined using a market approach utilizing recent transactions of a similar nature in the same basin. These inputs required significant judgments and estimates by management at the time of the valuation and are the most sensitive to possible future changes.

The results of operations attributable to the merged companies are included in the Unaudited Consolidated Statements of Operations beginning on March 19, 2018. The Company generated revenues of approximately ~~$2.1~~$12.3 million and ~~expenses of approximately $1.8~~$14.3 million from the Fifth Creek assets during the ~~period March 19,~~three and six months ended June 30, 2018, ~~to March 31, 2018.~~respectively, and expenses of approximately $9.5 million and $11.3 million during the three and six months ended June 30, 2018, respectively.

Pro Forma Financial Information

The following pro forma condensed combined financial information was derived from the historical financial statements of the Company and Fifth Creek and gives effect to the acquisition as if it had occurred on January 1, ~~2017.~~2018. The below information reflects pro forma adjustments based on available information and certain assumptions that the Company believes are reasonable, including (i) the repayment of Fifth Creek's debt, (ii) depletion of Fifth Creek's fair-valued proved crude oil and natural gas properties, and (iii) the estimated tax impacts of the pro forma adjustments.

Additionally, pro forma earnings for the three months ended ~~March 31,~~June 30, 2018 were adjusted to exclude merger-related costs of ~~$4.8~~$1.3 million incurred by the Company. Pro forma earnings for the six months ended June 30, 2019 and 2018 were adjusted to exclude merger-related costs of $2.4 million and $6.0 million, respectively, incurred by the Company and zero and $4.0 million, respectively, incurred by Fifth ~~Creek for the three months ended March 31, 2018.~~

Creek. The pro forma results of operations do not include any cost savings or other synergies that may have occurred as a result ~~from~~of the acquisition or any estimated costs that have been ~~or will be~~ incurred by usthe Company to integrate the Fifth Creek assets. The pro forma condensed combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the acquisition taken place on January 1, ~~2017;~~2018; furthermore, the financial information is not intended to be a projection of future results.

Three Months Ended March 31,
2018 2017
(in thousands, except per share data)
Revenues $ 96,742
$ 89,688
Net Income (Loss) and Comprehensive Income (Loss) (24,104 ) (10,674 )
Net Income (Loss) per Common Share, Basic and Diluted (0.12 ) (0.06 )



	Three Months Ended June 30,			Six Months Ended June 30,
	2018			2019			2018
	(in thousands, except per share data)
Revenues	$	110,398		$	209,564		$	207,140
Net Income (Loss)⁽¹⁾	(45,629		)	(95,725		)	(69,733		)
Net Income (Loss) per Common Share, Basic ⁽¹⁾	(0.22		)	(0.46		)	(0.33		)
Net Income (Loss) per Common Share, Diluted⁽¹⁾	(0.22		)	(0.46		)	(0.33		)


(1)	The pro forma information for the six months ended June 30, 2019 includes adjustments for merger-related costs of $2.4 million. There were no pro forma adjustments subsequent to the three months ended March 31, 2019.

5. Long-Term Debt

The Company's outstanding debt is summarized below:



		As of June 30, 2019							As of December 31, 2018
	Maturity Date	Principal		Debt Issuance Costs			Carrying Amount		Principal		Debt Issuance Costs			Carrying Amount
		(in thousands)
Amended Credit Facility ⁽¹⁾	September 14, 2023	$	150,000	$	—		$	150,000	$	—	$	—		$	—
7.0% Senior Notes ⁽²⁾	October 15, 2022	350,000		(2,791		)	347,209		350,000		(3,210		)	346,790
8.75% Senior Notes ⁽³⁾	June 15, 2025	275,000		(4,060		)	270,940		275,000		(4,403		)	270,597
Lease Financing Obligation ⁽⁴⁾	August 10, 2020	—		—			—		1,859		—			1,859
Total Debt		$	775,000	$	(6,851	)	$	768,149	$	626,859	$	(7,613	)	$	619,246
Less: Current Portion of Long-Term Debt ⁽⁵⁾		—		—			—		1,859		—			1,859
Total Long-Term Debt		$	775,000	$	(6,851	)	$	768,149	$	625,000	$	(7,613	)	$	617,387

As of March 31, 2018 As of December 31, 2017
Maturity Date Principal Debt Issuance Costs
Carrying
Amount
Principal Debt Issuance Costs
Carrying
Amount
(in thousands)
Amended Credit Facility April 8, 2020 $ —
$ —
$ —
$ —
$ —
$ —
7.0% Senior Notes ⁽¹⁾
October 15, 2022 350,000
(3,837 ) 346,163
350,000
(4,033 ) 345,967
8.75% Senior Notes ⁽²⁾
June 15, 2025 275,000
(4,919 ) 270,081
275,000
(5,080 ) 269,920
Lease Financing Obligation ⁽³⁾
August 10, 2020 2,212
—
2,212
2,328
(2 ) 2,326
Total Debt $ 627,212
$ (8,756 ) $ 618,456
$ 627,328
$ (9,115 ) $ 618,213
Less: Current Portion of Long-Term Debt ⁽⁴⁾
2,212
—
2,212
469
—
469
Total Long-Term Debt $ 625,000
$ (8,756 ) $ 616,244
$ 626,859
$ (9,115 ) $ 617,744


(1)	The ~~aggregate estimated fair~~recorded value of the ~~7.0% Senior Notes was approximately $346.9 million~~Amended Credit Facility approximates its fair value due to its floating rate structure and ~~$356.1 million as of March 31, 2018 and December 31, 2017, respectively, based~~ on ~~reported market trades of these instruments.~~financing terms currently available to the Company.


(2)	The aggregate estimated fair value of the ~~8.75%~~7.0% Senior Notes was approximately ~~$297.8~~$332.6 million and ~~$305.3~~$329.7 million as of ~~March 31, 2018~~June 30, 2019 and December 31, ~~2017,~~2018, respectively, based on reported market trades of these instruments.


(3)	The aggregate estimated fair value of the 8.75% Senior Notes was approximately $264.7 million as of June 30, 2019 and December 31, 2018, respectively, based on reported market trades of these instruments.


(4)	The aggregate estimated fair value of the Lease Financing Obligation was approximately ~~$2.0 million and $2.1~~$1.8 million as of ~~March~~December 31, 2018, ~~and December 31, 2017, respectively. As there is no active, public market for the Lease Financing Obligation, the aggregate estimated fair value was~~ based on market-based parameters of comparable term secured financing instruments.


~~(4)~~	~~The current portion of long-term debt includes the current portion of the Lease Financing Obligation.~~ The Company ~~has elected to exercise~~exercised the early buyout option ~~pursuant to which the Company will purchase~~and purchased the equipment for $1.8 million on February 10, 2019.


(5)	As of December 31, 2018, the current portion of long-term debt included the Lease Financing Obligation, which was settled on February 10, 2019.

Amended Credit Facility

The Company's revolving bank credit facility (the "Amended Credit Facility"), has a maturity date of September 14, 2023, a maximum credit amount of $1.5 billion, an initial elected commitment amount of $500.0 million and an initial borrowing base of $500.0 million. The Company had $150.0 million and zero outstanding under the Amended Credit Facility ~~had commitments from 13 lenders~~as of

June 30, 2019 and ~~a borrowing base of $300.0 million as of March~~December 31, ~~2018.~~2018, respectively. As credit support for future payments under a contractual obligation, a $26.0 million letter of credit has been issued under the Amended Credit Facility, which reduced the available borrowing capacity ofunder the Amended Credit Facility as of ~~March 31, 2018~~June 30, 2019 to ~~$274.0~~$324.0 million. ~~There were no borrowings under the Amended Credit Facility in 2018 to date or in 2017.~~

Interest rates are either adjusted LIBOR plus applicable margins of 1.5% to 2.5% or ~~ABR~~an alternate base rate plus applicable margins of 0.5% to 1.5%, and the unused commitment fee is between 0.375% and 0.5%. The applicable margin and the unused commitment fee rate are determined based on borrowing base utilization.

The ~~borrowing base under~~weighted average annual interest rate incurred on the Amended Credit Facility ~~is determined at~~was 4.2% and 4.1%, respectively, for the ~~discretion of the lenders, based on the collateral value of the Company's proved reserves that have been mortgaged to the lenders,~~three and ~~is subject to regular re-~~six months ended June 30, 2019.

determinations on or about April 1 and October 1 of each year, as well as following any property sales. On May 1, 2018, the Company's borrowing base was re-affirmed at $300.0 million based on Bill Barrett's proved reserves in place at December 31, 2017 and the Company's commodity hedge position. Borrowing bases are computed based on proved oil, natural gas and NGL reserves, hedge positions and estimated future cash flows from those reserves calculated using future commodity pricing provided by the Company's lenders, as well as any other outstanding debt. Lower commodity prices could result in a decreased borrowing base.

The Amended Credit Facility contains certain financial covenants. The Company is currently in compliance with all financial covenants and has complied with all financial covenants since issuance. If the Company fails to comply with the covenants or other terms of any agreements governing the Company's debt, the Company's lenders and holders of the Company's senior notes may have the right to accelerate the maturity of that debt and foreclose upon the collateral, if any, securing that debt. The occurrence of any such event would adversely affect the Company's financial condition.

~~7.0%~~ Senior Notes ~~Due 2022~~

The Company's $350.0 million aggregate principal amount of 7.0% Senior Notes mature on October 15, 2022 at par, unless earlier redeemed or purchased by the Company. Interest is payable in arrears semi-annually on April 15 and October 15 of each year. The 7.0% Senior Notes are senior unsecured obligations and rank equal in right of payment with all of the Company's other existing and future senior unsecured indebtedness, including the 8.75% Senior Notes.

The 7.0% Senior Notes became redeemable at the Company's option on October 15, 2017 at a redemption price of 103.500% of the principal amount. The redemption price will decrease to 102.333%, 101.167% and 100.000% of the principal amount in 2018, 2019 and 2020, respectively. The 7.0% Senior Notes include certain covenants that limit the Company's ability to incur additional indebtedness, make restricted payments, create liens or sell assets and that generally prohibit the Company from paying dividends. The Company is currently in compliance with all covenants and has complied with all covenants since issuance.

~~8.75% Senior Notes Due 2025~~

The Company's $275.0 million aggregate principal amount of 8.75% Senior Notes mature on June 15, 2025 at par, unless earlier redeemed or purchased by the Company. Interest is payable in arrears semi-annually on June 15 and December 15 of each year. The 8.75% Senior Notes are senior unsecured obligations and rank equal in right of payment with all of the Company's other existing and future senior unsecured indebtedness, including the 7.0% Senior Notes.

The 8.75% Senior Notes will become redeemable at the Company's option on or after June 15, 2020, 2021, 2022 and 2023 at redemption prices of 106.563%, 104.375%, 102.188% and 100.000% of the principal amount, respectively. Prior to June 15, 2020, the Company may use proceeds of an equity offering to redeem up to 35% of the principal amount at a redemption price of 108.750% of the principal amount. In addition, prior to June 15, 2020, the Company may redeem the notes at a redemption price equal to 100.000% of the principal amount plus a specified "make-whole" premium. The 8.75% Senior Notes include certain covenants that limit the Company's ability to incur additional indebtedness, make restricted payments, create liens or sell assets and that generally prohibit the Company from paying dividends. The Company is currently in compliance with all covenants and has complied with all covenants since issuance.

The issuer of the 7.0% Senior Notes and the 8.75% Senior Notes is HighPoint Operating Corporation (f/k/a Bill Barrett). Pursuant to supplemental indentures entered into in connection with the Merger, HighPoint Resources Corporation became a guarantor of the 7.0% Senior Notes and the 8.75% Senior Notes in March 2018. ~~A subsidiary of HighPoint Operating Corporation is also a guarantor of the Senior Notes.~~ All covenants in the indentures governing the notes limit the activities of ~~the~~ HighPoint Operating Corporation, ~~and the subsidiary guarantor,~~ including limitations on the ability ~~of HighPoint Operating Corporation~~ to pay dividends, incur additional indebtedness, make restricted payments, create liens, sell assets or make loans to ~~High Point~~HighPoint Resources Corporation, but in most cases the covenants in the indentures are not applicable to HighPoint Resources Corporation. HighPoint Operating Corporation is currently in compliance with all covenants and has complied with all covenants since issuance.

Nothing in the indentures governing the 7.0% Senior Notes or the 8.75% Senior Notes prohibits the Company from repurchasing any of the notes from time to time at any price in open market purchases, negotiated transactions or by tender offer or otherwise without any notice to or consent of the holders.

Lease Financing Obligation Due 2020

The Company ~~has~~had a lease financing obligation with a balance of ~~$2.2~~$1.9 million as of ~~March~~December 31, 2018 resulting from the Company's sale and subsequent lease back of certain compressors and related facilities owned by the Company (the "Lease Financing Obligation"). The ~~Lease Financing Obligation expires on August 10, 2020, and~~Company elected to exercise the ~~Company has the option to purchase the equipment at the end of the lease term for the then current fair market value. The Lease Financing Obligation also contains an~~ early buyout option ~~pursuant to which the Company will purchase~~and purchased the equipment for $1.8 million on February 10, 2019. The lease payments related to the equipment are recognized as principal and interest expense based on a weighted average implicit interest rate of 3.3%. See Note 12 for a discussion of aggregate minimum future lease payments.

6. Asset Retirement Obligations

A reconciliation of the Company's asset retirement obligations for the ~~three~~six months ended ~~March 31, 2018~~June 30, 2019 is as follows (in thousands):


As of December 31, 2017	$	17,586
As of December 31, 2018				$	29,655
Liabilities incurred ⁽¹⁾	7,795			2,347
Liabilities settled	(282		)	(789		)
Disposition of properties ⁽¹⁾				(7,668		)
Accretion expense	251			771
Revisions to estimate	—			1,088
As of March 31, 2018	$	25,350
As of June 30, 2019				$	25,404
Less: Current asset retirement obligations	1,443			3,008
Long-term asset retirement obligations	$	23,907		$	22,396


(1)	~~Includes~~ ~~$7.4 million~~ ~~associated with properties acquired in the Merger during the~~ ~~three~~ ~~months ended~~ ~~March 31, 2018~~. See ~~Note 4 for~~ additional information regarding ~~this Merger.~~ disposition of properties in Note 4.

7. Fair Value Measurements

Fair value is defined 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 (exit price). The Company uses market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. These inputs can be readily observable, market corroborated or generally unobservable. A fair value hierarchy was established 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 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Quoted prices are available in active markets for similar assets or liabilities and in non-active markets for identical or similar instruments. Model-derived valuations have inputs that are observable or whose significant value drivers are observable. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, 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 than objective sources. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value. At each balance sheet date, the Company performs an analysis of all applicable instruments and includes in Level 3 all of those whose fair value is based on significant unobservable inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Certain assets and liabilities are measured at fair value on a recurring basis in ~~our~~the Company's consolidated balance sheet. The following methods and assumptions were used to estimate the fair values:

Cash equivalents – The highly liquid cash equivalents are recorded at fair value. Carrying value approximates fair value, which represents a Level 1 input.

Deferred compensation plan – The Company maintains a non-qualified deferred compensation plan which allows certain management employees to defer receipt of a portion of their compensation. The Company maintains assets for the deferred compensation plan in a rabbi trust. The assets of the rabbi trust are invested in publicly traded mutual funds and are recorded in other current and other long-term assets in the Unaudited Consolidated Balance Sheets. The deferred compensation plan financial assets are reported at fair value based on active market quotes, which represent Level 1 inputs.

Commodity derivatives – The fair value of crude oil, natural gas and NGL swaps and costless collars are valued based on an income approach using various assumptions, such as quoted forward prices for commodities and time value factors. These assumptions are observable in the marketplace throughout the full term of the contract, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace, and are, therefore, designated as Level 2 inputs. The Company utilizes its counterparties' valuations to assess the reasonableness of its own valuations. At times, the Company utilizes an independent third party to perform the valuation.

The commodity derivatives have been adjusted for non-performance risk. For applicable financial assets carried at fair value, the credit standing of the counterparties is analyzed and factored into the fair value measurement of those assets. In addition, the fair value measurement of a liability has been adjusted to reflect the nonperformance risk of the Company.

The following tables set forth by level within the fair value hierarchy the Company's non-financial assets and liabilities that were measured at fair value on a recurring basis in the Unaudited Consolidated Balance Sheets.


	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)								(in thousands)
As of March 31, 2018
As of June 30, 2019
Financial Assets
Cash equivalents	$	196,710	$	—	$	—	$	196,710	$	4,344	$	—	$	—	$	4,344
Deferred compensation plan	1,880		—		—		1,880		1,816		—		—		1,816
Commodity derivatives	—		1,281		—		1,281		—		26,387		—		26,387
Financial Liabilities
Commodity derivatives	—		45,708		—		45,708		—		7,236		—		7,236
As of December 31, 2017
As of December 31, 2018
Financial Assets
Cash equivalents	271,027		—		—		271,027		$	12,188	$	—	$	—	$	12,188
Deferred compensation plan	1,749		—		—		1,749		1,392		—		—		1,392
Commodity derivatives	—		656		—		656		—		109,494		—		109,494
Financial Liabilities
Commodity derivatives	—		25,714		—		25,714		—		1,039		—		1,039

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in ~~our~~the Company's consolidated balance sheets. The following methods and assumptions were used to estimate the fair values:

Oil and gas properties –Oil and gas property costs are evaluated for impairment and reduced to fair value when there is an indication that the carrying costs may not be recoverable. If an impairment is necessary, the fair value is estimated by using either a market approach based on recent sales prices of comparable properties and/or indications from marketing activities or by using the income valuation technique, which involves calculating the present value of future net revenues. The present value, net of estimated operating and development costs, is calculated using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the projected cash flows, predominantly all of which are designated as Level 3 inputs within the fair value hierarchy.

