Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 01, 2018 | |
Document And Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ESTE | |
Entity Registrant Name | EARTHSTONE ENERGY INC | |
Entity Central Index Key | 10,254 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Class A Common Stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 28,611,277 | |
Class B Common Stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 35,452,178 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 13,429 | $ 22,955 |
Accounts receivable: | ||
Oil, natural gas, and natural gas liquids revenues | 14,600 | 14,978 |
Joint interest billings and other, net of allowance of $111 and $138 at September 30, 2018 and December 31, 2017, respectively | 6,047 | 7,778 |
Derivative asset | 0 | 184 |
Prepaid expenses and other current assets | 1,440 | 1,178 |
Total current assets | 35,516 | 47,073 |
Oil and gas properties, successful efforts method: | ||
Proved properties | 684,862 | 605,039 |
Unproved properties | 268,426 | 275,025 |
Land | 5,382 | 5,534 |
Total oil and gas properties | 958,670 | 885,598 |
Accumulated depreciation, depletion and amortization | (115,382) | (118,028) |
Net oil and gas properties | 843,288 | 767,570 |
Other noncurrent assets: | ||
Goodwill | 17,620 | 17,620 |
Office and other equipment, net of accumulated depreciation of $2,378 and $2,093 at September 30, 2018 and December 31, 2017, respectively | 725 | 947 |
Other noncurrent assets | 1,252 | 1,207 |
TOTAL ASSETS | 898,401 | 834,417 |
Current liabilities: | ||
Accounts payable | 22,234 | 33,472 |
Revenues and royalties payable | 32,459 | 10,288 |
Accrued expenses | 14,274 | 8,707 |
Advances | 2,771 | 4,587 |
Derivative liability | 23,391 | 11,805 |
Total current liabilities | 95,129 | 68,859 |
Noncurrent liabilities: | ||
Long-term debt | 35,000 | 25,000 |
Deferred tax liability | 10,634 | 10,515 |
Asset retirement obligation | 1,635 | 2,354 |
Derivative liability | 10,019 | 1,826 |
Other noncurrent liabilities | 1,891 | 131 |
Total noncurrent liabilities | 59,179 | 39,826 |
Commitments and Contingencies (Note 13) | ||
Equity: | ||
Preferred stock, $0.001 par value, 20,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Additional paid-in capital | 512,960 | 503,932 |
Accumulated deficit | (218,627) | (224,822) |
Total Earthstone Energy, Inc. equity | 294,397 | 279,174 |
Noncontrolling interest | 449,696 | 446,558 |
Total equity | 744,093 | 725,732 |
TOTAL LIABILITIES AND EQUITY | 898,401 | 834,417 |
Class A Common Stock | ||
Equity: | ||
Common stock | 28 | 28 |
Class B Common Stock | ||
Equity: | ||
Common stock | $ 36 | $ 36 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Joint interest billings and other, allowance | $ 111 | $ 138 |
Office and other equipment, accumulated depreciation | $ 2,378 | $ 2,093 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 28,400,421 | 27,584,638 |
Common stock, shares outstanding (in shares) | 28,400,421 | 27,584,638 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 35,663,034 | 36,052,169 |
Common stock, shares outstanding (in shares) | 35,663,034 | 36,052,169 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
REVENUES | ||||
Oil | $ 38,791 | $ 25,733 | $ 105,111 | $ 59,815 |
Natural gas | 1,790 | 2,513 | 6,257 | 6,338 |
Natural gas liquids | 5,495 | 3,036 | 12,753 | 6,249 |
Total revenues | 46,076 | 31,282 | 124,121 | 72,402 |
OPERATING COSTS AND EXPENSES | ||||
Lease operating expense | 4,843 | 5,407 | 14,509 | 14,990 |
Severance taxes | 2,254 | 1,588 | 6,115 | 3,705 |
Impairment expense | 833 | 92 | 833 | 66,740 |
Depreciation, depletion and amortization | 12,842 | 10,330 | 33,362 | 28,258 |
General and administrative expense | 4,944 | 7,295 | 18,809 | 19,483 |
Transaction costs | 892 | 109 | 892 | 4,676 |
Accretion of asset retirement obligation | 44 | 72 | 128 | 378 |
Total operating costs and expenses | 26,652 | 24,893 | 74,648 | 138,230 |
Gain on sale of oil and gas properties | 4,096 | 2,157 | 4,608 | 3,848 |
Income (loss) from operations | 23,520 | 8,546 | 54,081 | (61,980) |
OTHER INCOME (EXPENSE) | ||||
Interest expense, net | (565) | (903) | (1,788) | (1,873) |
Write-off of deferred financing costs | 0 | 0 | 0 | (526) |
(Loss) gain on derivative contracts, net | (17,481) | (3,663) | (33,606) | 4,137 |
Litigation settlement | (4,775) | 0 | (4,775) | 0 |
Other income, net | 37 | (66) | 434 | (34) |
Total other income (expense) | (22,784) | (4,632) | (39,735) | 1,704 |
Income (loss) before income taxes | 736 | 3,914 | 14,346 | (60,276) |
Income tax (expense) benefit | (172) | 94 | (119) | 10,046 |
Net income (loss) | 564 | 4,008 | 14,227 | (50,230) |
Net income attributable to noncontrolling interest | 340 | 2,452 | 8,032 | (35,392) |
Net income (loss) attributable to Earthstone Energy, Inc. | $ 224 | $ 1,556 | $ 6,195 | $ (14,838) |
Net income (loss) per common share attributable to Earthstone Energy, Inc.: | ||||
Basic (in dollars per share) | $ 0.01 | $ 0.07 | $ 0.22 | $ (0.66) |
Diluted (in dollars per share) | $ 0.01 | $ 0.07 | $ 0.22 | $ (0.66) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 28,257,376 | 22,905,023 | 28,011,298 | 22,638,977 |
Diluted (in shares) | 28,311,759 | 22,905,023 | 28,108,365 | 22,638,977 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||||
Net income (loss) | $ 564 | $ 4,008 | $ 14,227 | $ (50,230) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
Impairment expense | 833 | 92 | 833 | 66,740 |
Depreciation, depletion and amortization | 12,842 | 10,330 | 33,362 | 28,258 |
Accretion of asset retirement obligations | 44 | 72 | 128 | 378 |
Settlement of asset retirement obligations | (79) | 0 | ||
Gain on sale of oil and gas properties | (4,096) | (2,157) | (4,608) | (3,848) |
Total loss (gain) on derivative contracts, net | 17,481 | 3,663 | 33,606 | (4,137) |
Operating portion of net cash paid in settlement of derivative contracts | (13,643) | 229 | ||
Stock-based compensation | 5,535 | 4,645 | ||
Deferred income taxes | 119 | (10,046) | ||
Write-off of deferred financing costs | 0 | 0 | 0 | 526 |
Amortization of deferred financing costs | 100 | 100 | 228 | 195 |
Changes in assets and liabilities: | ||||
(Increase) decrease in accounts receivable | (1,476) | 6,964 | ||
Increase in prepaid expenses and other current assets | (372) | (455) | ||
Increase (decrease) in accounts payable and accrued expenses | 3,939 | (11,522) | ||
Increase (decrease) in revenues and royalties payable | 26,572 | (4,019) | ||
Increase (decrease) in advances | (1,816) | 506 | ||
Net cash provided by operating activities | 96,555 | 24,184 | ||
Cash flows from investing activities: | ||||
Bold Contribution Agreement, net of cash acquired | 0 | (55,609) | ||
Additions to oil and gas properties | (120,124) | (29,958) | ||
Additions to office and other equipment | (121) | (139) | ||
Proceeds from sales of oil and gas properties | 5,840 | 5,054 | ||
Net cash used in investing activities | (114,405) | (80,652) | ||
Cash flows from financing activities: | ||||
Proceeds from borrowings | 70,308 | 70,000 | ||
Repayments of borrowings | (60,308) | (11,193) | ||
Cash paid related to the exchange and cancellation of Class A Common Stock | (1,402) | (324) | ||
Deferred financing costs | (274) | (1,168) | ||
Net cash provided by financing activities | 8,324 | 57,315 | ||
Net (decrease) increase in cash | (9,526) | 847 | ||
Cash at beginning of period | 22,955 | 10,200 | ||
Cash at end of period | $ 13,429 | $ 11,047 | 13,429 | 11,047 |
Cash paid for: | ||||
Interest | 1,480 | 1,555 | ||
Non-cash investing and financing activities: | ||||
Accrued capital expenditures | 11,314 | 19,519 | ||
Asset retirement obligations | (120) | 83 | ||
Class A Common Stock | ||||
Non-cash investing and financing activities: | ||||
Common stock issued in Bold Contribution Agreement | 0 | 2,037 | ||
Class B Common Stock | ||||
Non-cash investing and financing activities: | ||||
Common stock issued in Bold Contribution Agreement | $ 0 | $ 489,842 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Earthstone Energy, Inc., a Delaware corporation ("Earthstone" and together with its consolidated subsidiaries, the "Company"), is a growth-oriented independent oil and natural gas development and production company. In addition, the Company is active in corporate mergers and the acquisition of oil and natural gas properties that have production and future development opportunities. The Company's operations are all in the upstream segment of the oil and natural gas industry and all its properties are onshore in the United States. Earthstone is the sole managing member of Earthstone Energy Holdings, LLC, a Delaware limited liability company (together with its wholly-owned consolidated subsidiaries, “EEH”), with a controlling interest in EEH. Earthstone, together with its wholly-owned subsidiary, Lynden Energy Corp., a corporation organized under the laws of British Columbia (“Lynden Corp”), and Lynden Corp’s wholly-owned consolidated subsidiary, Lynden USA Inc., a Utah corporation (“Lynden US”) and also a member of EEH, consolidates the financial results of EEH and records a noncontrolling interest in the Condensed Consolidated Financial Statements representing the economic interests of EEH's members other than Earthstone and Lynden US. The accompanying unaudited Condensed Consolidated Financial Statements and notes thereto have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The accompanying unaudited Condensed Consolidated Financial Statements and notes should be read in conjunction with the financial statements and notes included in Earthstone’s 2017 Annual Report on Form 10-K. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for the fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. The Company’s Condensed Consolidated Balance Sheet at December 31, 2017 is derived from the audited Consolidated Financial Statements at that date. Prior-period Stock-based compensation in the Condensed Consolidated Statements of Operations has been reclassified from its own line item and included in General and administrative expense, within Operating Costs and Expenses, to conform to current-period presentation. This reclassification had no effect on Income (loss) from operations, Income (loss) before income taxes, or Net income (loss) for the three and nine months ended September 30, 2018 and 2017 . Bold Contribution Agreement On May 9, 2017, Earthstone completed a contribution agreement dated as of November 7, 2016 and as amended on March 21, 2017 (the “Bold Contribution Agreement”), by and among Earthstone, EEH, Lynden US, Lynden USA Operating, LLC, a Texas limited liability company (“Lynden Op”), Bold Energy Holdings, LLC, a Texas limited liability company (“Bold Holdings”), and Bold Energy III LLC, a Texas limited liability company (“Bold”). The purpose of the Bold Contribution Agreement was to provide for, among other things described below, the business combination between Earthstone and Bold, which owned significant developed and undeveloped oil and natural gas properties in the Midland Basin of Texas (the “Bold Transaction”). The Bold Transaction was structured in a manner commonly known as an “Up-C.” Under this structure and the Bold Contribution Agreement, (i) Earthstone recapitalized its common stock, $0.001 par value per share (the “Common Stock”), into two classes – Class A common stock, $0.001 par value per share (the “Class A Common Stock”), and Class B common stock, $0.001 par value per share (the “Class B Common Stock”), and all of the Common Stock, was recapitalized on a one -for-one basis for Class A Common Stock (the “Recapitalization”); (ii) Earthstone transferred all of its membership interests in Earthstone Operating, LLC, Sabine River Energy, LLC, EF Non-Op, LLC and Earthstone Legacy Properties, LLC (formerly Earthstone GP, LLC) and $36,071 in cash from the sale of Class B Common Stock to Bold Holdings (collectively, the “Earthstone Assets”) to EEH, in exchange for 16,791,296 membership units of EEH (the “EEH Units”); (iii) Lynden US transferred all of its membership interests in Lynden Op to EEH in exchange for 5,865,328 EEH Units; (iv) Bold Holdings transferred all of its membership interests in Bold to EEH in exchange for 36,070,828 EEH Units and purchased 36,070,828 shares of Class B Common Stock issued by Earthstone for $36,071 ; and (v) Earthstone granted an aggregate of 150,000 fully vested shares of Class A Common Stock under Earthstone’s 2014 Long-Term Incentive Plan, as amended and restated (the “2014 Plan”), to certain employees of Bold. Each EEH Unit, together with one share of Class B Common Stock, are convertible into one share of Class A Common Stock. Upon closing of the Bold Transaction on May 9, 2017, Bold Holdings owned approximately 61.4% of the outstanding shares of Class A Common Stock, on a fully diluted, as converted basis. The EEH Units and the shares of Class B Common Stock issued to Bold Holdings were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but were issued by EEH and Earthstone in reliance on the exemption provided under Section 4(a)(2) of the Securities Act. On May 9, 2017, the closing sale price of the Class A Common Stock was $13.58 per share. On May 10, 2017, the Class A Common Stock was uplisted from the NYSE American, LLC (formerly the NYSE MKT) (the “NYSE American”) to the New York Stock Exchange (the “NYSE”) where it is listed under the symbol “ESTE.” On May 9, 2017, in connection with the closing of the Bold Transaction, Earthstone, EnCap Investments L.P. (“EnCap”), Oak Valley Resources, LLC (“Oak Valley”), and Bold Holdings entered into a voting agreement (the “Voting Agreement”), pursuant to which EnCap, Oak Valley, and Bold Holdings agreed not to vote any shares of Class A Common Stock or Class B Common Stock held by them in favor of any action, or take any action that would in any way alter the composition of the board of directors of Earthstone (the “Board”) from its composition immediately following the closing of the Bold Transaction as long as the Voting Agreement is in effect. Pursuant to the terms of the Bold Contribution Agreement, at the closing of the Bold Transaction, Earthstone, Bold Holdings, and the unitholders of Bold Holdings entered into a registration rights agreement (the “Registration Rights Agreement”) relating to the shares of Class A Common Stock issuable upon the exchange of the EEH Units and Class B Common Stock held by Bold Holdings or its unitholders. In accordance with the Registration Rights Agreement, Earthstone filed a registration statement (the “Registration Statement”) with the SEC to permit the public resale of the shares of Class A Common Stock issued by Earthstone to Bold Holdings or its unitholders in connection with the exchange of Class B Common Stock and EEH Units in accordance with the terms of the First Amended and Restated Limited Liability Company Agreement of EEH. On October 18, 2017, the Registration Statement was declared effective by the SEC. The Bold Transaction was recorded in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, and is consolidated in these financial statements in accordance with FASB ASC Topic 810, Consolidation, which requires the recording of a noncontrolling interest component of net income (loss), as well as a noncontrolling interest component within equity, including changes to additional paid-in capital to reflect the noncontrolling interest within equity in the Condensed Consolidated Balance Sheet as of September 30, 2018 at the noncontrolling interest’s respective membership interest in EEH. Recently Issued Accounting Standards Revenue Recognition – On January 1, 2018, we adopted the FASB accounting standards update for “Revenue from Contracts with Customers,” which superseded the revenue recognition requirements in “Topic 605, Revenue Recognition,” using the modified retrospective method. Adoption of this standard did not have a significant impact on our consolidated statements of operations or cash flows. We implemented processes to ensure new contracts are reviewed for the appropriate accounting treatment and generate the disclosures required under the new standard. Revenues for the sale of oil, natural gas and natural gas liquids are recognized as the product is delivered to our customers’ custody transfer points and collectability is reasonably assured. We fulfill the performance obligations under our customer contracts through daily delivery of oil, natural gas and natural gas liquids to our customers’ custody transfer points and revenues are recorded on a monthly basis. The prices received for oil, natural gas and natural gas liquids sales under our contracts are generally derived from stated market prices which are then adjusted to reflect deductions including transportation, fractionation and processing. As a result, our revenues from the sale of oil, natural gas and natural gas liquids will decrease if market prices decline. The sales of oil, natural gas and natural gas liquids as presented on the Consolidated Statements of Operations represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling oil, natural gas and natural gas liquids on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis. To the extent actual volumes and prices of oil and natural gas sales are unavailable for a given reporting period because of timing or information not received from third parties, the expected sales volumes and prices for those properties are estimated and recorded. Statement of Cash Flows – In August 2016, the FASB issued updated guidance that clarifies how certain cash receipts and cash payments are presented in the statement of cash flows. This update provides guidance on eight specific cash flow issues. The standards update is effective for interim and annual periods beginning after December 15, 2017 and should be applied retrospectively to all periods presented. Early adoption is permitted. The Company adopted the new standard, as required, beginning with the first quarter of 2018, with no material impact on its Consolidated Financial Statements. Business Combinations – In January 2017, the FASB issued updated guidance that clarifies the definition of a business, which amends the guidance used in evaluating whether a set of acquired assets and activities represents a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not considered a business. As a result, acquisition fees and expenses will be capitalized to the cost basis of the property acquired, and the tangible and intangible components acquired will be recorded based on their relative fair values as of the acquisition date. The standard is effective for all public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted for periods for which financial statements have not yet been issued. The Company adopted