~~Information about the impaired assets is as follows:~~

Level 1 Level 2 Level 3
Net Book
Value ⁽¹⁾
Impairment
Loss
(in thousands)
As of March 31, 2018
Proved and unproved properties $ —
$ —
$ —
$ —
$ —
As of December 31, 2017
Uinta Basin oil and gas properties⁽²⁾
—
—
106,587
144,532
37,945
DJ Basin unproved properties ⁽³⁾
—
—
18,832
20,887
2,055
Piceance Basin unproved properties ⁽⁴⁾
—
—
—
9,098
9,098


~~(1)~~	~~Amount represents net book value at the date of assessment.~~


~~(2)~~	The Company recognized a non-cash impairment charge associated with the Company's Uinta Oil Program proved properties during the year ended December 31, 2017. The properties were sold on December 29, 2017.


~~(3)~~	~~As a result of having no future plans~~ No properties were reduced to develop certain acreage and/or estimated market values below carrying value, the Company recognized non-cash impairment charges of $2.1 million associated with certain non-core unproved properties in the DJ Basin during the year ended December 31, 2017.


~~(4)~~	As a result of having no future plans to develop certain acreage and/or estimated market values below carrying value, the Company recognized non-cash impairment charges of $9.1 million associated with certain unproved properties in the Cottonwood Gulch area of the Piceance Basin during the year ended December 31, 2017.

~~Purchase price allocation~~ –~~The Merger was~~accounted for as a business combination, using the acquisition method. The allocation of the total purchase price to the identifiable assets acquired and the liabilities assumed was based on the fair values at the acquisition date. See Note 4 for additional information regarding the fair value ofduring the ~~Merger.~~three or six month periods ended June 30, 2019 and 2018.

Additional Fair Value Disclosures

Long-term Debt – Long-term debt is not presented at fair value on the Unaudited Consolidated Balance Sheets, as it is recorded at carrying value, net of unamortized debt issuance costs. The fair values of the Company's fixed rate 7.0% Senior Notes and 8.75% Senior Notes totaled ~~$644.7~~$597.3 million and $594.4 million as of ~~March 31, 2018. The fair values of the Company's fixed rate 7.0% Senior Notes~~June 30, 2019 and ~~8.75% Senior Notes totaled $661.4 million as of~~ December 31, ~~2017.~~2018, respectively. The fair values of the Company's fixed rate Senior Notes are based on active market quotes, which represent Level 1 inputs.

There is no active, public market for the Amended Credit ~~Facility or Lease Financing Obligation.~~Facility. The recorded value of the Amended Credit Facility approximates its fair value due to its floating rate structure based on the LIBOR spread, secured interest, and the Company's borrowing base utilization. The Amended Credit Facility had a balance of $150.0 million as of June 30, 2019 and zero as of ~~March 31, 2018 and~~ December 31, 2017. The Lease Financing Obligation fair values of $2.0 million and $2.1 million as of March 31, 2018 and December 31, 2017, respectively, are measured based on market-based parameters of comparable term secured financing instruments.2018. The fair value measurements for the Amended Credit Facility ~~and Lease Financing Obligation~~ represent Level 2 inputs.

8. Derivative Instruments

The Company uses financial derivative instruments as part of its price risk management program to achieve a more predictable cash flow from its production revenues by reducing its exposure to commodity price fluctuations. The Company has entered into financial commodity swap contracts and costless collars related to the sale of a portion of the Company's production. The Company does not enter into derivative instruments for speculative or trading purposes.

In addition to financial contracts, the Company may at times be party to various physical commodity contracts for the sale of oil, natural gas and NGLs that have varying terms and pricing provisions. These physical commodity contracts qualify for the normal purchase and normal sale exception and, therefore, are not subject to hedge or mark-to-market accounting. The

financial impact of physical commodity contracts is included in oil, natural gas and NGL production revenues at the time of settlement.

All derivative instruments, other than those that meet the normal purchase and normal sale exception, as mentioned above, are recorded at fair value and included on the Unaudited Consolidated Balance Sheets as assets or liabilities. The following

table summarizes the location, as well as the gross and net fair value amounts, of all derivative instruments presented on the Unaudited Consolidated Balance Sheets as of the dates indicated.

   As of March 31, 2018
Balance Sheet Gross Amounts of
Recognized Assets Gross Amounts
Offset in the Balance
Sheet Net Amounts of
Assets Presented in
the Balance Sheet
(in thousands)
Derivative assets $ 949
$ (949 )
⁽¹⁾
$ —
Deferred financing costs and other noncurrent assets 332
(332 )
⁽¹⁾
—
Total derivative assets $ 1,281
$ (1,281 ) $ —

Gross Amounts of
Recognized Liabilities Gross Amounts
Offset in the Balance
Sheet Net Amounts of
Liabilities Presented in
the Balance Sheet
(in thousands)
Derivative liabilities $ (36,815 ) $ 949
⁽¹⁾
$ (35,866 )
Derivatives and other noncurrent liabilities (8,893 ) 332
⁽¹⁾
(8,561 )
Total derivative liabilities $ (45,708 ) $ 1,281
   $ (44,427 )


As of December 31, 2017
Balance Sheet Gross Amounts of
Recognized Assets Gross Amounts
Offset in the Balance
Sheet Net Amounts of
Assets Presented in
the Balance Sheet
(in thousands)
Derivative assets $ 594
$ (594 )
⁽¹⁾
$ —
Deferred financing costs and other noncurrent assets 62
(62 )
⁽¹⁾
—
Total derivative assets $ 656
$ (656 ) $ —

Gross Amounts of
Recognized Liabilities Gross Amounts
Offset in the Balance
Sheet Net Amounts of
Liabilities Presented in
the Balance Sheet
(in thousands)
Derivative liabilities $ (21,534 ) $ 594
⁽¹⁾
$ (20,940 )
Derivatives and other noncurrent liabilities (4,180 ) 62
⁽¹⁾
(4,118 )
Total derivative liabilities $ (25,714 ) $ 656
   $ (25,058 )



	As of June 30, 2019
Balance Sheet	Gross Amounts of Recognized Assets			Gross Amounts Offset in the Balance Sheet				Net Amounts of Assets Presented in the Balance Sheet
	(in thousands)
Derivative assets (current)	$	18,554		$	(6,390	)	⁽¹⁾	$	12,164
Derivative assets (noncurrent)	7,833			(771		)	⁽¹⁾	7,062
Total derivative assets	$	26,387		$	(7,161	)		$	19,226

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Balance Sheet				Net Amounts of Liabilities Presented in the Balance Sheet
	(in thousands)
Accounts payable and accrued liabilities	$	(6,465	)	$	6,390		⁽¹⁾	$	(75	)
Other noncurrent liabilities	(771		)	771			⁽¹⁾	—
Total derivative liabilities	$	(7,236	)	$	7,161			$	(75	)

	As of December 31, 2018
Balance Sheet	Gross Amounts of Recognized Assets			Gross Amounts Offset in the Balance Sheet				Net Amounts of Assets Presented in the Balance Sheet
	(in thousands)
Derivative assets (current)	$	82,205		$	(1,039	)	⁽¹⁾	$	81,166
Derivative assets (noncurrent)	27,289			—			⁽¹⁾	27,289
Total derivative assets	$	109,494		$	(1,039	)		$	108,455

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Balance Sheet				Net Amounts of Liabilities Presented in the Balance Sheet
	(in thousands)
Accounts payable and accrued liabilities	$	(1,039	)	$	1,039		⁽¹⁾	$	—
Other noncurrent liabilities	—			—				—
Total derivative liabilities	$	(1,039	)	$	1,039			$	—


(1)	Asset and liability balances with the same counterparty are presented as a net asset or liability on the Unaudited Consolidated Balance Sheets.

As of ~~March 31, 2018,~~June 30, 2019, the Company had ~~financial instruments~~swap contracts in place to hedge the following volumes for the periods indicated:



	July – December 2019			For the year 2020			For the year 2021
	Derivative Volumes	Weighted Average Price		Derivative Volumes	Weighted Average Price		Derivative Volumes	Weighted Average Price
Oil (Bbls)	3,076,743	$	59.01	4,434,500	$	59.44	181,000	$	57.13
Natural Gas (MMbtu)	1,288,000	$	2.11	—	$	—	—	$	—

As of June 30, 2019, the Company had cashless collars (purchased put options and written call options) in place to hedge the following volumes for the periods indicated:



	July – December 2019
	Derivative Volumes	Weighted Average Floor Price		Weighted Average Ceiling Price
Oil (Bbls)	552,000	$	55.00	$	77.56

April – December 2018 For the year 2019 For the year 2020
Derivative
Volumes Weighted Average Price Derivative Volumes Weighted Average Price Derivative Volumes Weighted Average Price
Oil (Bbls) 3,602,619
$ 54.14
3,280,434
$ 55.00
183,000
$ 50.20
Natural Gas (MMbtu) 1,375,000
$ 2.68
—
$ —
—
$ —

The Company's derivative financial instruments are generally executed with major financial or commodities trading institutions. The instruments expose the Company to market and credit risks and may, at times, be concentrated with certain counterparties or groups of counterparties. The Company had derivatives in place with ~~seven~~10 different counterparties as of ~~March 31, 2018.~~June 30, 2019. Although notional amounts are used to express the volume of these contracts, the amounts potentially subject to credit risk in the event of non-performance by the counterparties are substantially smaller. The creditworthiness of

counterparties is subject to continual review by management, and the Company believes all of these institutions currently are acceptable credit risks. Full performance is anticipated, and the Company has no past due receivables from any of ~~these~~its counterparties.

It is the Company's policy to enter into derivative contracts with counterparties that are lenders in the Amended Credit Facility, affiliates of lenders in the Amended Credit Facility or potential lenders in the Amended Credit Facility. The Company's derivative contracts are documented using an industry standard contract known as a Schedule to the Master Agreement and International Swaps and Derivative Association, Inc. ("ISDA") Master Agreement or other contracts. Typical terms for these contracts include credit support requirements, cross default provisions, termination events and set-off provisions. The Company is not required to provide any credit support to its counterparties other than cross collateralization with the properties securing the Amended Credit Facility. The Company has set-off provisions in its derivative contracts with lenders under its Amended Credit Facility which, in the event of a counterparty default, allow the Company to set-off amounts owed to the defaulting counterparty under the Amended Credit Facility or other obligations against monies owed to the Company under derivative contracts. Where the counterparty is not a lender under the Company's Amended Credit Facility, the Company may not be able to set-off amounts owed by the Company under the Amended Credit Facility, even if such counterparty is an affiliate of a lender under such facility. The Company does not have any derivative balances that are offset by cash collateral.

9. Income Taxes

~~On the date of the Merger, the Fifth Creek assets were acquired~~The Company accounts for uncertainty in income taxes for tax positions taken or expected to be taken in a ~~nontaxable transaction pursuant to Section 351 of~~tax return in accordance with the ~~Internal Revenue Code. Accordingly, a deferred tax liability of~~ ~~$137.1 million~~ ~~was recorded to reflect the difference between the fair value recorded and~~FASB's rules on income taxes. The Company recognizes the tax ~~basis of the assets acquired and liabilities assumed.~~

~~The~~benefit from an uncertain tax ~~effects of temporary differences that give rise to significant components of the deferred tax assets and deferred tax liabilities as of March 31, 2018 and December 31, 2017 are presented below:~~

As of March 31, 2018 As of December 31, 2017
(in thousands)
Deferred tax assets:
Net operating loss carryforward $ 116,193
$ 170,536
Stock-based compensation 2,849
3,826
Deferred rent —
163
Deferred compensation 846
1,824
State tax credit carryforwards —
6,499
Financing obligation 678
705
Accrued expenses 325
248
Investment in partnership 1,255
—
Derivative instruments 10,945
6,158
Other assets 2,314
228
Less: Valuation allowance (51,719 ) (114,530 )
Total deferred tax assets 83,686
75,657
Deferred tax liabilities:
Oil and gas properties (220,705 ) (75,409 )
Prepaid expenses (92 ) (248 )
Total deferred tax assets (liabilities) (220,797 ) (75,657 )
Net deferred tax assets (liabilities) $ (137,111 ) $ —

In connection with the Merger, the Company had a greater than 50% ownership change pursuant to Section 382 of the Internal Revenue Code. As a result of the ownership change, the Company's ability to use pre-change net operating losses ("NOLs") and credits against post-change taxable income is limited to an annual amount plus any built-in gains recognized within five years of the ownership change. The Company's annual limitation amount is approximately $11.7 million. The Company has reduced its Federal and state net operating losses by $274.6 million and $10.0 million, respectively, and eliminated its state tax credits by $8.2 million to reflect the expected impact of the Section 382 limitation. Deferred tax assets

~~and the corresponding valuation allowance have been reduced by $64.5 million for the expected tax effect of the Section 382 limitation. As of~~ ~~March 31, 2018, the Company projected approximately $471.1 million and $471.5 million of Federal and state NOLs, respectively. The Federal NOLs begin to expire in 2025 and the state NOLs begin to expire in 2029.~~

On December 22, 2017, Congress signed into law the Tax Cut and Jobs Act of 2017 ("TCJA"). The TCJA includes significant changes to the U.S. corporate tax system including a rate reduction from 35% to 21% beginning in January of 2018. Accordingly, the 21% Federal tax rate is utilized in computing the Company's annualized effective tax rate. Other provisions of TCJA include the elimination of the corporate alternative minimum tax, acceleration of depreciation for U.S. tax purposes, limitations on deductibility of interest expense, expanded Section 162(m) limitations on the deductibility of officer's compensation, the elimination of NOL carrybacks, and indefinite carryforwards on losses generated after 2017, subject to restrictions on their utilization.

~~In assessing the ability to realize the benefit of the deferred tax assets, management must consider whether~~position only if it is more likely than not that ~~some portion~~the tax position will be sustained upon examination by the taxing authorities. During the three and six months ended June 30, 2019 and 2018, the Company had no uncertain tax positions.

The Company's policy is to classify accrued penalties and interest related to unrecognized tax benefits in the Company's income tax provision. The Company did not record any accrued interest or ~~all~~penalties associated with unrecognized tax benefits during the three and six months ended June 30, 2019 and 2018.

Income tax benefit for the three and six months ended June 30, 2019 and 2018 differs from the amounts that would be provided by applying the U.S. statutory income tax rates to pretax income or loss principally due to stock-based compensation, political lobbying expense, political contributions, nondeductible officer compensation, state income taxes, and for 2018, the effect of deferred tax asset valuation allowances. For the three and six months ended June 30, 2019 the Company recognized $0.1 million of income tax expense and $29.6 million of income tax benefit, respectively. No income tax expense or benefit was recognized for the three and six months ended June 30, 2018 as a result of a full valuation allowance against the deferred tax ~~assets will not be realized. Management~~asset balance. The Company considers all available evidence (both positive and negative) ~~in determining~~to estimate whether ~~a valuation allowance is required.~~sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. Such evidence includes the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment, and judgment is required in considering the relative weight of negative and positive evidence. ~~In regard~~The Company continues to monitor facts and circumstances in the ~~Company's~~reassessment of the likelihood that operating loss carryforwards, credits and other deferred tax assets ~~the Company considered all available evidence in assessing the need for a valuation allowance.~~will be utilized prior to their expiration.

10. ~~Stockholders' Equity~~

~~Common and Preferred Stock.~~ ~~The Company's authorized capital structure consists of~~ ~~75,000,000~~ ~~shares of preferred stock, par value,~~ ~~$0.001~~ ~~per share, and~~ ~~400,000,000~~ ~~shares of common stock, par value~~ ~~$0.001~~ ~~per share. In March 2018, the Company increased the number of authorized shares of common stock from~~ ~~300,000,000~~ to ~~400,000,000~~ ~~with the Amended and Restated Certificate of Incorporation. There are no issued and outstanding shares of preferred stock.~~

In March 2018, the Company completed the Merger with Fifth Creek. Pursuant to the Merger Agreement, each share of Bill Barrett common stock, par value $0.001 per share (the "BBG Common Stock"), issued and outstanding immediately prior to the closing of the Merger was converted into one share of the Company's common stock and all outstanding equity interests in Fifth Creek, in the aggregate, were converted into 100,000,000 shares of the Company's common stock. In addition, all options to purchase shares of BBG Common Stock and all common stock awards and performance-based cash unit awards relating to BBG Common Stock that were outstanding immediately prior to the closing of the Merger were generally converted into corresponding awards relating to shares of the Company's common stock on the same terms and conditions (excluding performance conditions) as applied prior to the closing of the Merger (with 2016 and 2017 Program performance-based cash units converting into time-based common stock awards based on actual performance for the 2016 program and target performance for the 2017 program through the closing date). See Note 11 for additional information on equity compensation.

In March 2018, the Company terminated the Equity Distribution Agreement (the "Agreement"), dated as of June 2015, by and between the Company and Goldman, Sachs and Co. (the "Manager"). The Agreement was terminable at will upon written notification by the Company with no penalty. Pursuant to the terms of the Agreement, the Company was permitted to sell, from time to time through or to the Manager, shares of its common stock having an aggregate gross sales price of up to $100.0 million. Sales of the shares, if any, would be made by means of ordinary brokers' transactions through the facilities of the New York Stock Exchange, at market prices, in block transactions, to or through a market maker, through an electronic communications network or as otherwise agreed by the Company and the Manager. As of March 31, 2018, no shares had been sold pursuant to the Agreement.

~~11.~~ Equity Incentive Compensation Plans and Other Long-term Incentive Programs

The Company maintains various stock-based compensation plans and other employee benefits as discussed below. Stock-based compensation is measured at the grant date based on the value of the awards, and the fair value is recognized on a straight-line basis over the requisite service period (usually the vesting period). Nonvested shares of common stock generally vest ratably over a three year service period, and nonvested shares of common stock units vest over a one year service period.

Cash-based compensation is measured at fair value at each reporting date and is recognized on a straight-line basis over the requisite service period (usually the vesting period). Cash-based awards generally have a cliff vest of three years.

The following table presents the long-term equity and cash incentive compensation related to awards for the periods indicated:


	Three Months Ended March 31,						Three Months Ended June 30,				Six Months Ended June 30,
	2018			2017			2019		2018		2019		2018
	(in thousands)						(in thousands)
Nonvested common stock ⁽¹⁾	$	1,330		$	1,450		$	1,533	$	1,520	$	3,329	$	2,850
Nonvested common stock units⁽¹⁾	170			170			318		277		612		447
Nonvested performance-based shares ⁽¹⁾	—			469
Nonvested performance cash units ⁽²⁾⁽³⁾	(73		)	(961		)	445		451		1,077		378
Total	$	1,427		$	1,128		$	2,296	$	2,248	$	5,018	$	3,675


(1)	Unrecognized compensation ~~cost~~expense as of ~~March 31, 2018~~June 30, 2019 was ~~$10.4~~$10.1 million, which related to grants of nonvested shares of common stock that are expected to be recognized over a weighted-average period of ~~2.1~~1.9 years.

(2)

The nonvested performance-based cash units are accounted for as liability awards with $1.4 million ~~in accounts payable~~ and ~~accrued liabilities as of December 31, 2017 and $0.2 million and $3.0~~$0.3 million in ~~derivatives and~~ other noncurrent liabilities as of ~~March 31, 2018~~June 30, 2019 and December 31, ~~2017,~~2018, respectively, in the Unaudited Consolidated Balance Sheets. The decrease in liability was due to the closing of the Merger and the resulting conversion of the 2016 and 2017 Programs from liability awards to equity awards. See the 2016 Program and 2017 Program below for additional information on the conversion.

(3)

Liability awards are fair valued at each reporting date. For the three months ended March 31, 2018, the weighted average fair value share price decreased from $5.10 as of December 31, 2017 to $5.08 as of March 31, 2018. Prior to the 2016 and 2017 Program conversion discussed below, the weighted average fair value share price was $4.63 resulting in a decrease in expense offset by an increase inThe expense for the ~~2018 Program. See "2016 Program" and "2017 Program" below for additional information regarding the conversion. For the three months ended March 31, 2017, the weighted average~~period will increase or decrease based on updated fair ~~value share price decreased from $8.89 as~~values of ~~December 31, 2016 to $4.55 as of March 31, 2017.~~these awards at each reporting date.

Nonvested Equity and Cash Awards. The following tables present the equity and cash awards granted pursuant to the Company's various stock compensation plans. A summary of the Company's nonvested common stock awards for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 ~~and 2017~~ is presented below:


									Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
Nonvested Common Stock Awards									Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at April 1,									3,431,780		$	3.90	2,657,535		$	5.14
Granted									6,000		2.66		221,025		7.08
Vested									(30,031	)	5.81		(15,724	)	5.45
Forfeited or expired									(1,615	)	7.14		(4,558	)	7.38
Outstanding at June 30,									3,406,134		3.88		2,858,278		5.28

	Three Months Ended March 31, 2018				Three Months Ended March 31, 2017				Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
Nonvested Common Stock Awards	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1,	1,394,868		$	7.00	1,169,099		$	9.33	2,912,166		$	5.27	1,394,868		$	7.00
Granted	796,423		5.00		749,227		6.10		1,841,700		2.64		1,017,448		5.45
Modified ⁽¹⁾	1,146,305		4.84		—		—		—		—		1,146,305		4.84
Vested	(652,208	)	8.35		(468,603	)	10.55		(1,329,630	)	5.20		(667,932	)	8.28
Forfeited or expired	(27,853	)	6.62		(7,784	)	9.53		(18,102	)	4.96		(32,411	)	6.73
Outstanding at March 31,	2,657,535		5.14		1,441,939		7.25
Outstanding at June 30,									3,406,134		3.88		2,858,278		5.28


(1)	Due to the closing of the Merger, the 2016 and 2017 Performance Cash Programs were converted from nonvested performance-based cash units to nonvested common stock awards, resulting in an increase ofin nonvested common stock awards for the ~~three~~six months ended ~~March 31,~~June 30, 2018.

A summary of the Company's nonvested common stock unit awards for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 ~~and 2017~~ is presented below:



	Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
Nonvested Common Stock Unit Awards	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Outstanding at April 1,	311,237		$	7.26	272,559		$	6.37
Granted	628,380		1.87		158,885		6.87
Vested	(143,514	)	5.77		(129,027	)	4.62
Outstanding at June 30,	796,103		3.27		302,417		7.37

	Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
Nonvested Common Stock Unit Awards	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Outstanding at January 1,	311,237		$	7.26	272,559		$	6.37
Granted	643,084		1.88		162,083		6.83
Vested	(158,218	)	5.44		(132,225	)	4.63
Outstanding at June 30,	796,103		3.27		302,417		7.37

Three Months Ended March 31, 2018 Three Months Ended March 31, 2017
Nonvested Common Stock Unit Awards Units Weighted Average
Grant Date
Fair Value Units Weighted Average
Grant Date
Fair Value
Outstanding at January 1, 272,559
$ 6.37
147,167
$ 10.09
Granted 3,198
5.08
3,571
4.55
Vested (3,198 ) 5.08
(3,571 ) 4.55
Forfeited or expired —
—
—
—
Outstanding at March 31, 272,559
6.37
147,167
10.09

A summary of the Company's nonvested performance-based cash unit awards for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 ~~and 2017~~ is presented below:


									Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
Nonvested Performance-Based Cash Unit Awards									Units		Weighted Average Fair Value		Units		Weighted Average Fair Value
Outstanding at April 1,									2,868,634				796,423
Granted									—				49,833
Outstanding at June 30,									2,868,634		$	1.82	846,256		$	6.08

	Three Months Ended March 31, 2018				Three Months Ended March 31, 2017				Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
Nonvested Performance-Based Cash Unit Awards	Units		Weighted Average Fair Value		Units		Weighted Average Fair Value		Units		Weighted Average Fair Value		Units		Weighted Average Fair Value
Outstanding at January 1,	1,548,083				942,326				909,585				1,548,083
Granted	796,423				633,141				2,026,521				846,256
Performance goal adjustment ⁽¹⁾	11,289				—				—				11,289
Modified ⁽²⁾	(1,211,478	)			—				—				(1,211,478	)
Vested	(286,652	)			—				—				(286,652	)
Forfeited or expired	(61,242	)			(8,067	)			(67,472	)			(61,242	)
Outstanding at March 31,	796,423		$	5.08	1,567,400		$	4.55
Outstanding at June 30,									2,868,634		$	1.82	846,256		$	6.08


(1)	The 2015 Program vested at 104.1% in excess of target level and resulted in additional units ~~vested~~vesting in March 2018. These units are included in the vested line item for the ~~three~~six months ended ~~March 31,~~June 30, 2018.

(2)

Due to the closing of the Merger, the 2016 and 2017 Performance Cash Programs were converted from nonvested performance-based cash units to nonvested common stock awards, resulting in a decrease in nonvested performance-based cash units for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The 2016 Program awards were converted based on ~~its~~ performance through March 19, 2018, which resulted in 89% of the units converting to nonvested common stock awards or a reduction of 65,173 units converting to nonvested common stock awards.

Performance Cash Program

~~2018~~2019 Program. In February ~~2018,~~2019, the Compensation Committee of the Board of Directors of the Company approved a performance cash program (the ~~"2018~~"2019 Program") granting performance cash units that will settle in cash and are accounted for as liability awards. The performance-based awards contingently vest in February ~~2021,~~2022, depending on the level at which the performance goal is achieved. The ~~performance-goal,~~performance goal, which will be measured over the three-year period ending December 31, ~~2020,~~2021, will be the Company's total shareholder return ("TSR") based on a matrix measurement of (1) the Company's absolute

performance and (2) the Company's ranking relative to a defined peer group's individual TSRs ("Relative TSR"). The Company's absolute performance is measured against the December ~~29, 2017~~31, 2018 closing share price of ~~$5.13.~~$2.49. If the Company's absolute performance is ~~lower~~less than ~~the $5.13 share price,~~50%, the payout is ~~zero for this portion.~~zero. If the Company's absolute performance is ~~greater than~~50%, the ~~$5.13 share price, the performance cash units will vest 1% for each 1% in growth, up to 150% of the original grant.~~payout is 50%. If the Company's ~~Relative TSR~~absolute performance is ~~less than the median,~~100%, the payout is ~~zero~~100%, which is the maximum payout for this portion. If the Company's Relative TSR is ~~above~~less than 30%, the ~~median,~~payout is zero. If the Company's Relative TSR is 30% or greater, the payout is equal to the Company's percentile rank ~~above the median,~~ up to ~~50%~~100% of the original grant. The Company's combined absolute performance and Relative TSR have a maximum vest of up to 200% of the original grant. ~~A total~~

11. Leases

The Company adopted ASC 842 effective January 1, 2019 using the modified retrospective method and elected the option to not apply ASC 842 to comparative periods. See Note 2 - New Accounting Pronouncements for the impacts of ~~796,423 units were granted under~~adopting this ~~program~~new standard.

Under ASC 842, a contract is or contains a lease when, (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the ~~three months ended March 31, 2018.~~

~~2017 Program.~~ In February 2017, the Compensation Committee approved a performance cash program (the "2017 Program") granting performance cash units that would settle in cash and were accounted for as liability awards. In March 2018 upon the Merger closing, the 2017 Program was converted to a nonvested common stock award at 100%term of the ~~original award. At the time~~contract in exchange for consideration. The Company assesses whether an arrangement is or contains a lease at inception of the ~~modification, 619,006 units were converted~~contract. For all leases, other than those that qualify for the short-term recognition exemption, the Company recognizes as of the lease commencement date on the balance sheet a liability for its obligation related to ~~619,006 shares~~the lease and a corresponding asset representing the Company's right to use the underlying asset over the period of use. The Company currently has leases for office space and other equipment, all of which are classified as operating leases.

The Company's leases have remaining terms of up to nine years. Certain lease agreements contain options to extend or early terminate the agreement. These options are used to calculate right-of-use asset and lease liability balances when it is reasonably certain that the Company will exercise these options.

The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily determinable. As most of the Company's ~~nonvested common stock. These awards no longer have~~leases do not provide an implicit rate, the Company utilizes its incremental borrowing rate.

The Company has elected, for all classes of underlying assets, to not apply the balance sheet recognition requirements of ASC 842 to leases with a ~~performance criteria, but continue~~term of one year or less, and instead, the Company recognizes the lease payments in the income statement on a straight-line basis over the lease term. The Company has also made the election, for certain classes of underlying assets, to ~~have a service-based criteria through~~combine lease and non-lease components. However, for the ~~cliff vest in February 2020. The conversion~~majority of its leases, the ~~performance-based liability award~~Company accounts for lease and non-lease components separately.

For the three and six months ended June 30, 2019, lease cost was as follows:



	Three Months Ended June 30,		Six Months Ended June 30,
Lease Cost	2019		2019
	(in thousands)
Operating lease cost⁽¹⁾⁽³⁾	$	569	$	1,117
Short-term lease cost ⁽²⁾⁽³⁾	4,167		10,386
Total lease cost	$	4,736	$	11,503


(1)	Operating lease cost was primarily included in general and administrative expense or lease operating expense on the Unaudited Consolidated Statements of Operations.


(2)	Short-term lease cost primarily includes leases for drilling rigs, which were capitalized to property, plant and equipment on the Unaudited Consolidated Balance Sheets.


(3)	A portion of the operating lease cost and a majority of the short-term lease cost represent gross amounts that the Company was financially committed to pay. However, the Company recorded in the financial statements its proportionate share based on the Company's working interest, which varies from property to property.

Supplemental balance sheet information related to ~~a service-based equity award~~leases as of June 30, 2019, was ~~accounted for~~ as follows:

~~a modification~~



Operating Leases	As of June 30, 2019
	(in thousands)
Right-of-use assets ⁽¹⁾	$	9,533
Accumulated amortization ⁽²⁾	(710		)
Total right-of-use assets ⁽³⁾	$	8,823
Current lease liabilities ⁽⁴⁾	(730		)
Noncurrent lease liabilities ⁽⁵⁾	(14,027		)
Total lease liabilities ⁽³⁾	$	(14,757	)
Weighted average remaining lease term
Operating leases (in years)	8.1
Weighted average discount rate
Operating leases	5.6		%


(1)	Included in furniture, equipment and other in the Unaudited Consolidated Balance Sheets.


(2)	Included in accumulated depreciation, depletion, amortization and impairment in the Unaudited Consolidated Balance Sheets.


(3)	The difference between the right-of-use assets and total lease liabilities is primarily related to lease incentives and deferred rent balances, which were required to be netted against the right-of-use assets as of the implementation date of January 1, 2019.


(4)	Included in accounts payable and accrued liabilities in the Unaudited Consolidated Balance Sheets.


(5)	Included in ~~accordance with ASC 718,~~ ~~Compensation - Stock Compensation. The Company recorded an increase to additional paid-in capital ("APIC") and a decrease to derivative and~~ other noncurrent liabilities in the Unaudited Consolidated Balance Sheets.

Maturities of lease liabilities ~~of $0.9 million~~ as of ~~March~~June 30, 2019 were as follows:



	As of June 30, 2019
	(in thousands)
2019	$	717
2020	2,040
2021	2,340
2022	2,031
2023	2,024
Thereafter	9,654
Total	$	18,806
Less: Interest	(4,049		)
Present value of lease liabilities	$	14,757

Minimum future contractual payments for operating leases under the scope of ASC 840 as of December 31, 2018 ~~in the Unaudited Consolidated Statement of Stockholders' Equity and the Unaudited Consolidated Balance Sheets, respectively.~~were as follows:



	As of December 31, 2018
	(in thousands)
2019	$	2,583
2020	3,032
2021	3,331
2022	3,263
2023	3,036
Thereafter	13,112
Total	$	28,357

~~2016 Program.~~ In March 2016, the Compensation Committee approved a performance cash program (the "2016 Program") granting performance cash units that would settle in cash and were accounted for as liability awards. In March 2018 upon the Merger closing, the 2016 Program was converted to a nonvested common stock award at 89% of the original award based on the Company's performance through March 19, 2018. At the time of the modification, 592,472 units were converted to 527,299 shares of the Company's nonvested common stock. These awards no longer have a performance criteria, but continue to have a service-based criteria through the cliff vest in February 2019. The conversion of the performance-based liability award to a service-based equity award was accounted for as a modification in accordance with ASC 718, ~~Compensation - Stock Compensation~~. The Company recorded an increase to APIC and a decrease to derivative and other noncurrent liabilities of $1.8 million as of March 31, 2018 in the Unaudited Consolidated Statement of Stockholders' Equity and the Unaudited Consolidated Balance Sheets, respectively.

~~2015 Program.~~ In February 2015, the Compensation Committee approved a performance cash program (the "2015 Program") granting performance cash units that would settle in cash and were accounted for as liability awards. The performance-based awards were to contingently vest in May 2018, depending on the level at which the performance goals were achieved. The performance goals, which were measured over the three year period ending December 31, 2017, consisted of the TSR compared to Relative TSR (weighted at 60%) and the percentage change in discretionary cash flow per debt adjusted share relative to a defined peer group's percentage calculation ("DCF per Debt Adjusted Share") (weighted at 40%). The Relative TSR and DCF per Debt Adjusted Share goals would vest at 25% or 50%, respectively, of the total award for performance met at the threshold level, 100% at the target level and 200% at the stretch level. If the actual results for a metric were between the threshold and target levels or between the target and stretch levels, the vested number of units would be prorated based on the actual results compared to the threshold, target and stretch goals. If the threshold metrics were not met, no units would vest. In any event, the total number of units that could vest would not exceed 200% of the original number of performance cash units granted. At the end of the three year vesting period, any units that had not vested would be forfeited. A total of 422,345 units were granted under this program during the year ended December 31, 2015. All compensation expense related to the TSR metric would be recognized if the requisite service period was fulfilled, even if the market condition was not achieved. All compensation expense related to the DCF per Debt Adjusted Share metric would be based on the number of shares expected to vest at the end of the three year period. The Company modified the vesting date of these awards from May 2018 to March 2018. Based upon the Company's performance through 2017, 104.1% or 286,652 units of the 2015 Program vested in March 2018.