the new standard, as required, beginning with the first quarter of 2018, with no material impact on its Consolidated Financial Statements. Compensation – Stock Compensation – In May 2017, the FASB issued updated guidance that provides clarity about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update is effective for annual periods beginning after December 15, 2017, and early adoption is permitted, including adoption in any interim period. The Company adopted the new standard, as required, beginning with the first quarter of 2018, with no material impact on its Consolidated Financial Statements. Leases – In February 2016, the FASB issued updated guidance on accounting for leases. The update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Similar to current guidance, the update continues to differentiate between finance leases and operating leases; however, this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The standards update is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. Entities are required to use a modified retrospective adoption, with certain relief provisions, for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements when adopted. The Company expects to adopt this update, as required, beginning with the first quarter of 2019. The Company is in the process of evaluating the impact of this guidance, if any, of the adoption of this guidance on its Consolidated Financial Statements. Intangibles - Goodwill and Other – In January 2017, the FASB issued updated guidance simplifying the test for goodwill impairment. The update eliminates Step 2 of the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company is in the process of evaluating the impact of this guidance, if any, on its Consolidated Financial Statements. Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the FASB issued updated guidance simplifying the guidance on nonemployee share-based payments. The update is effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company is in the process of evaluating the impact of this guidance, if any, on its Consolidated Financial Statements. Codification Improvements – In July 2018, the FASB issued an update which does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company is in the process of evaluating the impact of this update, if any, on its Consolidated Financial Statements. Fair Value Measurements – In August 2018, the FASB issued an update which modifies the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company is in the process of evaluating the impact of this update, if any, on its Consolidated Financial Statements. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures The Company accounts for its acquisitions that qualify as business combinations, under the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations , which, among other things, requires the assets acquired and liabilities assumed to be measured and recorded at their fair values as of the acquisition date. The initial accounting for acquisitions may not be complete and adjustments to provisional amounts, or recognition of additional assets acquired or liabilities assumed, may occur as additional information is obtained about the facts and circumstances that existed as of the acquisition dates. Bold Transaction On May 9, 2017, Earthstone completed the Bold Transaction described in Note 1. Basis of Presentation and Summary of Significant Accounting Policies . An allocation of the purchase price was prepared using, among other things, a reserve report prepared by qualified reserve engineers and priced as of the acquisition date. The following table summarizes the consideration transferred, fair value of assets acquired and liabilities assumed ( in thousands, except unit, share and share price amounts ): Consideration: Shares of Class A Common Stock issued pursuant to the Bold Contribution Agreement to certain employees of Bold 150,000 EEH Units issued to Bold Holdings 36,070,828 Total equity interest issued in the Bold Transaction 36,220,828 Closing per share price of Class A Common Stock as of May 9, 2017 $ 13.58 Total consideration transferred (1)(2) $ 491,879 Fair value of assets acquired: Cash and cash equivalents $ 2,355 Other current assets 10,078 Oil and gas properties (3) 557,704 Amount attributable to assets acquired $ 570,137 Fair value of liabilities assumed: Long-term debt (4) $ 58,000 Current liabilities 17,042 Deferred tax liability 2,857 Noncurrent asset retirement obligations 359 Amount attributable to liabilities assumed $ 78,258 (1) Consideration included 150,000 shares of Class A Common Stock recorded above based upon its fair value which was determined using its closing price of $13.58 per share on May 9, 2017. (2) Consideration was 36,070,828 EEH Units. Additionally, Bold Holdings purchased 36,070,828 shares of Class B Common Stock for $36,071 . Each EEH Unit, together with one share of Class B Common Stock, is convertible into one share of Class A Common Stock. The fair value of the consideration was determined using the closing price of the Company’s Class A Common Stock of $13.58 per share on May 9, 2017. (3) The market assumptions as to the future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of the future development and operating costs, projecting of future rates of production, expected recovery rate and risk adjusted discount rates used by the Company to estimate the fair value of the oil and natural gas properties represent Level 3 inputs; see Note 3. Fair Value Measurements , below. (4) Concurrent with the closing of the Bold Transaction, EEH assumed Bold’s outstanding borrowings of $58 million under its credit agreement. The following unaudited supplemental pro forma condensed results of operations present consolidated information as though the Bold Transaction and the Bakken Sale (discussed below) had been completed as of January 1, 2017. The unaudited supplemental pro forma financial information was derived from the historical consolidated and combined statements of operations for Bold and Earthstone and adjusted to include: (i) depletion expense applied to the adjusted basis of the properties acquired and (ii) to eliminate non-recurring transaction costs directly related to the Bold Transaction that do not have a continuing impact on the Company’s operating results. These unaudited supplemental pro forma results of operations are provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future. Future results may vary significantly from the results reflected in this unaudited pro forma financial information ( in thousands, except per share amounts ): Three Months Ended Nine Months Ended 2017 2017 Revenue $ 28,409 $ 91,163 Income (loss) before taxes $ 3,408 $ (42,228 ) Net income (loss) $ 3,502 $ (39,711 ) Less: Net income (loss) available to noncontrolling interest $ 2,142 $ (24,316 ) Net income (loss) attributable to Earthstone Energy, Inc. $ 1,360 $ (15,395 ) Pro forma net income (loss) per common share attributable to Earthstone Energy, Inc.: Basic $ 0.06 $ (0.68 ) Diluted $ 0.06 $ (0.68 ) The Company has included in its Condensed Consolidated Statements of Operations, revenues of $31.6 million and $83.2 million , respectively, and direct operating expenses of $13.4 million and $35.5 million , respectively, for the three and nine months ended September 30, 2018 related to the properties acquired in the Bold Transaction. On September 28, 2018, the Company sold certain of its non-operated oil and natural gas properties located in the Eagle Ford Trend of south Texas for cash consideration of approximately $5.5 million . The sale resulted in a net gain of approximately $4.6 million recorded in Gain on sale of oil and gas properties in the Consolidated Statements of Operations. On December 20, 2017, the Company sold all of its oil and natural gas leases, oil and natural gas wells and associated assets located in the Williston Basin in North Dakota (the "Bakken Sale") for a net cash consideration of approximately $27.3 million after normal and customary purchase price adjustments of $0.3 million to account for net cash flows from the effective date to the closing date. The effective date of the sale was December 1, 2017. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements FASB ASC Topic 820, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. ASC 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets. The three-level fair value hierarchy for disclosure of fair value measurements defined by ASC 820 is as follows: Level 1 – Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Inputs, other than quoted prices within Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 – Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were no transfers between fair value hierarchy levels for the nine months ended September 30, 2018 . Fair Value on a Recurring Basis Derivative financial instruments are carried at fair value and measured on a recurring basis. The derivative financial instruments consist of swaps for crude oil and natural gas. The Company’s swaps are valued based on a discounted future cash flow model. The primary input for the model is published forward commodity price curves. The swaps are also designated as Level 2 within the valuation hierarchy. The fair values of commodity derivative instruments in an asset position include a measure of counterparty nonperformance risk, and the fair values of commodity derivative instruments in a liability position include a measure of the Company’s nonperformance risk. These measurements were not material to the Condensed Consolidated Financial Statements. The following table summarizes the fair value of the Company’s financial assets and liabilities, by level within the fair-value hierarchy (in thousands) : September 30, 2018 Level 1 Level 2 Level 3 Total Financial assets Derivative asset - current $ — $ — $ — $ — Derivative asset - noncurrent — — — — Total financial assets $ — $ — $ — $ — Financial liabilities Derivative liability - current $ — $ 23,391 $ — $ 23,391 Derivative liability - noncurrent — 10,019 — 10,019 Total financial liabilities $ — $ 33,410 $ — $ 33,410 December 31, 2017 Financial assets Derivative asset - current $ — $ 184 $ — $ 184 Derivative asset - noncurrent — — — — Total financial assets $ — $ 184 $ — $ 184 Financial liabilities Derivative liability - current $ — $ 11,805 $ — $ 11,805 Derivative liability - noncurrent — 1,826 — 1,826 Total financial liabilities $ — $ 13,631 $ — $ 13,631 Other financial instruments include cash, accounts receivable and payable, and revenue royalties. The carrying amount of these instruments approximates fair value because of their short-term nature. The Company’s long-term debt obligation bears interest at floating market rates, therefore carrying amounts and fair value are approximately equal. Fair Value on a Nonrecurring Basis The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities, including oil and gas properties and goodwill. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Proved Oil and Natural Gas Properties Proved oil and natural gas properties are measured at fair value on a nonrecurring basis in order to review for impairment. The impairment charge reduces the carrying values to their estimated fair values. These fair value measurements are classified as Level 3 measurements and include many unobservable inputs. Fair value is calculated as the estimated discounted future net cash flows attributable to the assets. The Company’s primary assumptions in preparing the estimated discounted future net cash flows to be recovered from oil and gas properties are based on (i) proved reserves, (ii) forward commodity prices and assumptions as to costs and expenses, and (iii) the estimated discount rate that would be used by potential purchasers to determine the fair value of the assets. Goodwill Goodwill represents the excess of the purchase price of assets acquired over the fair value of those assets and is tested for impairment annually, or more frequently if events or changes in circumstances dictate that the fair value of goodwill may be less than its carrying amount. Such test includes an assessment of qualitative and quantitative factors. Business Combinations The Company records the identifiable assets acquired and liabilities assumed at fair value at the date of acquisition on a nonrecurring basis. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two. In the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and include estimates of future oil and gas production, commodity prices based on NYMEX commodity futures price strips as of the date of the estimate, operating and development costs, and a risk-adjusted discount rate. The future oil and natural gas pricing used in the valuation is a Level 2 assumption. Significant Level 3 assumptions associated with the calculation of discounted cash flows used in the determination of fair value of the acquisition include the Company’s estimate operating and development costs, anticipated production of proved reserves, appropriate risk-adjusted discount rates and other relevant data. The Company’s acquisitions are described in Note 2. Acquisitions and Divestitures . Asset Retirement Obligations The estimated fair value of the Company's asset retirement obligation at inception is determined by utilizing the income approach by applying a credit-adjusted risk-free rate, which takes into account the Company's credit risk, and the time value of money to the undiscounted expected abandonment cash flows, including estimates of plugging, abandonment and remediation costs and well life. Given the unobservable nature of the inputs, the measurement of the asset retirement obligations was classified as Level 3 in the fair value hierarchy. See Note 11. Asset Retirement Obligations for a reconciliation of the beginning and ending balances of the liability for the Company’s asset retirement obligations. Performance Units Stock-based compensation related to performance is estimated utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome, and has been classified as Level 3 in the fair value hierarchy. Stock-based compensation related to performance units is described in Note 9. Stock-Based Compensation . |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s hedging activities consist of derivative instruments entered into in order to hedge against changes in oil and natural gas prices through the use of fixed price swap agreements. Swaps exchange floating price risk in the future for a fixed price at the time of the hedge. Consistent with its hedging policy, the Company has entered into a series of derivative instruments to hedge a significant portion of its expected oil and natural gas production through December 31, 2020. Typically, these derivative instruments require payments to (receipts from) counterparties based on specific indices as required by the derivative agreements. Although not risk free, the Company believes these instruments reduce its exposure to oil and natural gas price fluctuations and, thereby, allow the Company to achieve a more predictable cash flow. The Company’s derivative instruments are cash flow hedge transactions in which it is hedging the variability of cash flow related to a forecasted transaction. The Company does not enter into derivative instruments for trading or other speculative purposes. These transactions are recorded in the Condensed Consolidated Financial Statements in accordance with FASB ASC Topic 815. The Company has accounted for these transactions using the mark-to-market accounting method. Generally, the Company incurs accounting losses on derivatives during periods where prices are rising and gains during periods where prices are falling which may cause significant fluctuations in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations. The Company nets its derivative instrument fair value amounts executed with each counterparty pursuant to an International Swap Dealers Association Master Agreement (“ISDA”), which provides for net settlement over the term of the contract. The ISDA is a standard contract that governs all derivative contracts entered into between the Company and the respective counterparty. The ISDA allows for offsetting of amounts payable or receivable between the Company and the counterparty, at the election of both parties, for transactions that occur on the same date and in the same currency. The Company had the following open crude oil and natural gas derivative contracts as of September 30, 2018 : Price Swaps Period Commodity Volume (Bbls / MMBtu) Weighted Average Price ($/Bbl / $/MMBtu) Q4 2018 Crude Oil 413,700 $ 54.05 Q1 - Q4 2019 Crude Oil 1,624,100 $ 58.95 Q1 - Q4 2020 Crude Oil 732,000 $ 63.08 Q4 2018 Crude Oil (Basis Swap)(1) 243,800 $ (1.90 ) Q4 2018 Crude Oil (Basis Swap)(2) 92,000 $ 6.35 Q1 - Q4 2019 Crude Oil Basis Swap(1) 1,277,500 $ (6.39 ) Q1 - Q4 2019 Crude Oil (Basis Swap)(2) 365,000 $ 4.50 Q1 - Q4 2020 Crude Oil Basis Swap(1) 732,000 $ (5.38 ) Q4 2018 Natural Gas 610,000 $ 2.95 (1) The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX. (2) The basis differential price is between LLS Argus Crude and the WTI NYMEX. Subsequent to September 30, 2018, the Company entered into the following crude oil and natural gas derivative contracts: Price Swaps Period Commodity Volume (Bbls / MMBtu) Weighted Average Price ($/Bbl / $/MMBtu) Q1 - Q4 2019 Crude Oil 730,000 $ 73.05 Q1 - Q4 2020 Crude Oil 732,000 $ 68.67 Q1 - Q4 2019 Crude Oil Basis Swap(1) 730,000 $ (5.50 ) Q1 - Q4 2020 Crude Oil Basis Swap(1) 732,000 $ (0.10 ) Q1 - Q4 2019 Natural Gas 1,277,550 $ 2.87 Q1 - Q4 2019 Natural Gas (Basis Swap)(2) 1,277,550 $ (1.28 ) (1) The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX. (2) The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX. The following table summarizes the location and fair value amounts of all derivative instruments in the Condensed Consolidated Balance Sheets as well as the gross recognized derivative assets, liabilities, and amounts offset in the Condensed Consolidated Balance Sheets (in thousands) : September 30, 2018 December 31, 2017 Derivatives not designated as hedging contracts under ASC Topic 815 Balance Sheet Location Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Commodity contracts Derivative asset - current $ — $ — $ — $ 184 $ — $ 184 Commodity contracts Derivative liability - current $ 25,200 $ (1,809 ) $ 23,391 $ 11,805 $ — $ 11,805 Commodity contracts Derivative liability - noncurrent $ 10,025 $ (6 ) $ 10,019 $ 1,826 $ — $ 1,826 The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivatives instruments in the Condensed Consolidated Statements of Operations (in thousands) : Three Months Ended Nine Months Ended Derivatives not designated as hedging contracts under ASC Topic 815 Statement of Operations Location 2018 2017 2018 2017 Total (loss) gain on commodity contracts (Loss) gain on derivative contracts, net $ (13,105 ) $ (4,159 ) $ (19,963 ) $ 3,908 Cash (paid) received in settlements on commodity contracts (Loss) gain on derivative contracts, net (4,376 ) 496 (13,643 ) 229 (Loss) gain on commodity contracts, net $ (17,481 ) $ (3,663 ) $ (33,606 ) $ 4,137 |