12. Commitments and Contingencies

~~Lease Financing Obligation.~~ The Company has a Lease Financing Obligation with Bank of America Leasing & Capital, LLC as the lead bank as discussed in Note 5. The aggregate undiscounted minimum future lease payments, including both principal and interest components, are presented below. The Company has elected to exercise the early buyout option pursuant to which the Company will purchase the equipment for $1.8 million on February 10, 2019.

As of March 31, 2018
(in thousands)
2018 $ 403
2019 1,869
Thereafter —
Total $ 2,272

Firm Transportation Agreements. The Company is party to two firm transportation contracts ~~through July 2021,~~ to provide capacity on natural gas pipeline systems. The contracts require the Company to pay minimum volume transportation charges through July 2021 regardless of the amount of pipeline capacity utilized by the Company. These monthly transportation payments are included in unused commitments expense in the Unaudited Consolidated Statements of Operations. As a result of previous divestitures in 2013 and 2014, the Company will likely not utilize the firm capacity on the natural gas pipelines.

The Company is party to one firm pipeline transportation contract to provide capacity on an oil pipeline system. The contract requires the Company to pay minimum volume transportation charges from May 2020 through April 2025 regardless of the amount of pipeline capacity utilized by the Company.

The amounts in the table below represent the Company's future minimum transportation charges:



	As of June 30, 2019
	(in thousands)
2019	$	8,974
2020	23,300
2021	19,798
2022	13,064
2023	14,600
Thereafter	19,440
Total	$	99,176

As of March 31, 2018
(in thousands)
2018 $ 13,784
2019 18,691
2020 18,691
2021 10,902
Thereafter —
Total $ 62,068

Gas Gathering and Processing ~~Agreement.~~Agreements. The Company is party to one minimum volume commitment ~~through December 2021 which~~and one reimbursement obligation. The minimum volume commitment requires the Company to deliver a minimum volume of natural gas to a midstream entity for gathering and processing. The contract requires the Company to pay a fee associated with ~~those~~the contracted volumes regardless of the amount delivered. The reimbursement obligation requires the Company to pay a monthly gathering and processing fee per Mcf of production over a one year period to reimburse a midstream entity for its costs to construct gas gathering and processing facilities. If the costs are not reimbursed by the Company via the monthly gathering and processing fees through August 2019, the Company must pay the difference. The amounts in the table below represent the Company's future minimum ~~volume charges:~~charges under both agreements:



	As of June 30, 2019
	(in thousands)
2019 ⁽¹⁾	$	5,882
2020	2,167
2021	1,997
Thereafter	—
Total	$	10,046

As of March 31, 2018
(in thousands)
2018 $ 1,962
2019 2,365
2020 2,167
2021 1,996
Thereafter —
Total $ 8,490


(1)	Includes $4.7 million associated with the reimbursement obligation discussed above.

~~Lease and~~ Other Commitments.The Company ~~leases office space, vehicles and certain office equipment under non-cancellable operating leases.~~is party to one minimum volume commitment for fresh water. The minimum volume commitment requires the Company to purchase a minimum volume of fresh water from a water supplier. The contract requires the Company to pay a fee associated with the contracted volumes regardless of the amount delivered. The Company also has ~~various long-term~~non-cancellable agreements for ~~telecommunication~~information technology services. Future minimum annual payments under ~~lease and other~~these agreements are as follows:



	As of June 30, 2019
	(in thousands)
2019	$	2,959
2020	1,490
2021	745
2022	745
2023	744
Thereafter	—
Total	$	6,683

As of March 31, 2018
(in thousands)
2018 $ 3,188
2019 1,817
2020 853
2021 458
2022 445
Thereafter 191
Total $ 6,952

Litigation. The Company is subject to litigation, claims and governmental and regulatory proceedings arising in the ordinary course of business. It is the opinion of the Company's management that current claims and litigation involving the Company are not likely to have a material adverse effect on its Unaudited Consolidated Balance Sheet, Cash Flows or Statements of Operations.

13. Parent Guarantor ~~Subsidiaries~~

The condensed consolidating financial information as of and for the periods ended ~~March 31,~~June 30, 2019 and 2018 presents the results of operations, financial position and cash flows of HighPoint Resources Corporation, or parent guarantor, and HighPoint Operating Corporation (f/k/a Bill Barrett), or subsidiary issuer, ~~and Circle B Land Company, LLC, a subsidiary guarantor,~~ as well as the consolidating adjustments necessary to present HighPoint Resources Corporation's results on a consolidated basis. The parent guarantor ~~and the subsidiary guarantor, on a joint and several basis, have~~ fully and unconditionally ~~guaranteed~~guarantees the debt

securities of the subsidiary issuer. The indentures governing those securities limit the ability of the subsidiary issuer ~~and the subsidiary guarantor~~ to pay dividends or otherwise provide funding to the parent guarantor.

Prior periods are presented under the structure of the Company prior to the Merger, of which Circle B Land Company, LLC and Aurora Gathering, LLC (both 100% owned subsidiaries of the Company), on a joint and several basis, fully and unconditionally guaranteed the debt of Bill Barrett, the parent issuer. On December 29, 2017, the Company completed the sale of its remaining assets in the Uinta Basin, which included the sale of Aurora Gathering, LLC.

For the purpose of the following financial information, investments in subsidiaries are reflected in accordance with the equity method of accounting. The financial information may not necessarily be indicative of results of operations, cash flows, or financial position had the ~~subsidiaries~~parent and the subsidiary operated as independent entities.

Condensed Consolidating Balance Sheets


	As of March 31, 2018											As of June 30, 2019
	Parent Guarantor		Subsidiary Issuer		Subsidiary Guarantor		Intercompany Eliminations			Consolidated		Parent Guarantor		Subsidiary Issuer		Intercompany Eliminations			Consolidated
	(in thousands)											(in thousands)
Assets:
Cash and cash equivalents	$	—	$	224,692	$	—	$	—		$	224,692	$	—	$	16,112	$	—		$	16,112
Accounts receivable, net of allowance for doubtful accounts	—		50,268		—		—			50,268		—		54,440		—			54,440
Other current assets	—		2,393		—		—			2,393		—		17,163		—			17,163
Property and equipment, net	—		1,809,548		1,894		—			1,811,442		—		2,137,664		—			2,137,664
Intercompany receivable	—		854		—		(854		)	—
Investment in subsidiaries	1,060,340		1,040		—		(1,061,380		)	—		1,116,393		—		(1,116,393		)	—
Noncurrent assets	—		3,679		—		—			3,679		—		13,309		—			13,309
Total assets	$	1,060,340	$	2,092,474	$	1,894	$	(1,062,234	)	$	2,092,474	$	1,116,393	$	2,238,688	$	(1,116,393	)	$	2,238,688
Liabilities and Stockholders' Equity:
Accounts payable and other accrued liabilities	$	—	$	135,925	$	—	$	—		$	135,925	$	—	$	119,809	$	—		$	119,809
Other current liabilities	—		104,463		—		—			104,463		—		83,955		—			83,955
Intercompany payable	—		—		854		(854		)	—
Long-term debt	—		616,244		—		—			616,244		—		768,149		—			768,149
Deferred income taxes	—		137,111		—		—			137,111		—		109,933		—			109,933
Other noncurrent liabilities	—		38,391		—		—			38,391		—		40,449		—			40,449
Stockholders' equity	1,060,340		1,060,340		1,040		(1,061,380		)	1,060,340		1,116,393		1,116,393		(1,116,393		)	1,116,393
Total liabilities and stockholders' equity	$	1,060,340	$	2,092,474	$	1,894	$	(1,062,234	)	$	2,092,474	$	1,116,393	$	2,238,688	$	(1,116,393	)	$	2,238,688



	As of December 31, 2018
	Parent Guarantor		Subsidiary Issuer		Intercompany Eliminations			Consolidated
	(in thousands)
Assets:
Cash and cash equivalents	$	—	$	32,774	$	—		$	32,774
Accounts receivable, net of allowance for doubtful accounts	—		72,943		—			72,943
Other current assets	—		84,064		—			84,064
Property and equipment, net	—		2,029,523		—			2,029,523
Investment in subsidiaries	1,212,098		—		(1,212,098		)	—
Noncurrent assets	—		33,156		—			33,156
Total assets	$	1,212,098	$	2,252,460	$	(1,212,098	)	$	2,252,460
Liabilities and Stockholders' Equity:
Accounts payable and other accrued liabilities	$	—	$	131,379	$	—		$	131,379
Other current liabilities	—		116,806		—			116,806
Long-term debt	—		617,387		—			617,387
Deferred income taxes	—		139,534		—			139,534
Other noncurrent liabilities	—		35,256		—			35,256
Stockholders' equity	1,212,098		1,212,098		(1,212,098		)	1,212,098
Total liabilities and stockholders' equity	$	1,212,098	$	2,252,460	$	(1,212,098	)	$	2,252,460

As of December 31, 2017
Parent
Issuer Subsidiary
Guarantors Intercompany
Eliminations Consolidated
(in thousands)
Assets:
Cash and cash equivalents $ 314,466
$ —
$ —
$ 314,466
Accounts receivable, net of allowance for doubtful accounts 51,415
—
—
51,415
Other current assets 1,782
—
—
1,782
Property and equipment, net 1,016,986
1,894
—
1,018,880
Intercompany receivable 854
—
(854 ) —
Investment in subsidiaries 1,040
—
(1,040 ) —
Noncurrent assets 4,163
—
—
4,163
Total assets $ 1,390,706
$ 1,894
$ (1,894 ) $ 1,390,706
Liabilities and Stockholders' Equity:
Accounts payable and other accrued liabilities $ 84,055
$ —
$ —
$ 84,055
Other current liabilities 64,879
—
—
64,879
Intercompany payable —
854
(854 ) —
Long-term debt 617,744
—
—
617,744
Other noncurrent liabilities 25,474
—
—
25,474
Stockholders' equity 598,554
1,040
(1,040 ) 598,554
Total liabilities and stockholders' equity $ 1,390,706
$ 1,894
$ (1,894 ) $ 1,390,706

Condensed Consolidating Statements of Operations



	Three Months Ended June 30, 2019
	Parent Guarantor			Subsidiary Issuer			Intercompany Eliminations		Consolidated
	(in thousands)
Operating and other revenues	$	—		$	107,584		$	—	$	107,584
Operating expenses	—			(102,300		)	—		(102,300		)
General and administrative	—			(12,401		)	—		(12,401		)
Merger transaction expense	—			—			—		—
Interest expense	—			(14,381		)	—		(14,381		)
Interest income and other income (expense)	—			19,698			—		19,698
Income (loss) before income taxes and equity in earnings (loss) of subsidiaries	—			(1,800		)	—		(1,800		)
(Provision for) benefit from income taxes	—			(110		)	—		(110		)
Equity in earnings (loss) of subsidiaries	(1,910		)	—			1,910		—
Net income (loss)	$	(1,910	)	$	(1,910	)	$	1,910	$	(1,910	)

	Six Months Ended June 30, 2019
	Parent Guarantor			Subsidiary Issuer			Intercompany Eliminations		Consolidated
	(in thousands)
Operating and other revenues	$	—		$	209,564		$	—	$	209,564
Operating expenses	—			(196,590		)	—		(196,590		)
General and administrative	—			(25,061		)	—		(25,061		)
Merger transaction expense	—			(2,414		)	—		(2,414		)
Interest expense	—			(28,060		)	—		(28,060		)
Interest income and other income (expense)	—			(85,179		)	—		(85,179		)
Income (loss) before income taxes and equity in earnings (loss) of subsidiaries	—			(127,740		)	—		(127,740		)
(Provision for) benefit from income taxes	—			29,601			—		29,601
Equity in earnings (loss) of subsidiaries	(98,139		)	—			98,139		—
Net income (loss)	$	(98,139	)	$	(98,139	)	$	98,139	$	(98,139	)



	Three Months Ended June 30, 2018
	Parent Guarantor			Subsidiary Issuer			Intercompany Eliminations		Consolidated
	(in thousands)
Operating and other revenues	$	—		$	110,398		$	—	$	110,398
Operating expenses	—			(75,725		)	—		(75,725		)
General and administrative	—			(11,624		)	—		(11,624		)
Merger transaction expense	—			(1,277		)	—		(1,277		)
Interest expense	—			(13,093		)	—		(13,093		)
Interest income and other income (expense)	—			(55,585		)	—		(55,585		)
Income (loss) before income taxes and equity in earnings (loss) of subsidiaries	—			(46,906		)	—		(46,906		)
(Provision for) benefit from income taxes	—			—			—		—
Equity in earnings (loss) of subsidiaries	(46,906		)	—			46,906		—
Net income (loss)	$	(46,906	)	$	(46,906	)	$	46,906	$	(46,906	)

	Six Months Ended June 30, 2018
	Parent Guarantor			Subsidiary Issuer			Intercompany Eliminations		Consolidated
	(in thousands)
Operating and other revenues	$	—		$	191,208		$	—	$	191,208
Operating expenses	—			(133,870		)	—		(133,870		)
General and administrative	—			(21,731		)	—		(21,731		)
Merger transaction expense	—			(6,040		)	—		(6,040		)
Interest expense	—			(26,183		)	—		(26,183		)
Interest income and other income (expense)	—			(75,227		)	—		(75,227		)
Income (loss) before income taxes and equity in earnings (loss) of subsidiaries	—			(71,843		)	—		(71,843		)
(Provision for) benefit from income taxes	—			—			—		—
Equity in earnings (loss) of subsidiaries	(71,843		)	—			71,843		—
Net income (loss)	$	(71,843	)	$	(71,843	)	$	71,843	$	(71,843	)

Three Months Ended March 31, 2018
Parent
Guarantor Subsidiary
Issuer Subsidiary
Guarantor Intercompany
Eliminations Consolidated
(in thousands)
Operating and other revenues $ —
$ 80,810
$ —
$ —
$ 80,810
Operating expenses —
(58,145 ) —
—
(58,145 )
General and administrative —
(10,107 ) —
—
(10,107 )
Merger transaction expense —
(4,763 ) —
—
(4,763 )
Interest expense —
(13,090 ) —
—
(13,090 )
Interest income and other income (expense) —
(19,642 ) —
—
(19,642 )
Income (loss) before income taxes and equity in earnings (loss) of subsidiaries —
(24,937 ) —
—
(24,937 )
(Provision for) benefit from income taxes —
—
—
—
—
Equity in earnings (loss) of subsidiaries (24,937 ) —
—
24,937
—
Net income (loss) $ (24,937 ) $ (24,937 ) $ —
$ 24,937
$ (24,937 )

Three Months Ended March 31, 2017
Parent
Issuer Subsidiary
Guarantors Intercompany Eliminations Consolidated
(in thousands)
Operating and other revenues $ 50,425
$ 111
$ —
$ 50,536
Operating expenses (56,858 ) (163 ) —
(57,021 )
General and administrative (9,349 ) —
—
(9,349 )
Interest expense (13,951 ) —
—
(13,951 )
Interest income and other income (expense) 16,670
—
—
16,670
Income (loss) before income taxes and equity in earnings (loss) of subsidiaries (13,063 ) (52 ) —
(13,115 )
(Provision for) benefit from income taxes —
—
—
—
Equity in earnings (loss) of subsidiaries (52 ) —
52
—
Net income (loss) $ (13,115 ) $ (52 ) $ 52
$ (13,115 )

~~Condensed Consolidating Statements of Comprehensive Income (Loss)~~

Three Months Ended March 31, 2018
Parent
Guarantor Subsidiary
Issuer Subsidiary
Guarantor Intercompany
Eliminations Consolidated
(in thousands)
Net income (loss) $ (24,937 ) $ (24,937 ) $ —
$ 24,937
$ (24,937 )
Other comprehensive loss —
—
—
—
—
Comprehensive income (loss) $ (24,937 ) $ (24,937 ) $ —
$ 24,937
$ (24,937 )

Three Months Ended March 31, 2017
Parent
Issuer Subsidiary
Guarantors Intercompany
Eliminations Consolidated
(in thousands)
Net income (loss) $ (13,115 ) $ (52 ) $ 52
$ (13,115 )
Other comprehensive loss —
—
—
—
Comprehensive income (loss) $ (13,115 ) $ (52 ) $ 52
$ (13,115 )

Condensed Consolidating Statements of Cash Flows


	Three Months Ended March 31, 2018												Six Months Ended June 30, 2019
	Parent Guarantor		Subsidiary Issuer			Subsidiary Guarantor		Intercompany Eliminations		Consolidated			Parent Guarantor		Subsidiary Issuer			Intercompany Eliminations		Consolidated
	(in thousands)												(in thousands)
Cash flows from operating activities	$	—	$	54,317		$	—	$	—	$	54,317		$	—	$	98,545		$	—	$	98,545
Cash flows from investing activities:
Additions to oil and gas properties, including acquisitions	—		(88,854		)	—		—		(88,854		)	—		(258,153		)	—		(258,153		)
Additions to furniture, fixtures and other	—		(122		)	—		—		(122		)	—		(3,574		)	—		(3,574		)
Repayment of debt associated with merger, net of cash acquired	—		(53,357		)	—		—		(53,357		)
Proceeds from sale of properties and other investing activities	—		(157		)	—		—		(157		)
Intercompany transfers	—		—			—		—		—
Proceeds from sale of properties													—		1,334			—		1,334
Other investing activities													—		(1,432		)			(1,432		)
Cash flows from financing activities:
Proceeds from debt													—		150,000			—		150,000
Principal payments on debt	—		(116		)	—		—		(116		)	—		(1,859		)	—		(1,859		)
Intercompany transfers	—		—			—		—		—
Other financing activities	—		(1,485		)	—		—		(1,485		)	—		(1,523		)	—		(1,523		)
Change in cash and cash equivalents	—		(89,774		)	—		—		(89,774		)	—		(16,662		)	—		(16,662		)
Beginning cash and cash equivalents	—		314,466			—		—		314,466			—		32,774			—		32,774
Ending cash and cash equivalents	$	—	$	224,692		$	—	$	—	$	224,692		$	—	$	16,112		$	—	$	16,112