Oil and Natural Gas Properties
Oil and Natural Gas Properties | 9 Months Ended |
Sep. 30, 2018 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Oil and Natural Gas Properties | Oil and Natural Gas Properties The Company follows the successful efforts method of accounting for its oil and natural gas properties. Under this method, costs to acquire oil and natural gas properties, drill and equip exploratory wells that find proved reserves, and drill and equip development wells are capitalized. Exploration costs, including unsuccessful exploratory wells and geological and geophysical costs, are charged to operations as incurred. Upon sale or retirement of oil and natural gas properties, the costs and related accumulated depreciation, depletion and amortization are eliminated from the accounts and the resulting gain or loss is recognized. Costs incurred to maintain wells and related equipment, lease and well operating costs, and other exploration costs are charged to expense as incurred. Gains and losses arising from the sale of properties are included in Income (loss) from operations in the Condensed Consolidated Statements of Operations. The Company’s lease acquisition costs and development costs of proved oil and natural gas properties are amortized using the units-of-production method, at the field level, based on total proved reserves and proved developed reserves, respectively. For the three months ended September 30, 2018 and 2017 , depletion expense for oil and gas producing property and related equipment was $12.7 million and $10.2 million , respectively. For the nine months ended September 30, 2018 and 2017 , depletion expense for oil and gas producing property and related equipment was $33.0 million and $27.9 million , respectively. Proved Properties Proved oil and natural gas properties are measured at fair value on a nonrecurring basis in order to review for impairment. The impairment charge reduces the carrying values to their estimated fair values. These fair value measurements are classified as Level 3 measurements and include many unobservable inputs. Fair value is calculated as the estimated discounted future net cash flows attributable to the assets. The Company’s primary assumptions in preparing the estimated discounted future net cash flows to be recovered from oil and gas properties are based on (i) proved reserves, (ii) forward commodity prices and assumptions as to costs and expenses, and (iii) the estimated discount rate that would be used by potential purchasers to determine the fair value of the assets. Unproved Properties Unproved properties consist of costs incurred to acquire undeveloped leases as well as the cost to acquire unproved reserves. Undeveloped lease costs and unproved reserve acquisition costs are capitalized. Unproved oil and gas leases are generally for a primary term of three to five years . In most cases, the term of the unproved leases can be extended by paying delay rentals, meeting contractual drilling obligations, or by the presence of producing wells on the leases. Unproved costs related to successful exploratory drilling are reclassified to proved properties and depleted on a units-of-production basis. The Company reviews its unproved properties periodically for impairment. In determining whether an unproved property is impaired, the Company considers numerous factors including, but not limited to, current exploration and development plans, favorable or unfavorable exploration activity on the property being evaluated and/or adjacent properties, the Company’s geologists' evaluation of the property, and the remaining months in the lease term for the property. Impairments to Oil and Natural Gas Properties During the three months ended September 30, 2018 , the Company recorded an impairment of $0.8 million to its unproved oil and natural gas properties as a result of acreage expirations to its properties located in the Eagle Ford Trend of south Texas. During the three months ended September 30, 2017 , the Company recorded an impairment of $0.1 million to its unproved oil and natural gas properties as a result of acreage expirations to its properties located in the Eagle Ford Trend of south Texas. As a result of acreage expirations and forward commodity price declines, during the nine months ended September 30, 2017 , the Company recorded impairments consisting of $63.0 million to its proved oil and natural gas properties and $3.7 million to its unproved oil and natural gas properties, primarily to properties located in the Eagle Ford Trend of south Texas. |
Noncontrolling Interest
Noncontrolling Interest | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Noncontrolling Interest Earthstone consolidates the financial results of EEH and its subsidiaries and records a noncontrolling interest for the economic interest in Earthstone held by the members of EEH other than Earthstone and Lynden US. Net income attributable to noncontrolling interest in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 represents the portion of net income or loss attributable to the economic interest in the Company held by the members of EEH other than Earthstone and Lynden US. Noncontrolling interest in the Condensed Consolidated Balance Sheet as of September 30, 2018 and December 31, 2017 represents the portion of net assets of the Company attributable to the members of EEH other than Earthstone and Lynden US. The following table presents the changes in noncontrolling interest for the nine months ended September 30, 2018 : EEH Units Held By Earthstone and Lynden US % EEH Units Held By Others % Total EEH Units Outstanding As of December 31, 2017 27,584,638 43.3 % 36,052,169 56.7 % 63,636,807 EEH Units and Class B Common Stock converted to Class A Common Stock 389,135 (389,135 ) — EEH Units issued in connection with the vesting of restricted stock units 426,648 — 426,648 As of September 30, 2018 28,400,421 44.3 % 35,663,034 55.7 % 64,063,455 The following table summarizes the activity for the equity attributable to the noncontrolling interest for the nine months ended September 30, 2018 ( in thousands ): 2018 As of December 31, 2017 $ 446,558 EEH Units and Class B Common Stock converted to Class A Common Stock (4,894 ) Net income attributable to noncontrolling interest 8,032 As of September 30, 2018 $ 449,696 |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Net income (loss) per common share—basic is calculated by dividing Net income (loss) by the weighted average number of shares of common stock outstanding during the period (Common Stock for the period from January 1, 2017 through May 8, 2017 and Class A Common Stock thereafter). Net income (loss) per common share—diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing Net income (loss) by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net income (loss) per common share—diluted considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares, as defined above, would have an anti-dilutive effect. A reconciliation of Net income (loss) per common share is as follows: Three Months Ended Nine Months Ended (In thousands, except per share amounts) 2018 2017 2018 2017 Net income (loss) attributable to Earthstone Energy, Inc. $ 224 $ 1,556 $ 6,195 $ (14,838 ) Net income (loss) per common share attributable to Earthstone Energy, Inc.: Basic $ 0.01 $ 0.07 $ 0.22 $ (0.66 ) Diluted $ 0.01 $ 0.07 $ 0.22 $ (0.66 ) Weighted average common shares outstanding Basic 28,257,376 22,905,023 28,011,298 22,638,977 Add potentially dilutive securities: Unvested restricted stock units 54,383 — 97,067 — Diluted weighted average common shares outstanding 28,311,759 22,905,023 28,108,365 22,638,977 Class B Common Stock has been excluded, as its conversion would eliminate noncontrolling interest and Net income (loss) attributable to noncontrolling interest of $0.3 million and $8.0 million for the three and nine months ended September 30, 2018 , respectively, would be added back to Net income (loss) attributable to Earthstone Energy, Inc., having no dilutive effect on Net income (loss) per common share attributable to Earthstone Energy, Inc. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Common Stock | Common Stock On May 9, 2017, and in connection with the completion of the Bold Transaction, Earthstone recapitalized its Common Stock into two classes, as described in Note 1. – Basis of Presentation and Summary of Significant Accounting Policies , Class A Common Stock and Class B Common Stock. At that time, all of Earthstone’s existing outstanding Common Stock was automatically converted on a one -for-one basis into Class A Common Stock. Class A Common Stock At September 30, 2018 and December 31, 2017 , there were 28,400,421 and 27,584,638 shares of Class A Common Stock issued and outstanding, respectively. During the three and nine months ended September 30, 2018 , as a result of the vesting and settlement of restricted stock units under the 2014 Plan, Earthstone issued 115,574 and 569,585 shares of Class A Common Stock, respectively, of which 30,511 and 142,937 shares of Class A Common Stock, respectively, were retained as treasury stock and canceled to satisfy the related employee income tax liability. During the three and nine months ended September 30, 2017, as a result of the vesting and settlement of restricted stock units under the 2014 Plan, Earthstone issued 126,751 and 594,380 shares of common stock and Class A Common Stock, respectively, of which 29,441 shares of Class A Common Stock were retained as treasury stock and canceled to satisfy the related employee income tax liability. Additionally, on May 9, 2017, under the Bold Contribution Agreement, Earthstone issued 150,000 shares of Class A Common Stock valued at approximately $2.0 million on that date. For additional information, see Note 2. Acquisitions and Divestitures. Class B Common Stock At September 30, 2018 and December 31, 2017 , there were 35,663,034 and 36,052,169 shares of Class B Common Stock issued and outstanding, respectively. Each share of Class B Common Stock, together with one EEH Unit, is convertible into one share of Class A Common Stock. During the three and nine months ended September 30, 2018 , 183,894 shares and 389,135 shares, respectively, of Class B Common Stock and EEH Units were exchanged for an equal number of shares of Class A Common Stock. In October 2018, an additional 210,856 shares of Class B Common Stock and EEH Units were exchanged for an equal number of shares of Class A Common Stock. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Restricted Stock Units The 2014 Plan, allows, among other things, for the grant of restricted stock units ("RSUs"). On June 6, 2018, at the annual meeting of stockholders, Earthstone's stockholders approved an amendment and restatement of the 2014 Plan, including increasing the shares of Class A Common Stock that may be issued under the Plan by 600,000 shares, to a total of 6.4 million shares. On May 9, 2017, and in connection with the completion of the Bold Contribution Agreement, and upon approval by the stockholders of Earthstone, the 2014 Plan was amended to increase the number of shares of Class A Common Stock authorized to be issued under the 2014 Plan by 4.3 million shares, to a total of 5.8 million shares. Each RSU represents the contingent right to receive one share of Class A Common Stock. The holders of outstanding RSUs do not receive dividends or have voting rights prior to vesting and settlement. Prior to May 9, 2017, the Company determined the fair value of granted RSUs based on the market price of the Common Stock on the date of the grant. Beginning on May 9, 2017, the Company began determining the fair value of granted RSUs based on the market price of the Class A Common Stock on the date of the grant. Compensation expense for granted RSUs is recognized on a straight-line basis over the vesting and is net of forfeitures, as incurred. Stock-based compensation is included in General and administrative expense in the Condensed Consolidated Statements of Operations and is recorded with a corresponding increase in Additional paid-in capital within the Condensed Consolidated Balance Sheet. The table below summarizes unvested RSU award activity for the nine months ended September 30, 2018 : Shares Weighted-Average Grant Date Fair Value Unvested RSUs at December 31, 2017 969,245 $ 9.89 Granted 359,500 $ 9.33 Forfeited (44,165 ) $ 10.87 Vested (569,585 ) $ 9.89 Unvested RSUs at September 30, 2018 714,995 $ 9.55 For the three and nine months ended September 30, 2018 , Stock-based compensation related to RSUs was $1.2 million and $4.9 million , respectively. The unrecognized compensation expense related to the RSU awards at September 30, 2018 was $6.4 million which will be amortized over the remaining vesting period. The weighted average remaining vesting period of the unrecognized compensation expense is 0.93 years. The table below summarizes unvested RSU award activity for the nine months ended September 30, 2017 : Shares Weighted-Average Grant Date Fair Value Unvested RSUs at December 31, 2016 781,500 $ 12.53 Granted 254,500 $ 11.67 Forfeited (36,000 ) $ 13.30 Vested (594,380 ) $ 12.45 Unvested RSUs at September 30, 2017 405,620 $ 12.03 For the three and nine months ended September 30, 2017 , Stock-based compensation related to RSUs was $1.7 million and $4.6 million , respectively. Performance Units On February 28, 2018, the Board granted 252,500 performance units (“PSUs”) to certain named executive officers pursuant to the 2014 Plan. The PSUs are payable in shares of Class A Common Stock based upon the achievement by the Company over a period commencing on February 28, 2018 and ending on February 28, 2021 (the “Performance Period”) of performance criteria established by the Board. The number of shares of Class A Common Stock that may be issued will be determined by multiplying the number of PSUs granted by the Relative Total Shareholder Return ("TSR") Percentage ( 0% to 200% ). The “Relative TSR Percentage” is the percentage, if any, achieved by attainment of a certain predetermined range of targets for the Performance Period. Accordingly, the potential aggregate number of shares of Class A Common Stock issuable under the outstanding PSU awards range from zero to 505,000 . TSR for the Company and each of the peer companies is generally determined by dividing (A) the volume weighted average price of a share of stock for the trading days during the thirty calendar days ending on and including the last calendar day of the Performance Period minus the volume weighted average price of a share of stock for the trading days during the thirty calendar days ending on and including the first day of the Performance Period plus cash dividends paid over the Performance Period by (B) the volume weighted average price of a share of stock for the trading days during the thirty calendar days ending on and including the first day of the Performance Period. As of September 30, 2018 , there were 252,500 PSUs outstanding. There were no PSUs outstanding as of December 31, 2017. The unrecognized compensation expense related to the PSU awards at September 30, 2018 was $2.8 million which will be amortized over the remaining vesting period. The weighted average remaining vesting period of the unrecognized compensation expense is 1.25 years. The Company is accounting for this award as a market-based award which was valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome. Under the Monte Carlo Simulation pricing model, the Company calculated the weighted average fair value per PSU to be $13.75 . For the three and nine months ended September 30, 2018 , Stock-based compensation related to the PSUs was approximately $0.3 million and $0.7 million , respectively. There was no Stock-based compensation related to the PSUs for the three and nine months ended September 30, 2017 . |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Credit Agreement On May 23, 2018, Earthstone Energy Holdings, LLC (“EEH” or the “Borrower”), a subsidiary of Earthstone, each of Earthstone Operating, LLC, EF Non-Op, LLC, Sabine River Energy, LLC, Earthstone Legacy Properties, LLC, Lynden USA Operating, LLC, Bold Energy III LLC, Bold Operating, LLC, as guarantors (the “Guarantors”), BOKF, NA dba Bank Of Texas, as Administrative Agent, and the lenders party thereto (the “Lenders”), entered into an amendment (the “Amendment”) to the Credit Agreement dated May 9, 2017, by and among EEH, as Borrower, the Guarantors, BOKF, NA dba Bank Of Texas, as Agent and Lead Arranger, Wells Fargo Bank, National Association, as Syndication Agent, and the Lenders (together with all amendments or other modifications, the “EEH Credit Agreement”). Among other things, the Amendment increased the borrowing base from $185.0 million to $225.0 million , provided for a 50-basis point decrease in the interest rate on outstanding loans, increased flexibility related to hedging limitations and provided the ability to obtain short-term borrowings via a swingline as a part of the borrowing base. On May 9, 2017, in connection with the closing of the Bold Transaction, the Company exited its credit agreement dated December 19, 2014, by and among Earthstone and its subsidiaries, BOKF, NA dba Bank of Texas, and the Lenders party thereto (as amended, modified or restated from time to time, the “ESTE Credit Agreement”). At that time, all outstanding borrowings of $10.0 million under the ESTE Credit Agreement were repaid and $0.5 million of remaining unamortized deferred financing costs were expensed. The borrowing base under the EEH Credit Agreement is subject to redetermination on or about November 1st and May 1st of each year. The amounts borrowed under the EEH Credit Agreement bear annual interest rates at either (a) the London Interbank Offered Rate (“LIBOR”) plus 1.75% to 2.75% or (b) the prime lending rate of Bank of Texas plus 0.75% to 1.75% , depending on the amounts borrowed under the EEH Credit Agreement. Principal amounts outstanding under the EEH Credit Agreement are due and payable in full at maturity on May 9, 2022 . All of the obligations under the EEH Credit Agreement, and the guarantees of those obligations, are secured by substantially all of EEH’s assets. Additional payments due under the EEH Credit Agreement include paying a commitment fee of 0.375% or 0.50% , depending on borrowing base utilization, per