	Six Months Ended June 30, 2018
	Parent Guarantor		Subsidiary Issuer			Intercompany Eliminations		Consolidated
	(in thousands)
Cash flows from operating activities	$	—	$	68,887		$	—	$	68,887
Cash flows from investing activities:
Additions to oil and gas properties, including acquisitions	—		(220,816		)	—		(220,816		)
Additions to furniture, fixtures and other	—		(470		)	—		(470		)
Payment of acquiree's debt associated with merger, net of cash acquired	—		(53,357		)	—		(53,357		)
Proceeds from sale of properties	—		194			—		194
Other investing activities	—		336			—		336
Cash flows from financing activities:
Principal payments on debt	—		(232		)	—		(232		)
Other financing activities	—		(1,629		)	—		(1,629		)
Change in cash and cash equivalents	—		(207,087		)	—		(207,087		)
Beginning cash and cash equivalents	—		314,466			—		314,466
Ending cash and cash equivalents	$	—	$	107,379		$	—	$	107,379

Three Months Ended March 31, 2017
Parent
Issuer Subsidiary
Guarantors Intercompany
Eliminations Consolidated
(in thousands)
Cash flows from operating activities $ 37,930
$ 168
$ —
$ 38,098
Cash flows from investing activities:
Additions to oil and gas properties, including acquisitions (57,963 ) —
—
(57,963 )
Additions to furniture, fixtures and other (11 ) —
—
(11 )
Proceeds from sale of properties and other investing activities 11,225
—
—
11,225
Intercompany transfers 168
—
(168 ) —
Cash flows from financing activities:
Principal payments on debt (112 ) —
—
(112 )
Proceeds from sale of common stock, net of offering costs (224 ) —
—
(224 )
Intercompany transfers —
(168 ) 168
—
Other financing activities (967 ) —
—
(967 )
Change in cash and cash equivalents (9,954 ) —
—
(9,954 )
Beginning cash and cash equivalents 275,841
—
—
275,841
Ending cash and cash equivalents $ 265,887
$ —
$ —
$ 265,887

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements as to future plans, estimates, beliefs and expected performance of HighPoint Resources Corporation. Forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to:

legislative, judicial or regulatory changes including initiatives to impose increased setbacks from occupied structures and other sensitive areas, initiatives to give local governmental authorities the ability to further regulate or to ban oil and gas development activities within their boundaries, and initiatives related to drilling and completion techniques such as hydraulic fracturing;

potential failure to achieve expected production from existing and future exploration or development projects or acquisitions;

volatility of market prices received for oil, natural gas and natural gas liquids ("NGLs"), and the risk of a prolonged period of depressed prices;

declines in the values of our oil and natural gas properties resulting in impairments;

reduction of proved undeveloped reserves due to failure to develop within the five-year development window defined by the Securities and Exchange Commission;

derivative and hedging activities;

~~legislative, judicial or regulatory changes including initiatives to impose standard setbacks from occupied structures and other sensitive areas, initiatives to give local governmental authorities~~ the ~~ability to further regulate or to ban oil and gas development activities within their boundaries, and initiatives related to drilling and completion techniques such as hydraulic fracturing;~~

~~solely operating~~concentration of our properties in the Rocky Mountain region;

compliance with environmental and other regulations;

economic and competitive conditions;

occurrence of property divestitures or acquisitions;

costs and availability of third party facilities for gathering, processing, refining and transportation;

future processing volumes and pipeline throughput;

impact of health and safety issues on operations;

operational risks, including the risk of industrial accidents and natural disasters;

reductions in the borrowing base under our amended revolving credit facility (the "Amended Credit Facility");

debt and equity market conditions and availability of capital;

ability to receive drilling and other permits, regulatory approvals and required surface access and rights of way;

higher than expected costs and expenses including production, drilling and well equipment costs;

changes in estimates of proved reserves;

the potential for production decline rates from our wells, and/or drilling and related costs, to be greater than we expect;

ability to replace natural production declines with acquisitions, new drilling or recompletion activities;

exploration risks such as the risk of drilling unsuccessful wells;

capital expenditures and contractual obligations;

liabilities resulting from litigation concerning alleged damages related to environmental issues, pollution, contamination, personal injury, royalties, marketing, title to properties, validity of leases, or other matters that may not be covered by an effective indemnity or insurance;

midstream ~~copacity~~capacity issues;

changes in tax laws and statutory tax rates; and

other uncertainties, including those factors discussed below and in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 under the headings "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" and in Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q, all of which are difficult to predict.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. Readers should not place undue reliance on these forward-looking statements, which reflect management's views only as of the date hereof. Other than as required under the securities laws, we do not undertake any obligation to update any forward-looking statements whether as a result of changes in internal estimates or expectations, new information, subsequent events or circumstances or otherwise.

Overview

We became the successor to Bill Barrett Corporation ("Bill Barrett") on March 19, 2018 upon completion of the business combination (the "Merger") between Bill Barrett and Fifth Creek Operating Company, LLC ("Fifth Creek"). Except where the context indicates otherwise, the terms "we", "us", "our" or the "Company" as used herein refer, for periods prior to the

completion of the Merger, to Bill Barrett and its subsidiaries and, for periods following the completion of the Merger, to HighPoint Resources Corporation and its subsidiaries (including Bill Barrett, which has subsequently been renamed HighPoint Operating Corporation).

We develop oil and natural gas in the Rocky Mountain region of the United States. We seek to build stockholder value by delivering profitable growth in cash flow, reserves and production through the development of oil and natural gas assets. In order to deliver profitable growth, we allocate capital to our highest return assets, concentrate expenditures on exploiting our core assets, maintain capital discipline and optimize operations while upholding high-level standards for health, safety and the environment. Substantially all of our revenues are generated through the sale of oil and natural gas production and NGL recovery at market prices.

We are committed to developing and producing oil and natural gas in a responsible and safe manner. Our employees work diligently with regulatory agencies, as well as environmental, wildlife and community organizations, to ensure that exploration and development activities meet stakeholders' expectations and regulatory requirements.

Colorado Senate Bill 19-181 was signed into law on April 16, 2019, and took immediate effect. It authorizes local governments to approve the siting of and regulate the surface impacts from oil and natural gas facilities, and it empowers them to adopt requirements and impose conditions that are more stringent than state regulations. The statute changes the mission of the Colorado Oil and Gas Conservation Commission from fostering responsible and balanced development to regulating development to protect public health and the environment as the primary goal. It requires the Commission to undertake rulemaking on environmental protection, facility siting, cumulative impacts, flowline safety, orphan wells, financial assurance, wellbore integrity, and application fees. It also requires the Air Quality Control Commission to review its leak detection and repair regulations and adopt rules to further minimize emissions of hydrocarbons and nitrogen oxides. These rulemakings will impose new approval and operating requirements and may have an adverse effect on our development program, particularly in terms of costs and delays in the permitting process. However, we believe that the location of our assets in rural areas of Weld County, a jurisdiction generally supportive of oil and gas development, is likely to mitigate these impacts to a significant extent.

Future acquisitions or dispositions could have a material impact on our financial condition and results of operations by increasing or decreasing our reserves, production and revenues as well as expenses and future capital expenditures. We currently anticipate that we would finance any future acquisitions with available borrowings under our Amended Credit Facility, sales of properties, and/or the issuance of debt, equity or equity-linked securities. Our prior acquisitions and capital expenditures were financed with a combination of cash on hand, funding from the sale of our equity securities, our Amended Credit Facility, other debt financing and cash flows from operations.

As a result of acquisitions and dispositions of properties, our historical results of operations and period-to-period comparisons of these results and certain financial data may not be meaningful. In addition, past results are not necessarily indicative of future results.

Commodity prices are inherently volatile and are influenced by many factors outside of our control. As of ~~April 24, 2018,~~July 22, 2019, we have hedged ~~3,602,619~~3,628,743 barrels of oil and ~~1,375,000~~1,288,000 MMbtu of natural gas, or approximately ~~43%~~54% of our expected remaining ~~2018~~2019 production, ~~4,557,934~~4,526,500 barrels of oil for ~~2019~~2020 and ~~183,000~~181,000 barrels of oil for ~~2019~~2021 at price levels that provide some economic certainty to our cash flows. We focus our efforts on increasing oil, natural gas and NGLs reserves and production while controlling costs at a level that is appropriate for long-term operations. Our future earnings and cash flows are dependent on our ability to manage our revenues and overall cost structure to a level that allows for profitable production.

We operate in one industry segment, which is the development and production of crude oil, natural gas and NGLs, and all of our operations are conducted in the Rocky Mountain region of the United States. Consequently, we currently report a single reportable segment.

AsFor the three months ended June 30, 2018, as a result of the closing of the Merger on March 19, 2018, Fifth Creek's ~~assets and liabilities are included in the Unaudited Consolidated Balance Sheet as of March 31, 2018 and Fifth Creek's~~ revenues and expenses are included in the Unaudited Consolidated Statement of Operations ~~for the period from~~beginning on March 19, ~~2018 to March 31,~~ 2018. ~~See Note 4 for additional information regarding the accounting for the Merger.~~

Results of Operations

The following table sets forth selected operating data for the periods indicated:

Three Months Ended ~~March 31, 2018~~June 30, 2019 Compared with Three Months Ended ~~March 31, 2017~~June 30, 2018


	Three Months Ended March 31,						Increase (Decrease)					Three Months Ended June 30,				Increase (Decrease)
	2018			2017			Amount			Percent		2019		2018		Amount			Percent
	($ in thousands, except per unit data)
Operating Results:
Operating Revenues
Oil, gas and NGL production	$	80,831		$	50,425		$	30,406		60	%	$	107,486	$	110,118	$	(2,632	)	(2	)%
Other operating revenues	(21		)	111			(132		)	(119	)%	98		280		(182		)	(65	)%
Total operating revenues	80,810			50,536			30,274			60	%	107,584		110,398		(2,814		)	(3	)%
Operating Expenses
Lease operating expense	6,251			5,862			389			7	%	10,772		7,594		3,178			42	%
Gathering, transportation and processing expense	419			489			(70		)	(14	)%	1,742		1,012		730			72	%
Production tax expense	5,175			322			4,853			*nm		8,905		9,684		(779		)	(8	)%
Exploration expense	13			27			(14		)	(52	)%	12		7		5			71	%
Impairment, dry hole costs and abandonment expense	317			8,074			(7,757		)	(96	)%	995		108		887			*nm
(Gain) loss on sale of properties	408			(92		)	500			543	%	2,906		564		2,342			415	%
Depreciation, depletion and amortization	40,985			38,340			2,645			7	%	72,612		52,175		20,437			39	%
Unused commitments	4,538			4,572			(34		)	(1	)%	4,352		4,572		(220		)	(5	)%
General and administrative expense ⁽¹⁾	10,107			9,349			758			8	%	12,401		11,624		777			7	%
Merger transaction expense	4,763			—			4,763			*nm		—		1,277		(1,277		)	(100	)%
Other operating expenses, net	39			(573		)	612			107	%
Other operating expense, net												4		9		(5		)	(56	)%
Total operating expenses	$	73,015		$	66,370		$	6,645		10	%	$	114,701	$	88,626	$	26,075		29	%
Production Data:
Oil (MBbls)	1,137			825			312			38	%	1,748		1,507		241			16	%
Natural gas (MMcf)	2,562			1,890			672			36	%	3,558		3,096		462			15	%
NGLs (MBbls)	350			293			57			19	%	500		386		114			30	%
Combined volumes (MBoe)	1,914			1,433			481			34	%	2,841		2,409		432			18	%
Daily combined volumes (Boe/d)	21,267			15,922			5,345			34	%	31,220		26,473		4,747			18	%
Average Realized Prices Before Hedging:
Oil (per Bbl)	$	60.45		$	47.92		$	12.53		26	%	$	55.46	$	65.07	$	(9.61	)	(15	)%
Natural gas (per Mcf)	1.95			2.66			(0.71		)	(27	)%	1.58		1.29		0.29			22	%
NGLs (per Bbl)	20.31			20.04			0.27			1	%	9.81		20.84		(11.03		)	(53	)%
Combined (per Boe)	42.24			35.18			7.06			20	%	37.83		45.71		(7.88		)	(17	)%
Average Realized Prices with Hedging:
Oil (per Bbl)	$	53.00		$	52.41		$	0.59		1	%	$	54.88	$	54.59	$	0.29		1	%
Natural gas (per Mcf)	1.98			2.62			(0.64		)	(24	)%	1.59		1.40		0.19			14	%
NGLs (per Bbl)	20.31			20.04			0.27			1	%	9.81		20.84		(11.03		)	(53	)%
Combined (per Boe)	37.86			37.71			0.15			—	%	37.48		39.29		(1.81		)	(5	)%
Average Costs (per Boe):
Lease operating expense	$	3.27		$	4.09		$	(0.82	)	(20	)%	$	3.79	$	3.15	$	0.64		20	%
Gathering, transportation and processing expense	0.22			0.34			(0.12		)	(35	)%	0.61		0.42		0.19			45	%
Production tax expense	2.70			0.22			2.48			*nm		3.13		4.02		(0.89		)	(22	)%
Depreciation, depletion and amortization	21.41			26.76			(5.35		)	(20	)%	25.56		21.66		3.90			18	%
General and administrative expense ⁽¹⁾	5.28			6.52			(1.24		)	(19	)%	4.37		4.83		(0.46		)	(10	)%


*	Not meaningful.


(1)	Included in general and administrative expense is long-term cash and equity incentive compensation of $2.3 million (or $0.81 per Boe) and $2.2 million (or $0.93 per Boe) for the three months ended June 30, 2019 and 2018, respectively.

Production Revenues and Volumes. Production revenues decreased to $107.5 million for the three months ended June 30, 2019 from $110.1 million for the three months ended June 30, 2018. The decrease in production revenues was due to a 17% decrease in average realized prices before hedging, offset by an 18% increase in production volumes. The decrease in average realized prices before hedging decreased production revenues by approximately $19.0 million, while the increase in production volumes increased production revenues by approximately $16.4 million.

Lease Operating Expense ("LOE"). LOE increased to $3.79 per Boe for the three months ended June 30, 2019 from $3.15 per Boe for the three months ended June 30, 2018. The increase per Boe for the three months ended June 30, 2019 compared with the three months ended June 30, 2018 is due to higher initial LOE related to our early development program in the Hereford field.

Gathering, Transportation and Processing Expense ("GTP"). GTP expense increased to $0.61 per Boe for the three months ended June 30, 2019 from $0.42 per Boe for the three months ended June 30, 2018.

Costs incurred to gather, transport and/or process our oil, gas and NGLs prior to the transfer of control to the customer are included in GTP expense. Costs incurred to gather, transport and/or process our oil, gas and NGLs after control has transferred to the customer are considered components of the consideration received from the customer and thus recorded in oil, gas and NGL production revenues. In general, based on specific contract arrangements, costs incurred in the Hereford Field in the DJ Basin, which was acquired in the Merger, are included in GTP expense and costs incurred in the Northeast Wattenberg Field in the DJ Basin are included in production revenues. See the "Revenue Recognition" section in Note 2 for additional information.

GTP expense for the three months ended June 30, 2019 of $0.61 per Boe is primarily associated with the Hereford Field. We expect GTP expense per Boe to increase in the future as we further develop and increase our production mix from the Hereford Field under the existing contractual arrangements.

Production Tax Expense. Total production taxes decreased to $8.9 million for the three months ended June 30, 2019 from $9.7 million for the three months ended June 30, 2018. Production taxes are primarily based on the wellhead values of production, which exclude gains and losses associated with hedging activities. Production taxes as a percentage of oil, natural gas and NGL sales before hedging adjustments were 8.3% and 8.8% for the three months ended June 30, 2019 and June 30, 2018, respectively.

Depreciation, Depletion and Amortization ("DD&A"). DD&A increased to $72.6 million for the three months ended June 30, 2019 compared with $52.2 million for the three months ended June 30, 2018. The increase of $20.4 million was a result of an 18% increase in production volumes and an 18% increase in the DD&A rate for the three months ended June 30, 2019 compared with the three months ended June 30, 2018. The increase in production accounted for a $9.4 million increase in DD&A expense, while the increase in the DD&A rate accounted for an $11.0 million increase in DD&A expense.

Under successful efforts accounting, depletion expense is calculated on a field-by-field basis based on geologic and reservoir delineation using the unit-of-production method. The capital expenditures for proved properties for each field compared to the proved reserves corresponding to each producing field determine a depletion rate for current production. For the three months ended June 30, 2019, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate of $25.56 per Boe compared with $21.66 per Boe for the three months ended June 30, 2018. The increase in the depletion rate of 18% is the result of year end 2018 reserve adjustments.

Unused Commitments. Unused commitments expense of $4.4 million and $4.6 million for the three months ended June 30, 2019 and June 30, 2018, respectively, related to gas transportation contracts. During March 2010, we entered into two firm natural gas pipeline transportation contracts to provide a guaranteed outlet for production from the West Tavaputs area of the Uinta Basin and the Gibson Gulch area of the Piceance Basin. These transportation contracts were not included in the sales of these assets in December 2013 and September 2014, respectively. Both firm transportation contracts require the pipeline to provide transportation capacity and require us to pay transportation charges regardless of the amount of pipeline capacity utilized. The agreements expire July 31, 2021.

General and Administrative Expense. General and administrative expense increased slightly to $12.4 million for the three months ended June 30, 2019 from $11.6 million for the three months ended June 30, 2018 primarily due to an increase in employee compensation and benefits associated with an increase in headcount. General and administrative expense on a Boe basis decreased to $4.37 for the three months ended June 30, 2019 from $4.83 for the three months ended June 30, 2018.

Included in general and administrative expense is long-term cash and equity incentive compensation of $2.3 million and $2.2 million for the three months ended June 30, 2019 and 2018, respectively. The components of long-term cash and equity incentive compensation for the three months ended June 30, 2019 and 2018 are shown in the following table:



	Three Months Ended June 30,
	2019		2018
	(in thousands)
Nonvested common stock	$	1,533	$	1,520
Nonvested common stock units	318		277
Nonvested performance cash units ⁽¹⁾	445		451
Total	$	2,296	$	2,248


(1)	The nonvested performance cash units are accounted for as liability awards and will be settled in cash for the performance metrics that are met. The expense for the period will increase or decrease based on updated fair values of these awards at each reporting date.

Commodity Derivative Gain (Loss). Commodity derivative gain (loss) was a gain of $19.5 million for the three months ended June 30, 2019 compared with a loss of $56.3 million for the three months ended June 30, 2018. The gain or loss on commodity derivatives is related to fluctuations of oil and natural gas future pricing compared to actual pricing of commodity hedges in place as of June 30, 2019 and 2018 or during the periods then ended.

The fair value of our open, but not yet settled derivative contracts is based on an income approach using various assumptions, such as quoted forward prices for commodities, risk-free discount rates, volatility factors and time value factors. The mark-to-market fair value of the open commodity derivative contracts will generally be inversely related to the price movement of the underlying commodity. If commodity price trends reverse from period to period, prior unrealized gains may become unrealized losses and vice versa. Higher underlying commodity price volatility will generally lead to higher volatility in our unrealized gains and losses and, by association, the fair value of our commodity derivative contracts. These unrealized gains and losses will impact our net income in the period reported. The mark-to-market fair value can create non-cash volatility in our reported earnings during periods of commodity price volatility. We have experienced such volatility in the past and are likely to experience it in the future. Gains on our derivatives generally indicate lower wellhead revenues in the future while losses indicate higher future wellhead revenues.

The table below summarizes our commodity derivative gains and losses that were recognized in the periods presented:



	Three Months Ended June 30,
	2019			2018
	(in thousands)
Realized gain (loss) on derivatives ⁽¹⁾	$	(993	)	$	(15,460	)
Prior year unrealized (gain) loss transferred to realized (gain) loss ⁽¹⁾	(20,933		)	5,788
Unrealized gain (loss) on derivatives ⁽¹⁾	41,470			(46,614		)
Total commodity derivative gain (loss)	$	19,544		$	(56,286	)

(1)

Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative gain (loss) in the Unaudited Consolidated Statements of Operations. This separate presentation is a non-GAAP measure. Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of our hedge position. We also believe that this disclosure allows for a more accurate comparison to our peers.

During the three months ended June 30, 2019, approximately 90% of our oil volumes and 17% of our natural gas volumes were subject to financial hedges, which resulted in a decrease in oil income of $1.0 million and no change to natural gas income after settlements. During the three months ended June 30, 2018, approximately 70% of our oil volumes and 14% of our natural gas volumes were subject to financial hedges, which resulted in a decrease in oil income of $15.8 million and an increase in natural gas income of $0.3 million after settlements.

Six Months Ended June 30, 2019 Compared with Six Months Ended June 30, 2018



	Six Months Ended June 30,					Increase (Decrease)
	2019			2018		Amount			Percent
	($ in thousands, except per unit data)
Operating Results:
Operating Revenues
Oil, gas and NGL production	$	209,191		$	190,949	$	18,242		10	%
Other operating revenues	373			259		114			44	%
Total operating revenues	209,564			191,208		18,356			10	%
Operating Expenses
Lease operating expense	22,049			13,845		8,204			59	%
Gathering, transportation and processing expense	3,465			1,431		2,034			142	%
Production tax expense	12,798			14,859		(2,061		)	(14	)%
Exploration expense	37			20		17			85	%
Impairment, dry hole costs and abandonment expense	1,317			425		892			210	%
(Gain) loss on sale of properties	2,901			972		1,929			198	%
Depreciation, depletion and amortization	145,222			93,160		52,062			56	%
Unused commitments	8,821			9,110		(289		)	(3	)%
General and administrative expense ⁽¹⁾	25,061			21,731		3,330			15	%
Merger transaction expense	2,414			6,040		(3,626		)	(60	)%
Other operating expenses, net	(20		)	48		(68		)	*nm
Total operating expenses	$	224,065		$	161,641	$	62,424		39	%
Production Data:
Oil (MBbls)	3,468			2,644		824			31	%
Natural gas (MMcf)	7,308			5,652		1,656			29	%
NGLs (MBbls)	953			737		216			29	%
Combined volumes (MBoe)	5,639			4,323		1,316			30	%
Daily combined volumes (Boe/d)	31,155			23,884		7,271			30	%
Average Realized Prices Before Hedging:
Oil (per Bbl)	$	53.16		$	63.09	$	(9.93	)	(16	)%
Natural gas (per Mcf)	1.90			1.59		0.31			19	%
NGLs (per Bbl)	11.47			20.59		(9.12		)	(44	)%
Combined (per Boe)	37.10			44.18		(7.08		)	(16	)%
Average Realized Prices with Hedging:
Oil (per Bbl)	$	54.45		$	53.91	$	0.54		1	%
Natural gas (per Mcf)	1.79			1.66		0.13			8	%
NGLs (per Bbl)	11.47			20.59		(9.12		)	(44	)%
Combined (per Boe)	37.75			38.66		(0.91		)	(2	)%
Average Costs (per Boe):
Lease operating expense	$	3.91		$	3.20	$	0.71		22	%
Gathering, transportation and processing expense	0.61			0.33		0.28			85	%
Production tax expense	2.27			3.44		(1.17		)	(34	)%
Depreciation, depletion and amortization	25.75			21.55		4.20			19	%
General and administrative expense ⁽¹⁾	4.44			5.03		(0.59		)	(12	)%


*	Not meaningful.


(1)	Included in general and administrative expense is long-term cash and equity incentive compensation of ~~$1.4~~$5.0 million (or ~~$0.75~~$0.89 per Boe) and ~~$1.1~~$3.7 million (or ~~$0.79~~$0.85 per Boe) for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, ~~and 2017,~~ respectively.

Production Revenues and Volumes. Production revenues increased to ~~$80.8~~$209.2 million for the ~~three~~six months ended ~~March 31, 2018~~June 30, 2019 from ~~$50.4~~$190.9 million for the ~~three~~six months ended ~~March 31, 2017.~~June 30, 2018. The increase in production revenues was due to a ~~20%~~30% increase in production volumes, offset by a 16% decrease in average realized prices before ~~hedging and a 34% increase in production volumes.~~hedging. The ~~increase in average realized prices before hedging increased production revenues by approximately $10.1 million, while the~~ increase in production volumes increased production revenues by approximately ~~$20.3~~$48.9 million, while average realized prices before hedging decreased production revenues by approximately $30.6 million.

Lease Operating Expense. LOE increased to $3.91 per Boe for the six months ended June 30, 2019 from $3.20 per Boe for the six months ended June 30, 2018. The ~~34%~~ increase per Boe for the six months ended June 30, 2019 compared with the six months ended June 30, 2018 is primarily related to adverse weather impacting field operations in ~~total production from~~both the Northeast Wattenberg and Hereford fields during the three months ended March 31, ~~2017~~2019 and higher initial LOE related to our early development program in the Hereford field.

Gathering, Transportation and Processing Expense. GTP expense increased to $0.61 per Boe for the six months ended June 30, 2019 from $0.33 per Boe for the six months ended June 30, 2018.

Costs incurred to gather, transport and/or process our oil, gas and NGLs prior to the ~~three months ended March 31, 2018 was primarily due~~transfer of control to ~~a 50% increase~~the customer are included in GTP expense. Costs incurred to gather, transport and/or process our oil, gas and NGLs after control has transferred to the customer are considered components of the consideration received from the customer and thus recorded in oil, gas and NGL production revenues. In general, based on specific contract arrangements, costs incurred in the Hereford Field in the DJ Basin, ~~as a result of new wells placed into production, along with new wells~~which was acquired in the Merger, ~~offset by the sale of our remaining assets~~are included in GTP expense and costs incurred in the ~~Uinta Oil Program in December 2017. Additional information concerning production is set forth~~Northeast Wattenberg Field in the ~~following table:~~DJ Basin are included in production revenues. See the "Revenue Recognition" section in Note 2 for additional information.

GTP expense for the six months ended June 30, 2019 of $0.61 per Boe is primarily associated with the Hereford Field. We expect GTP expense per Boe to increase in the future as we further develop and increase our production mix from the Hereford Field under the existing contractual arrangements.

Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 % Increase (Decrease)
Oil NGL Natural
Gas Total Oil NGL Natural
Gas Total Oil NGL Natural
Gas Total
(MBbls) (MBbls) (MMcf) (MBoe) (MBbls) (MBbls) (MMcf) (MBoe) (MBbls) (MBbls) (MMcf) (MBoe)
DJ Basin 1,137
350
2,562
1,914
679
291
1,842
1,277
67 % 20 % 39 % 50 %
Other ⁽¹⁾
—
—
—
—
146
2
48
156
*nm
*nm
*nm
*nm
Total 1,137
350
2,562
1,914
825
293
1,890
1,433
38 % 19 % 36 % 34 %


*	~~Not meaningful.~~


~~(1)~~	~~Other includes 145 MBbls of oil, 1 MBbls of NGLs and 48 MMcf of natural gas production in the Uinta Oil Program for the three months ended March 31, 2017.~~

~~Lease Operating Expense ("LOE")~~. LOE decreased to $3.27 per Boe for the three months ended March 31, 2018 from $4.09 per Boe for the three months ended March 31, 2017. The decrease per Boe for the three months ended March 31, 2018 compared with the three months ended March 31, 2017 is primarily related to operational efficiencies and sale of our remaining assets in the Uinta Oil Program in December 2017, which had relatively high LOE costs on a per Boe basis.

Production Tax Expense. Total production taxes ~~increased~~decreased to ~~$5.2~~$12.8 million for the ~~three~~six months ended ~~March 31, 2018~~June 30, 2019 from ~~$0.3~~$14.9 million for the ~~three~~six months ended ~~March 31, 2017.~~June 30, 2018. Production tax expense for both periods included an annual true-up of Colorado ad valorem tax based on actual assessments and a true-up of the Colorado severance tax. Production taxes are primarily based on the wellhead values of production, which exclude gains and losses associated with hedging activities. Excluding the ad valorem and severance tax adjustments, production taxes as a percentage of oil, natural gas and NGL sales were ~~8.9%~~8.4% and ~~6.7%~~7.8% for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~The increase was due to an increase in the effective rate of Colorado severance taxes for the three months ended March 31, 2018.~~

~~Impairment, Dry Hole Costs and Abandonment Expense.~~ ~~Our impairment, dry hole costs and abandonment expense for the three months ended March 31, 2018 and 2017 are summarized below:~~

Three Months Ended March 31,
2018 2017
(in thousands)
Impairment of unproved oil and gas properties ⁽¹⁾
$ —
$ 8,010
Dry hole expense —
2
Abandonment expense and lease expirations 317
62
Total impairment, dry hole costs and abandonment expense $ 317
$ 8,074


~~(1)~~	~~The Company recognized an impairment related to unproved oil and gas properties in the Cottonwood Gulch area of the Piceance Basin. The Company has no current plan to develop this acreage.~~

We review our oil and natural gas properties for impairment on a quarterly basis or whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. Whenever we conclude the carrying value may not be recoverable, we estimate the expected undiscounted future net cash flows of our oil and gas properties using proved and risked probable and possible reserves based on our development plans and best estimate of future production, commodity pricing, reserve risking, gathering and transportation deductions, production tax rates, lease operating expenses and

future development costs. We compare such undiscounted future net cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. If the undiscounted future net cash flows exceed the carrying amount of the oil and gas properties, no impairment is taken. If the carrying amount of a property exceeds the undiscounted future net cash flows, we will impair the carrying value to fair value based on an analysis of quantitative and qualitative factors existing as of the balance sheet date. We do not believe that the undiscounted future net cash flows of our oil and gas properties represent the applicable market value. The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the projected cash flows.

Unproved oil and gas properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks, future plans to develop acreage, recent sales prices of comparable properties and other relevant matters. We generally expect impairments of unproved properties to be more likely to occur in periods of low commodity prices because we will be less likely to devote capital to exploration activities.

Given current and projected future commodity prices, we will continue to review our acreage position and future drilling plans. In addition, we will assess the carrying value of our properties relative to their estimated future net cash flows. Estimated future net cash flows from our properties are based on our aggregate best estimates of future production, commodity pricing, gathering and transportation deducts, production tax rates, lease operating expenses and future development costs as of the balance sheet date.

Depreciation, Depletion and ~~Amortization ("DD&A").~~Amortization. DD&A increased to ~~$41.0~~$145.2 million for the ~~three~~six months ended ~~March 31, 2018~~June 30, 2019 compared with ~~$38.3~~$93.2 million for the ~~three~~six months ended ~~March 31, 2017.~~June 30, 2018. The increase of ~~$2.6~~$52.0 million was a result of a ~~20% decrease~~30% increase in production and a 19% increase in the DD&A rate ~~offset by a 34%~~for the six months ended June 30, 2019 compared with the six months ended June 30, 2018. The increase in production accounted for a $28.4 million increase in DD&A expense while the ~~three months ended March 31, 2018 compared with the three months ended March 31, 2017. The decrease~~increase in the DD&A rate accounted for a ~~$10.2 million decrease in DD&A expense, while the increase in production accounted for a $12.8~~$23.6 million increase in DD&A expense.

Under successful efforts accounting, depletion expense is calculated on a field-by-field basis ~~within a common geological structure~~based on geologic and reservoir delineation using the unit-of-production method. The capital expenditures for proved properties for each field compared to the proved reserves corresponding to each producing field determine a depletion rate for current production. For the ~~three~~six months ended ~~March 31, 2018,~~June 30, 2019, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate of ~~$21.41~~$25.75 per Boe compared with ~~$26.76~~$21.55 per Boe for the ~~three~~six months ended ~~March 31, 2017.~~June 30, 2018. The ~~decrease~~increase in the depletion rate of ~~20%~~19% is the result of ~~adding proved developed producing reserves at lower costs.~~year end 2018 reserve adjustments.

Unused Commitments. Unused commitments expense of $8.8 million and $9.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, ~~and 2017 consisted of $4.5 million and $4.6 million,~~ respectively, related to gas transportation contracts. During March 2010, we entered into two firm natural gas pipeline transportation contracts to provide a guaranteed outlet for production from the West Tavaputs area of the Uinta Basin and the Gibson Gulch area of the Piceance Basin. These transportation contracts were not included in the sales of these assets in December 2013 and September 2014, respectively. Both firm transportation contracts require the pipeline to provide transportation capacity and require us to pay monthly transportation charges regardless of the amount of pipeline capacity utilized. The agreements expire July 31, 2021.

General and Administrative Expense. General and administrative expense increased to ~~$10.1~~$25.1 million for the ~~three~~six months ended ~~March 31, 2018~~June 30, 2019 from ~~$9.3~~$21.7 million for the ~~three~~six months ended ~~March 31, 2017~~June 30, 2018, primarily due to an increase in ~~long-term cash~~employee compensation and ~~equity compensation discussed below as well as~~benefits associated with an increase in ~~employee compensation~~headcount. General and ~~benefits.~~administrative expense on a Boe basis decreased to $4.44 for the six months ended June 30, 2019 from $5.03 for the six months ended June 30, 2018.

Included in general and administrative expense is long-term cash and equity incentive compensation of ~~$1.4~~$5.0 million and ~~$1.1~~$3.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, ~~and 2017,~~ respectively. The components of long-term cash and equity incentive compensation for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018 ~~and 2017~~ are shown in the following table:


	Three Months Ended March 31,						Six Months Ended June 30,
	2018			2017			2019		2018
	(in thousands)						(in thousands)
Nonvested common stock	$	1,330		$	1,919		$	3,329	$	2,850
Nonvested common stock units	170			170			612		447
Performance cash units ⁽¹⁾⁽²⁾	(73		)	(961		)
Nonvested performance cash units ⁽¹⁾							1,077		378
Total	$	1,427		$	1,128		$	5,018	$	3,675


(1)	The nonvested performance cash units are accounted for as liability awards and will be settled in cash for the performance metrics that are met.

~~(2)~~

The ~~performance cash units are accounted~~expense for ~~as liability~~the period will increase or decrease based on updated fair values of these awards ~~and fair valued~~ at each reporting date. For the three months ended March 31, 2018, the weighted average fair value share price decreased from $5.10 as of December 31, 2017 to $5.08 as of March 31, 2018. Prior to the 2016 and 2017 Program conversion that occurred in connection with the Merger, the weighted average fair value share price was $4.63, resulting in a decrease in expense offset by an increase in expense for the 2018 Program. For the three months ended March 31, 2017, the weighted average fair value share price decreased from $8.89 as of December 31, 2016 to $4.55 as of March 31, 2017. See Note 11 for additional information on the liability to equity award conversion of the 2016 and 2017 Programs.

Merger Transaction Expense. Merger transaction expense was ~~$4.8~~$2.4 million and $6.0 million for the ~~three~~six months ended ~~March 31, 2018. We entered into the Merger Agreement on December 4, 2017~~June 30, 2019 and ~~closed on March 19, 2018.~~June 30, 2018, respectively. Transaction expenses included severance, consulting, advisory, legal and other merger-related fees that were ~~incurred during the three months ended March 31, 2018 and will~~ not be capitalized as part of the Merger. ~~We previously expensed $8.7 million of merger transaction expenses incurred in the fourth quarter of 2017.~~

Commodity Derivative Gain (Loss). Commodity derivative gain (loss) was a loss of ~~$20.3~~$85.6 million for the ~~three~~six months ended ~~March 31, 2018~~June 30, 2019 compared with a ~~gain~~loss of ~~$16.5~~$76.6 million for the ~~three~~six months ended ~~March 31, 2017.~~June 30, 2018. The loss for the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to the loss for the six months ended June 30, 2018 iswas related to fluctuations of oil and natural gas future pricing compared to actual pricing of commodity hedges in place as of ~~March 31,~~June 30, 2019 and 2018.

The table below summarizes our commodity derivative gains and losses that were recognized in the periods presented:


	Three Months Ended March 31,						Six Months Ended June 30,
	2018			2017			2019			2018
	(in thousands)						(in thousands)
Realized gain (loss) on derivatives ⁽¹⁾	$	(8,388	)	$	3,632		$	3,656		$	(23,848	)
Prior year unrealized (gain) loss transferred to realized (gain) loss ⁽¹⁾	6,094			(1,377		)	(57,073		)	20,940
Unrealized gain (loss) on derivatives ⁽¹⁾	(18,039		)	14,209			(32,230		)	(73,711		)
Total commodity derivative gain (loss)	$	(20,333	)	$	16,464		$	(85,647	)	$	(76,619	)

(1)

Realized and unrealized gains and losses on commodity derivatives are presented in the table as separate line items but are combined for a total commodity derivative gain (loss) in the Unaudited Consolidated Statements of Operations. This separate presentation is a non-GAAP measure. Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of our hedge position. We also believe that this disclosure allows for a more accurate comparison to our peers.

During the ~~three~~six months ended ~~March 31, 2018,~~June 30, 2019, approximately ~~75%~~90% of our oil volumes and ~~17%~~26% of our natural gas volumes were subject to financial hedges, which resulted in increased oil income of $4.5 million and decreased natural gas income of

$0.8 million after settlements. During the six months ended June 30, 2018, approximately 72% of our oil volumes and 15% of our natural gas volumes were subject to financial hedges, which resulted in decreased oil income of ~~$8.5~~$24.2 million and increased natural gas income of ~~$0.1~~$0.4 million after ~~settlements of all commodity derivatives. During~~settlements.

Income Tax (Expense) Benefit. For the ~~three~~six months ended ~~March~~June 30, 2019, income tax benefit of $29.6 million was recognized. For the year ended December 31, ~~2017, approximately 71%~~2018, we determined that it was more likely than not that we would be able to realize a portion of our ~~oil volumes~~deferred tax assets. This determination was made by considering all available evidence in assessing the need for a valuation allowance. Such evidence included the scheduled reversal of deferred tax liabilities, assets acquired in connection with the Merger and ~~45%~~their classification as proved or unproved, current and projected future taxable income and tax planning strategies. In making this assessment, judgment is required in considering the relative weight of negative and positive evidence. As a result of the analysis conducted, we reversed a majority of the valuation allowance on certain deferred tax assets. We continue to consider all available evidence in assessing the need for a valuation allowance on our ~~natural gas volumes were subject to financial hedges, which resulted in increased oil~~deferred tax assets. No income tax expense or benefit was recognized for the six months ended June 30, 2018 as a result of ~~$3.7 million and decreased natural gas income of $0.1 million after settlements of all commodity derivatives.~~a full valuation allowance against our deferred tax assets.

Capital Resources and Liquidity

Our primary sources of liquidity since our formation have been net cash provided by operating activities, sales and other issuances of equity and debt securities, bank credit facilities, proceeds from sale-leasebacks, joint exploration agreements and

sales of interests in properties. Our primary use of capital has been for the development, exploration and acquisition of oil and natural gas properties. As we pursue profitable reserves and production growth, we continually monitor the capital resources available to us to meet our future financial obligations, fund planned capital expenditure activities and ensure adequate liquidity. Our future success in growing proved reserves and production will be highly dependent on capital resources being available to us. We believe that we have sufficient liquidity available to us from cash on hand, cash flows from operations and under our Amended Credit Facility for our planned uses of capital for the remainder of ~~2018~~2019 and for ~~2019.~~2020.

On September 14, 2018, we entered into the Amended Credit Facility to incorporate the proved reserves and assets acquired in the Merger. The Amended Credit Facility provides for a maximum credit amount of $1.5 billion, an initial elected commitment amount of $500.0 million, and an initial borrowing base of $500.0 million, with interest rates and commitment fees unchanged. On May 14, 2019, the commitment and borrowing base amounts were reaffirmed at $500.0 million. At ~~March~~December 31, 2018, we had cash and cash equivalents of ~~$224.7~~$32.8 million and no amounts outstanding under ~~our~~the Amended Credit Facility. At ~~December 31, 2017,~~June 30, 2019, we had cash and cash equivalents of ~~$314.5~~$16.1 million and ~~no amounts~~$150.0 million outstanding under ~~our~~the Amended Credit Facility. Our effective borrowing ~~base was $300.0 million~~capacity as of ~~March 31, 2018. Our effective borrowing capacity~~June 30, 2019 was reduced by $26.0 million to ~~$274.0~~$324.0 million due to an outstanding irrevocable letter of credit related to a firm transportation agreement.

On March 19, 2018, we completed the Merger, which was effected through the issuance of 100,000,000 shares of the Company's common stock, with a fair value of $484.0 million, and the repayment of $53.9 million of Fifth Creek debt. See Note 4 for additional information related to the Merger.

Cash Flow from Operating Activities

Net cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018 ~~and 2017~~ was ~~$54.3~~$98.5 million and ~~$38.1~~$68.9 million, respectively. The increase in net cash provided by operating activities was primarily due to an increase in production ~~revenues, offset by a decrease in cash from derivative settlements.~~revenues.

Commodity Hedging Activities

Our operating cash flow is sensitive to many variables, the most significant of which are the prices we receive for the oil, natural gas and NGLs we produce. Prices for these commodities are determined primarily by prevailing market conditions. National and worldwide economic activity and political stability, weather, infrastructure capacity to reach markets, supply levels and other variable factors influence market conditions for these products. These factors are beyond our control and are difficult to predict.

To mitigate some of the potential negative impact on cash flow caused by changes in oil, natural gas and NGL prices, we have entered into financial commodity swap contracts and cashless collars to receive fixed prices for a portion of our production. At ~~March 31, 2018,~~June 30, 2019, we had in place crude oil swaps covering portions of our ~~2018,~~ 2019, 2020, and ~~2020~~2021 production, ~~and~~ natural gas swaps covering portions of our ~~2018~~2019 production and crude oil cashless collars covering portions of our 2019 production.

~~At March 31, 2018, the estimated fair value of all of our commodity derivative instruments, summarized in the~~The following table ~~was a net liability of $44.4 million, comprised of current and noncurrent liabilities.~~includes all hedges entered into through July 22, 2019.


Contract	Total Hedged Volumes	Quantity Type	Weighted Average Fixed Price		Index Price ⁽¹⁾	Fair Market Value (in thousands)			Total Hedged Volumes	Quantity Type	Weighted Average Fixed Price		Weighted Average Floor Price		Weighted Average Ceiling Price		Index Price ⁽¹⁾
Swap Contracts:
2018
2019
Oil	3,602,619	Bbls	$	54.14	WTI	$	(32,238	)	3,076,743	Bbls	$	59.01					WTI
Natural gas	1,375,000	MMBtu	$	2.68	NWPL	830			1,288,000	MMBtu	$	2.11					NWPL
2020
Oil									4,526,500	Bbls	$	59.38					WTI
2021
Oil									181,000	Bbls	$	57.13					WTI
Cashless Collars:
2019
Oil	3,280,434	Bbls	$	55.00	WTI	(12,129		)	552,000	Bbls			$	55.00	$	77.56	WTI
2020
Oil	183,000	Bbls	$	50.20	WTI	(890		)
Total						$	(44,427	)


(1)	WTI refers to West Texas Intermediate price as quoted on the New York Mercantile Exchange. NWPL refers to the Northwest Pipeline Corporation price as quoted in Platt's Inside FERC on the first business day of each month.

~~The following table includes all hedges entered into from April 1, 2018 to April 24, 2018:~~

Contract Total
Hedged
Volumes Quantity
Type Weighted
Average
Fixed
Price Index
Price
Swap Contracts:
2019
Oil 1,277,500
Bbls $ 60.10
WTI

By removing the price volatility from a portion of our oil and natural gas revenue, we have mitigated, but not eliminated, the potential effects of changing prices on our operating cash flow for the relevant period. While mitigating negative effects of falling commodity prices, these derivative contracts also limit the benefits we would receive from increases in commodity prices.

It is our policy to enter into derivative contracts with counterparties that are lenders in the Amended Credit Facility, affiliates of lenders in the Amended Credit Facility or potential lenders in the Amended Credit Facility. Our derivative contracts are documented using an industry standard contract known as a Schedule to the Master Agreement and International Swaps and Derivative Association, Inc. ("ISDA") Master Agreement or other contracts. Typical terms for these contracts include credit support requirements, cross default provisions, termination events and set-off provisions. We are not required to provide any credit support to our counterparties other than cross collateralization with the properties securing the Amended Credit Facility. We have set-off provisions in our derivative contracts with lenders under our Amended Credit Facility which, in the event of a counterparty default, allow us to set-off amounts owed to the defaulting counterparty under the Amended Credit Facility or other obligations against monies owed to us under the derivative contracts. Where the counterparty is not a lender under the Amended Credit Facility, we may not be able to set-off amounts owed by us under the Amended Credit Facility, even if such counterparty is an affiliate of a lender under such facility.

Capital Expenditures

Our capital expenditures are summarized in the following tables for the periods indicated:


	Three Months Ended March 31,				Six Months Ended June 30,
Basin/Area	2018		2017		2019		2018
	(in millions)				(in millions)
DJ Basin	$	112.0	$	58.6	$	246.9	$	256.7
Other	0.1		0.6		3.6		0.4
Total	$	112.1	$	59.2	$	250.5	$	257.1


	Three Months Ended March 31,				Six Months Ended June 30,
	2018		2017		2019		2018
	(in millions)				(in millions)
Acquisitions of proved and unproved properties and other real estate	$	0.5	$	13.5	$	0.7	$	2.5
Drilling, development, exploration and exploitation of oil and natural gas properties	98.1		45.1		230.1		233.5
Gathering and compression facilities	13.4		0.4		9.3		20.4
Geologic and geophysical costs					6.8		0.2
Furniture, fixtures and equipment	0.1		0.2		3.6		0.5
Total	$	112.1	$	59.2	$	250.5	$	257.1

Our current estimated capital expenditure budget for ~~2018~~2019 is ~~$500.0~~$350.0 million to ~~$550.0~~$380.0 million. ~~The full year 2018 capital budget takes into account the expanded scope of our operations due to the completion of the Merger.~~ The budget includes facilities costs and excludes acquisitions. We may adjust capital expenditures as business conditions and operating results warrant. The amount, timing and allocation of capital expenditures is generally discretionary and within our control. If oil, natural gas and NGL prices decline to below acceptable levels or costs increase above acceptable levels, we could choose to defer a portion of our budgeted capital expenditures until later periods to achieve the desired balance between sources and uses of liquidity. We would generally do this by prioritizing capital projects to first focus on those that we believe will have the highest expected risk-adjusted financial returns and ability to generate near-term cash flow.

We believe that we have sufficient available liquidity with available cash on hand, cash under the Amended Credit Facility and cash flow from operations to fund our ~~2018~~2019 and ~~2019~~2020 capital expenditures. Future cash flows are subject to a number of variables, including our level of oil and natural gas production, commodity prices and operating costs. There can be no assurance that operations and other capital resources will provide sufficient amounts of cash flow to maintain planned levels of capital expenditures.

Financing Activities

~~Merger Financing.~~ On March 19, 2018, we completed the Merger with Fifth Creek. The Merger was effected through the issuance of 100,000,000 shares of our common stock, with a fair value of $484.0 million, and the repayment of $53.9 million of Fifth Creek debt.

Amended Credit Facility. ~~There were no borrowings~~We had $150.0 million and zero outstanding under the Amended Credit Facility ~~in 2018 to date or in 2017. On May 1, 2018, our borrowing base was re-affirmed at $300.0 million based on Bill Barrett's proved reserves in place at~~as of June 30, 2019 and December 31, ~~2017 and~~2018, respectively. On September 14, 2018, we entered into the ~~Company's commodity hedge position. We plan~~Amended Credit Facility to incorporate the proved reserves and ~~development of the~~ assets acquired in the ~~Merger~~Merger. The Amended Credit Facility provides for a maximum credit amount of $1.5 billion, an initial elected commitment amount of $500.0 million, and an initial borrowing base of $500.0 million, with interest rates and commitment fees unchanged. On May 14, 2019, the commitment and borrowing base amounts were reaffirmed at ~~our next re-determination, which will likely have a positive effect on our future borrowing base.~~$500.0 million. The Amended Credit Facility extended the maturity date of the facility to September 14, 2023. Borrowing bases are computed based on proved oil, natural gas and NGL reserves, hedge positions and estimated future cash flows from those reserves calculated using future commodity pricing provided by our lenders, as well as any other outstanding debt. Lower commodity prices will generally result in a lower borrowing base.

We are currently in compliance with all financial covenants and have complied with all financial covenants since issuance. We expect to be in compliance with all financial covenants based on the ~~2018~~2019 budget at current commodity prices.

Our outstanding debt is summarized below:


		As of March 31, 2018							As of December 31, 2017								As of June 30, 2019							As of December 31, 2018
	Maturity Date	Principal		Unamortized Discount			Carrying Amount		Principal		Unamortized Discount			Carrying Amount		Maturity Date	Principal		Unamortized Discount			Carrying Amount		Principal		Unamortized Discount			Carrying Amount
		(in thousands)															(in thousands)
Amended Credit Facility	April 8, 2020	$	—	$	—		$	—	$	—	$	—		$	—	September 14, 2023	$	150,000	$	—		$	150,000	$	—	$	—		$	—
7.0% Senior Notes	October 15, 2022	350,000		(3,837		)	346,163		350,000		(4,033		)	345,967		October 15, 2022	350,000		(2,791		)	347,209		350,000		(3,210		)	346,790
8.75% Senior Notes	June 15, 2025	275,000		(4,919		)	270,081		275,000		(5,080		)	269,920		June 15, 2025	275,000		(4,060		)	270,940		275,000		(4,403		)	270,597
Lease Financing Obligation	August 10, 2020	2,212		—			2,212		2,328		(2		)	2,326		August 10, 2020	—		—			—		1,859		—			1,859
Total Debt		$	627,212	$	(8,756	)	$	618,456	$	627,328	$	(9,115	)	$	618,213		$	775,000	$	(6,851	)	$	768,149	$	626,859	$	(7,613	)	$	619,246
Less: Current Portion of Long-Term Debt		2,212		—			2,212		469		—			469			—		—			—		1,859		—			1,859
Total Long-Term Debt ⁽¹⁾		$	625,000	$	(8,756	)	$	616,244	$	626,859	$	(9,115	)	$	617,744		$	775,000	$	(6,851	)	$	768,149	$	625,000	$	(7,613	)	$	617,387


(1)	See Note 5 for additional information.

Credit Ratings. Our credit risk is evaluated by two independent rating agencies based on publicly available information and information obtained during our ongoing discussions with the rating agencies. Moody's Investor Services and Standard & Poor's Rating Services currently rate our 7.0% Senior Notes and 8.75% Senior Notes and have assigned a credit rating. We do not have any credit rating triggers that would accelerate the maturity of amounts due under our Amended Credit Facility, 7.0% Senior Notes or 8.75% Senior Notes. However, our ability to raise funds and the costs of any financing activities ~~will~~could be affected by our credit rating at the time any such financing activities are conducted.

Contractual Obligations. A summary of our contractual obligations as of ~~March 31, 2018~~June 30, 2019 is provided in the following table:

Payments Due by Year
Year 1 Year 2 Year 3 Year 4 Year 5 Thereafter Total
Twelve Months Ended March 31, 2019 Twelve Months Ended March 31, 2020 Twelve Months Ended March 31, 2021 Twelve Months Ended March 31, 2022 Twelve Months Ended March 31, 2023 After
March 31, 2023
(in thousands)
Notes payable ⁽¹⁾
$ 46
$ —
$ —
$ —
$ —
$ —
$ 46
7.0% Senior Notes ⁽²⁾
24,500
24,500
24,500
24,500
374,500
—
472,500
8.75% Senior Notes ⁽³⁾
24,063
24,063
24,063
24,063
24,063
335,154
455,469
Lease Financing Obligation ⁽⁴⁾
2,272
—
—
—
—
—
2,272
Office and office equipment leases and other ⁽⁵⁾
4,122
1,141
720
445
445
79
6,952
Firm transportation agreements ⁽⁶⁾
18,456
18,691
18,691
6,230
—
—
62,068
Gas gathering and processing agreement ⁽⁷⁾
2,553
2,315
2,124
1,498
—
—
8,490
Asset retirement obligations ⁽⁸⁾
1,443
1,042
1,167
1,153
1,200
19,345
25,350
Derivative liability ⁽⁹⁾
35,866
7,941
620
—
—
—
44,427
Total $ 113,321
$ 79,693
$ 71,885
$ 57,889
$ 400,208
$ 354,578
$ 1,077,574



	Payments Due by Year
	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter		Total
	Twelve Months Ended June 30, 2020		Twelve Months Ended June 30, 2021		Twelve Months Ended June 30, 2022		Twelve Months Ended June 30, 2023		Twelve Months Ended June 30, 2024		After June 30, 2024
	(in thousands)
Notes payable ⁽¹⁾	$	246	$	—	$	—	$	150,000	$	—	$	—	$	150,246
7.0% Senior Notes ⁽²⁾	24,500		24,500		24,500		362,250		—		—		435,750
8.75% Senior Notes ⁽³⁾	24,063		24,063		24,063		24,063		24,063		299,060		419,375
Firm transportation agreements ⁽⁴⁾	19,394		26,139		12,243		14,600		14,640		12,160		99,176
Gas gathering and processing agreements ⁽⁵⁾⁽⁶⁾	6,966		2,082		998		—		—		—		10,046
Asset retirement obligations ⁽⁷⁾	3,008		335		330		434		299		20,998		25,404
Derivative liability ⁽⁸⁾	75		—		—		—		—		—		75
Operating leases ⁽⁹⁾	1,523		2,417		2,195		1,997		2,051		8,623		18,806
Other ⁽¹⁰⁾	3,704		1,117		745		745		372		—		6,683
Total	$	83,479	$	80,653	$	65,074	$	554,089	$	41,425	$	340,841	$	1,165,561

(1)

~~Notes~~Included in notes payable ~~includes~~is the outstanding principal amount under our Amended Credit Facility due September 14, 2023. This table does not include future commitment fees, interest expense or other fees on our Amended Credit Facility because the Amended Credit Facility is a floating rate instrument, and we cannot determine with accuracy the timing of future loan advances, repayments or future interest rates to be charged. Also included in notes payable is interest on a $26.0 million letter of credit that accrues interest at ~~2.0%~~1.5% and 0.125% per annum for participation fees and fronting fees, respectively. The expected term of the letter of credit is ~~April 30, 2018. There is currently no balance outstanding under the Amended Credit Facility due April 9,~~January 31, 2020.


(2)	On March 25, 2012, we issued $400.0 million aggregate principal amount of 7.0% Senior Notes. We are obligated to make semi-annual interest payments through maturity on October 15, 2022 equal to $12.3 million.


(3)	On April 28, 2017, we issued $275.0 million aggregate principal amount of 8.75% Senior Notes. We are obligated to make semi-annual interest payments through maturity on June 15, 2025 equal to $12.0 million.


(4)	The Lease Financing Obligation is calculated based on the aggregate undiscounted minimum future lease payments, which include both an interest and principal component. We have elected to exercise the early buyout option pursuant to which we will purchase the equipment for $1.8 million on February 10, 2019.


~~(5)~~	The lease for our principal office in Denver, Colorado extends through March 2019. Due to the Merger, we acquired the office lease of Fifth Creek in Greenwood Village, Colorado which extends through July 2023.


~~(6)~~	We have entered into contracts that provide firm transportation capacity on oil and gas pipeline systems. The contracts require us to pay transportation demand charges regardless of the amount ~~of gas~~ we deliver to the processing facility or pipeline.


~~(7)~~(5)	~~We have entered into~~Includes a gas gathering and processing contract which requires us to deliver a minimum volume of natural gas to a midstream entity for gathering and processing on a monthly basis. The contract requires us to pay a fee associated with ~~those~~the contracted volumes regardless of the amount delivered.

~~(8)~~(6)

Includes a reimbursement obligation of $4.7 million. The reimbursement obligation requires us to pay a monthly gathering and processing fee per Mcf of production over a one year period to reimburse a midstream entity for its costs to construct gas gathering and processing facilities. If the costs are not reimbursed by us via the monthly gathering and processing fees through August 2019, we must pay the difference.

(7)

Neither the ultimate settlement amounts nor the timing of our asset retirement obligations can be precisely determined in advance. See "Critical Accounting Policies and Estimates" in Part II, Item 7 of ~~Bill Barrett's~~HighPoint Resources' Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 for a more detailed discussion of the nature of the accounting estimates involved in estimating asset retirement obligations.

~~(9)~~(8)

Derivative liability represents the net fair value for oil, gas and NGL commodity derivatives presented as liabilities in our Unaudited Consolidated Balance Sheets as of ~~March 31, 2018.~~June 30, 2019. The ultimate settlement amounts of our derivative liabilities are unknown because they are subject to continuing market fluctuations. See "Critical Accounting Policies and Estimates" in Part II, Item 7 of ~~Bill Barrett's~~our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and in "Commodity Hedging Activities" above in this Quarterly Report on Form 10-Q for a more detailed discussion of the nature of the accounting estimates involved in valuing derivative instruments.


(9)	Operating leases primarily includes office leases. Also included are leases of operations equipment which are shown as gross amounts that we are financially committed to pay. However, we will record in our financial statements our proportionate share based on our working interest, which will vary from property to property.


(10)	Primarily includes a fresh water commitment contract which requires us to purchase a minimum volume of fresh water from a supplier. The contract requires us to pay a fee associated with the contracted volumes regardless of the amount delivered.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of ~~March 31, 2018.~~June 30, 2019.

Trends and Uncertainties

We refer you to the corresponding section in Part II, Item 7 of ~~Bill Barrett's~~our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 for a discussion of trends and uncertainties that may affect our financial condition or liquidity. Also see "Risk Factors" in Part II of this report.

Critical Accounting Policies and Estimates

We refer you to the corresponding section in Part II, Item 7 of ~~Bill Barrett's~~our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and the notes to the Unaudited Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for a description of critical accounting policies and estimates.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term "market risk" refers to the risk of loss arising from adverse changes in oil, natural gas and NGL prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk sensitive instruments were entered into for purposes other than speculative trading.

Commodity Price Risk

Our primary market risk exposure is to the prices we receive for our production. Commodity pricing is primarily driven by the prevailing worldwide price for crude oil and spot regional market prices applicable to our U.S. oil and natural gas production. Pricing for oil, natural gas and NGLs has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. The prices we receive for future production depend on many factors outside of our control, including volatility in the differences between product prices at sales points and the applicable index price. Based on our average daily production and our derivative contracts in place for the ~~three~~six months ended ~~March 31, 2018,~~June 30, 2019, our income before income taxes would have decreased by approximately ~~$0.2~~$0.4 million for each ~~$1.00~~$5.00 per barrel decrease in crude oil prices, approximately ~~$0.2~~$0.5 million for each $0.10 decrease per MMBtu in natural gas prices and approximately ~~$0.3~~$0.9 million for each $1.00 per barrel decrease in NGL prices.

We routinely enter into commodity hedges relating to a portion of our projected production revenue through various financial transactions that hedge future prices received. These transactions may include financial price swaps whereby we will receive a fixed price and pay a variable market price to the contract counterparty. These commodity hedging activities are intended to support oil, natural gas and NGL prices at targeted levels that provide an acceptable rate of return and to manage our exposure to oil, natural gas and NGL price fluctuations. We do not enter into any market risk sensitive instruments for trading purposes.

As of ~~April 24, 2018,~~July 22, 2019, we have ~~financial derivative instruments~~swap contracts related to oil and natural gas volumes in place for the following periods ~~indicated.~~ indicated:



	July – December 2019			For the year 2020			For the year 2021
	Derivative Volumes	Weighted Average Price		Derivative Volumes	Weighted Average Price		Derivative Volumes	Weighted Average Price
Oil (Bbls)	3,076,743	$	59.01	4,526,500	$	59.38	181,000	$	57.13
Natural Gas (MMbtu)	1,288,000	$	2.11				—	$	—

As of July 22, 2019, we have cashless collars related to oil volumes in place for the following periods indicated:



	July – December 2019
	Derivative Volumes	Weighted Average Floor Price		Weighted Average Ceiling Price
Oil (Bbls)	552,000	$	55.00	$	77.56

Further detail of these hedges is summarized in the table presented under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations— Capital Resources and Liquidity— Commodity Hedging Activities."

Interest Rate Risk

April – December 2018 For the year 2019 For the year 2020
Derivative
Volumes Weighted Average Price Derivative Volumes Weighted Average Price Derivative Volumes Weighted Average Price
Oil (Bbls) 3,602,619
$ 54.14
4,557,934
$ 56.43
183,000
$ 50.20
Natural Gas (MMbtu) 1,375,000
$ 2.68
—
$ —
—
$ —

At June 30, 2019, we had $150.0 million outstanding under our Amended Credit Facility, which bears interest at floating rates. The weighted average annual interest rate incurred on this debt for the six months ended June 30, 2019 was 4.1%. A 1.0% increase in each of the average LIBOR rate and federal funds rate for the six months ended June 30, 2019 would have resulted in an estimated $0.3 million increase in interest expense assuming a similar average debt level to the six months ended June 30, 2019. There were no borrowings under the Amended Credit Facility during 2018. We also had $350.0 million principal amount of 7.0% Senior Notes and $275.0 million principal amount of 8.75% Senior Notes outstanding at June 30, 2019.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. As of ~~March 31, 2018,~~June 30, 2019, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and ~~Principal~~Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and ~~Principal~~Chief Financial Officer concluded that our disclosure controls and procedures are effective as of ~~March 31, 2018.~~June 30, 2019.

Changes in Internal Controls. There ~~has been~~was no change in our internal control over financial reporting during the ~~first fiscal~~second quarter of ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are ~~not a party to any material pending~~involved in various legal or governmental proceedings ~~other than~~in the ordinary ~~routine litigation incidental~~course of business. These proceeding are subject to the uncertainties inherent in any litigation. We review the status of these proceedings on an ongoing basis and, from time to time, may settle or otherwise resolve these matters on terms and conditions that management believes are in our ~~business.~~best interests. While the ultimate outcome and impact of any proceeding cannot be predicted with certainty, our management does not believe that the resolution of any currently pending proceeding will have a material adverse effect on our financial condition or results of operations.

As previously disclosed, in the Annual Report on Form10-K for the year ended December 31, 2018, we received initial and supplemental EPA "Section 114" mandatory information directives, as well as parallel "compliance advisories" from the Colorado Department of Public Health and Environment ("CDPHE"). These directives led to settlement negotiations with EPA and CDPHE. In April 2019, we entered into a consent decree with the EPA and the CDPHE to resolve these matters. On June 24, 2019 the Court approved the consent decree and we will pay a fine of $275,000 to the United States and $55,000 to the State of Colorado, conduct a supplemental environmental project estimated to cost up to $220,000 and undertake certain operational enhancements.

Item 1A. Risk Factors.

~~As of the date of this filing, there have been no material changes or updates~~Please refer to ~~the risk factors previously disclosed in~~ the "Risk Factors" section of ~~Bill Barrett's~~our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. An investment in our securities involves various risks. When considering an investment in our Company, you should carefully consider all of the risk factors described in ~~Bill Barrett's~~our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and subsequent reports filed with the SEC. These risks and uncertainties are not the only ones facing us, and there may be additional matters that we are unaware of or that we currently consider immaterial. All of these could adversely affect our

business, financial condition, results of operations and cash flows and, thus, the value of an investment in our Company. There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 other than as detailed below.

If we cannot meet the "price criteria" for continued listing on the NYSE, the NYSE may delist our common stock, which could have an adverse impact on the trading volume, liquidity and market price of our common stock.

If we do not maintain an average closing price of $1.00 or more for our common stock over any consecutive 30 trading-day period, the NYSE may delist our common stock for failure to maintain compliance with the NYSE price criteria listing standards. As of July 22, 2019, the average closing price of our common stock over the immediately preceding 30 consecutive trading-day period was $1.69. The NYSE Listed Company Manual sets out rules and processes to cure non-compliance with this standard. For instance, an issuer generally has six months to cure the listing standard related to stock price (such as a reverse-stock split), during which time the issuer's common stock would continue to be traded on the NYSE, subject to compliance with the other continued listing standards. A delisting of our common stock from the NYSE could negatively impact us because it could reduce the liquidity and market price of our common stock, reduce the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing, and/or diminish the value of equity incentives available to provide to our employees.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Securities

There were no sales of unregistered equity securities during the period covered by this report.

Issuer Purchases of Equity Securities

The following table contains information about our acquisitions of equity securities during the three months ended ~~March 31, 2018:~~June 30, 2019:

Period
Total
Number of
Shares ⁽¹⁾

Weighted
Average Price
Paid Per
Share

Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced Plans
or Programs

Maximum Number
(or Approximate
Dollar Value)
of Shares (or
Units) that May
Yet Be Purchased
Under the Plans or
Programs
January 1 – 31, 2018 165
$ 5.26
—
—
February 1 – 28, 2018 269,042
5.36
—
—
March 1 – 31, 2018 4,145
4.69
—
—
Total 273,352
5.35
—
—



Period	Total Number of Shares ⁽¹⁾	Weighted Average Price Paid Per Share		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
April 1 – 30, 2019	—	$	—	—	—
May 1 – 31, 2019	8,196	2.26		—	—
June 1 – 30, 2019	2,353	1.63		—	—
Total	10,549	2.12		—	—


(1)	Represents shares delivered by employees to satisfy tax withholding obligations resulting from the vesting of restricted shares of common stock issued pursuant to our employee incentive plans.

Item 3. Defaults upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.



Exhibit Number		Description of Exhibits
~~4.1~~		~~Specimen Certificate of Common Stock.~~

~~10.1~~		~~Form of Change in Control Severance Protection Agreement.~~

~~10.2~~		~~Form of Indemnification Agreement.~~

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification of ~~Principal~~Chief Financial Officer.

32.1		Section 1350 Certification of Chief Executive Officer.

32.2		Section 1350 Certification of ~~Principal~~Chief Financial Officer.

101.INS		~~XBRL~~ Instance Document (The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




		HIGHPOINT RESOURCES CORPORATION

Date:	~~May 8, 2018~~August 5, 2019	By:	/s/ R. Scot Woodall
			R. Scot Woodall
			Chief Executive Officer and President
			(Principal Executive Officer)

Date:	~~May 8, 2018~~August 5, 2019	By:	/s/ David R. Macosko
			David R. Macosko
			Senior Vice President-Accounting
			(Principal Accounting Officer)

4445



	April – December 2018			For the year 2019			For the year 2020
	Derivative Volumes	Weighted Average Price		Derivative Volumes	Weighted Average Price		Derivative Volumes	Weighted Average Price
Oil (Bbls)	3,602,619	$	54.14	3,280,434	$	55.00	183,000	$	50.20
Natural Gas (MMbtu)	1,375,000	$	2.68	—	$	—	—	$	—



	As of December 31, 2017
	Parent Issuer		Subsidiary Guarantors		Intercompany Eliminations			Consolidated
	(in thousands)
Assets:
Cash and cash equivalents	$	314,466	$	—	$	—		$	314,466
Accounts receivable, net of allowance for doubtful accounts	51,415		—		—			51,415
Other current assets	1,782		—		—			1,782
Property and equipment, net	1,016,986		1,894		—			1,018,880
Intercompany receivable	854		—		(854		)	—
Investment in subsidiaries	1,040		—		(1,040		)	—
Noncurrent assets	4,163		—		—			4,163
Total assets	$	1,390,706	$	1,894	$	(1,894	)	$	1,390,706
Liabilities and Stockholders' Equity:
Accounts payable and other accrued liabilities	$	84,055	$	—	$	—		$	84,055
Other current liabilities	64,879		—		—			64,879
Intercompany payable	—		854		(854		)	—
Long-term debt	617,744		—		—			617,744
Other noncurrent liabilities	25,474		—		—			25,474
Stockholders' equity	598,554		1,040		(1,040		)	598,554
Total liabilities and stockholders' equity	$	1,390,706	$	1,894	$	(1,894	)	$	1,390,706



	Three Months Ended March 31, 2018				Three Months Ended March 31, 2017				% Increase (Decrease)
	Oil	NGL	Natural Gas	Total	Oil	NGL	Natural Gas	Total	Oil		NGL		Natural Gas		Total
	(MBbls)	(MBbls)	(MMcf)	(MBoe)	(MBbls)	(MBbls)	(MMcf)	(MBoe)	(MBbls)		(MBbls)		(MMcf)		(MBoe)
DJ Basin	1,137	350	2,562	1,914	679	291	1,842	1,277	67	%	20	%	39	%	50	%
Other ⁽¹⁾	—	—	—	—	146	2	48	156	*nm		*nm		*nm		*nm
Total	1,137	350	2,562	1,914	825	293	1,890	1,433	38	%	19	%	36	%	34	%

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