year to the Lenders in respect of the unutilized commitments thereunder, as well as certain other customary fees. The EEH Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, EEH’s ability to incur additional indebtedness, create liens on assets, make investments, enter into sale and leaseback transactions, pay dividends and make distributions or repurchase its limited liability interests, engage in mergers or consolidations, sell certain assets, sell or discount any notes receivable or accounts receivable and engage in certain transactions with affiliates. In addition, the EEH Credit Agreement requires EEH to maintain the following financial covenants: a current ratio, as defined, of not less than 1.0 to 1.0 and a leverage ratio of not greater than 4.0 to 1.0. Leverage ratio means the ratio of (i) the aggregate debt of EEH and its consolidated subsidiaries as at the last day of the fiscal quarter (excluding any debt from obligations relating to non-cash losses under FASB ASC 815 as a result of changes in the fair market value of derivatives) to (ii) the product of EBITDAX for such fiscal quarter multiplied by four . The term “EBITDAX” means, for any period, the sum of consolidated net income for such period plus (a) the following expenses or charges to the extent deducted from consolidated net income in such period: (i) interest, (ii) taxes, (iii) depreciation, (iv) depletion, (v) amortization, (vi) non-cash losses under FASB ASC 815 as a result of changes in the fair market value of derivatives, (vii) exploration expenses, (viii) impairment expenses, and (ix) non-cash compensation expenses and minus (b) to the extent included in consolidated net income in such period, non-cash gains under FASB ASC 815 as a result of changes in the fair market value of derivatives. The EEH Credit Agreement contains customary affirmative covenants and defines events of default to include failure to pay principal or interest, breach of covenants, breach of representations and warranties, insolvency, judgment default, and if Frank A. Lodzinski ceases to serve and function as Chief Executive Officer of EEH and the majority of the Lenders do not approve of Mr. Lodzinski’s successor. Upon the occurrence and continuance of an event of default, the Lenders have the right to accelerate repayment of the loans and exercise their remedies with respect to the collateral. As of September 30, 2018 , EEH was in compliance with the covenants under the EEH Credit Agreement. As of September 30, 2018 , the Company had a $225.0 million borrowing base under the EEH Credit Agreement, of which $35.0 million was outstanding, bearing annual interest of 3.915% , resulting in an additional $190.0 million of borrowing base availability under the EEH Credit Agreement. At December 31, 2017 , there were $25.0 million of borrowings outstanding under the EEH Credit Agreement. For the nine months ended September 30, 2018 , the Company had borrowings of $70.3 million and $60.3 million in repayments of borrowings. For the three and nine months ended September 30, 2018 , interest on borrowings averaged 3.94% and 3.91% per annum, respectively, which excluded commitment fees of $0.1 million and $0.6 million , respectively, and amortization of deferred financing costs of $0.1 million and $0.2 million , respectively. For the three and nine months ended September 30, 2017 , interest on borrowings averaged 4.21% and 4.01% per annum, respectively, which excluded commitment fees of $0.1 million and $0.2 million , respectively, and amortization of deferred financing costs of $0.1 million and $0.2 million , respectively. The Company capitalized $0.1 million and $0.3 million of costs associated with the EEH Credit Agreement for the three and nine months ended September 30, 2018 , respectively. The Company capitalized $0.1 million and $1.2 million of costs associated with the ESTE Credit Agreement for the three and nine months ended September 30, 2017 , respectively. These capitalized costs are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. The Company’s policy is to capitalize the financing costs associated with its debt and amortize those costs on a straight-line basis over the term of the associated debt. |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Sep. 30, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Asset Retirement Obligations The Company has asset retirement obligations associated with the future plugging and abandonment of oil and gas properties and related facilities. Revisions to the liability typically occur due to changes in the estimated abandonment costs, well economic lives, and the discount rate. The following table summarizes the Company’s asset retirement obligation transactions recorded during the nine months ended September 30, (in thousands) : 2018 2017 Beginning asset retirement obligations $ 2,354 $ 6,013 Liabilities incurred 63 64 Liabilities settled (79 ) — Acquisitions — 359 Accretion expense 128 378 Divestitures (649 ) (3,629 ) Revision of estimates (182 ) 19 Ending asset retirement obligations $ 1,635 $ 3,204 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions FASB ASC Topic 850 , Related Party Disclosures , requires that information about transactions with related parties that would make a difference in decision making shall be disclosed so that users of the financial statements can evaluate their significance. Flatonia Energy, LLC (“Flatonia”), which owns approximately 10.3% of the outstanding Class A Common Stock and 4.6% of our Class A Common Stock and Class B Common Stock combined together as a single class as of September 30, 2018 , is a party to a joint operating agreement (the “Operating Agreement”) with the Company. The Operating Agreement covers certain jointly owned oil and natural gas properties located in the Eagle Ford Trend in Texas. In connection with the Operating Agreement, the Company made payments to Flatonia of $0.0 million and $12.4 million and received payments from Flatonia of $0.7 million and $4.8 million for the three and nine months ended September 30, 2018 , respectively. For the three and nine months ended September 30, 2017 , the Company made payments to Flatonia of $6.4 million and $20.8 million and received payments from Flatonia of $0.8 million and $3.2 million , respectively. At September 30, 2018 and December 31, 2017 , amounts receivable from Flatonia in connection with the Operating Agreement were $0.8 million and $1.3 million , respectively. There were no payables outstanding and due to Flatonia as of September 30, 2018 or December 31, 2017 . Our majority shareholder consists of various investment funds managed by a venture capital firm who may manage other investments in entities with which we interact in the normal course of business. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal From time to time, the Company and its subsidiaries may be involved in various legal proceedings and claims in the ordinary course of business. Olenik v. Lodzinksi et al. : On June 2, 2017, Nicholas Olenik filed a purported shareholder class and derivative action in the Delaware Court of Chancery against Earthstone’s Chief Executive Officer, along with other members of the Board, EnCap, Bold, Bold Holdings and OVR. The complaint alleges that Earthstone’s directors breached their fiduciary duties in connection with the Bold Contribution Agreement. The Plaintiff asserts that the directors negotiated the Bold Transaction to benefit EnCap and its affiliates, failed to obtain adequate consideration for the Earthstone shareholders who were not affiliated with EnCap or Earthstone management, did not follow an adequate process in negotiating and approving the Bold Transaction and made materially misleading or incomplete proxy disclosures in connection with the Bold Transaction. The suit seeks unspecified damages and purports to assert claims derivatively on behalf of Earthstone and as a class action on behalf of all persons who held Common Stock up to March 13, 2017, excluding defendants and their affiliates. On July 20, 2018, the Delaware Court of Chancery granted the defendants' motion to dismiss and entered an order dismissing the action in its entirety with prejudice. The Plaintiff filed an appeal with the Delaware Supreme Court. Earthstone and each of the other defendants believe the claims are entirely without merit and they intend to mount a vigorous defense. The ultimate outcome of this suit is uncertain, and while Earthstone is confident in its position, any potential monetary recovery or loss to Earthstone cannot be estimated at this time. On August 18, 2017, litigation captioned Trinity Royal Partners, LP v. Bold Energy III LLC, et al. was filed with the 142nd Judicial District of the District Court in Midland County, Texas, asserting breach of contract and indemnity claims for alleged damages from loss of property relating to two oil and natural gas wells in which Bold was the operator. Trinity Royalty Partners, LP (“Trinity”) alleges that Bold is required to indemnify Trinity under the terms of an Assignment and a Participation and Joint Development Agreement between Bold and Trinity. Damages are alleged to include costs incurred in attempting to repair and restore an oil and natural gas well and for the loss of future reserves attributable to both wells. On October 23, 2018 Trinity and Bold entered into a Rule 11 Agreement whereby Trinity and Bold agreed in principle to settle the Lawsuit. Based on management’s current estimate, a $4.8 million expense has been recorded to Litigation settlement in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018. Environmental and Regulatory As of September 30, 2018 , there were no known environmental or other regulatory matters related to the Company’s operations that are reasonably expected to result in a material liability to the Company. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act ("TCJA") that significantly changes the federal income taxation of business entities. The TCJA, among other things, reduces the corporate income tax rate to 21%, partially limits the deductibility of business interest expense and net operating losses, imposes a one-time tax on unrepatriated earnings from certain foreign subsidiaries, taxes offshore earnings at reduced rates regardless of whether they are repatriated and allows the immediate deduction of certain capital expenditures instead of deductions for depreciation expense over time. Consistent with Staff Accounting Bulletin No. 118 issued by the SEC, which provides for a measurement period of one year from the enactment date to finalize the accounting for effects of the TCJA, the Company provisionally recorded income tax expense of $7.8 million related to the TCJA in the fourth quarter of 2017. As of September 30, 2018, the Company has not yet completed its accounting for the tax effects of the enactment of the TCJA. The Internal Revenue Service is expected to issue additional guidance clarifying provisions of the TCJA. As additional guidance is issued one or more of the provisional amounts may change. The Company’s corporate structure requires the filing of two separate consolidated U.S. Federal income tax returns and one Canadian income tax return which include Lynden US, Earthstone, and Lynden Corp. As such, taxable income of Earthstone cannot be offset by tax attributes, including net operating losses, of Lynden US, nor can taxable income of Lynden US be offset by tax attributes of Earthstone. Earthstone and Lynden US record a tax provision, respectively, for their share of the book income or loss of EEH, net of the non-controlling interest. As EEH is treated as a partnership for U.S. Federal income tax purposes, it is not subject to income tax at the federal level and only recognizes the Texas Margin Tax. During the nine months ended September 30, 2018 , the Company recorded income tax expense of approximately $0.1 million which included (1) income tax expense for Lynden US of $0.3 million as a result of its share of the distributable income from EEH, offset by a $0.5 million discrete income tax benefit related to refundable AMT tax credits resulting from the TCJA, (2) income tax expense for Earthstone of $1.1 million as a result of its share of the distributable income from EEH, which was used to reduce the valuation recorded against its deferred tax asset as future realization of the net deferred tax asset cannot be assured and (3) deferred income tax expense of $0.3 million related to the Texas Margin Tax. Lynden Corp incurred no material income or loss, or related income tax expense or benefit, for the nine months ended September 30, 2018 . During the nine months ended September 30, 2017 , the Company (1) recorded an income tax benefit for Lynden US of $2.7 million as a result of its standalone pre-tax incurred before the Bold Transaction and its share of the distributable loss from EEH after the Bold Transaction, (2) recorded a $7.5 million income tax benefit for Earthstone as a discrete item during the current reporting period, which resulted from a change in assessment of the realization of its net deferred tax assets due to the deferred tax liability that was recorded with respect to its investment in EEH as part of the Bold Transaction as an adjustment to Additional paid-in capital in the Condensed Consolidated Statement of Equity and (3) recorded deferred income tax expense of $0.2 million related to the Texas Margin Tax. Lynden Corp incurred no material income or loss, or related income tax expense or benefit, for the nine months ended September 30, 2017 . |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 8, 2018, the Company announced the closing of an acreage trade with an undisclosed operator in the Midland Basin of Texas. Under the terms of the acreage trade, the Company acquired 3,899 net operated acres in Reagan County with virtually a 100% working interest, in exchange for 1,222 net non-operated acres in Glasscock County with an average working interest of 39% and $27.8 million in cash, plus customary closing adjustments. On October 17, 2018, Earthstone, EEH and Sabalo Holdings, LLC (“Sabalo Holdings”) entered into an agreement (the “Sabalo Contribution Agreement”) which provides for the contribution by Sabalo Holdings of all its interests in Sabalo Energy, LLC (“Sabalo Energy”) and Sabalo Energy, Inc. to EEH. Also, on October 17, 2018, Sabalo Energy entered into a letter agreement (the “Shad Letter Agreement”) to acquire certain wellbore interests and related equipment held by Shad Permian, LLC (“Shad”) that are part of a joint venture between Sabalo Energy and Shad involving certain acreage covered by the Sabalo Contribution Agreement. Under those agreements, EEH expects to acquire (the “Acquisition”) an aggregate of approximately 20,800 net acres located in the Midland Basin of Texas with approximately 488 gross operated and 349 gross non-operated horizontal drilling locations with approximately 125 gross ( 67.4 net) existing vertical and horizontal wells on the acreage (and associated equipment and gathering infrastructure) for an aggregate purchase price of approximately $950 million , subject to certain purchase price and post-closing adjustments as set forth in the Sabalo Contribution Agreement and the Shad Letter Agreement. The aggregate purchase price of approximately $950 million for the Acquisition will include: (i) approximately $650 million in cash, which the Company intends to partially fund from (a) the net proceeds from the sale of Preferred Stock (as described below); (b) an unsecured bridge loan and/or an unsecured note offering (as described below); and (c) borrowings under an amended and restated five-year senior secured reserve-based revolving credit facility at EEH (the “New Credit Facility”); and (ii) approximately $300 million in equity comprised of the issuance of 32,315,695 EEH Units and 32,315,695 shares of Class B Common Stock. Upon the terms and conditions in the Sabalo Contribution Agreement, concurrently with closing of the Acquisition, EEH will amend its limited liability company agreement to admit Sabalo Holdings as a member. Each EEH Unit, together with a corresponding share of Class B Common Stock will be exchangeable, at the option of the holder any time after the closing of the Acquisition, for one share of Class A Common Stock. On October 17, 2018, Earthstone and EIG ESTE Equity Aggregator, L.P. (“EIG”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) relating to the sale by Earthstone and the purchase by EIG of $225 million of the Series A Redeemable Convertible Preferred Stock, $0.001 par value per share of Earthstone (the “Preferred Stock”), to be authorized by Earthstone, and up to $30 million of Class A Common Stock. The closing of the Purchase Agreement is expected to occur simultaneously with the closing of the Sabalo Contribution Agreement. On October 17, 2018, EEH entered into a commitment letter (the “Commitment Letter”) with Wells Fargo Bank, National Association (“Wells Fargo Bank”), Royal Bank of Canada (“Royal Bank”), SunTrust Bank (“SunTrust”), BOKF, NA (“BOKF”) and PNC Bank National Association (“PNC Bank”) (collectively, the “Banks”) pursuant to which the Banks committed on a several, not joint, basis to provide, subject to customary closing conditions, New Credit Facility to the Company with a minimum initial borrowing base of $475 million . Borrowings under the facility may be used to pay part of the cash portion of the purchase price under the Sabalo Contribution Agreement, to refinance certain existing indebtedness of the Company and its subsidiaries and to pay fees and expenses in connection with the foregoing. Further, Wells Fargo Bank, Royal Bank, SunTrust and Jefferies Finance LLC, severally and not jointly, committed to provide the Company with a senior unsecured term loan bridge facility (“Bridge Facility”) of up to $500 million . The Bridge Facility will mature on the date that is twelve months after the closing date of the Sabalo Contribution Agreement and, if not repaid in full on such date and subject to the satisfaction of conditions set forth in the Commitment Letter, will automatically be converted into an extended term loan facility that will mature on the eighth anniversary of the closing date of the Sabalo Contribution Agreement. The Bridge Facility may be used to close the Sabalo Contribution Agreement if a contemplated private sale of approximately $500 million of senior unsecured notes has not been completed at that time. Proceeds from the sale of such unsecured notes are expected to repay any amounts drawn down under the Bridge Facility. On November 2, 2018, the Company received commitments from a syndicate of banks, including the Banks, for an increased minimum initial borrowing base of $550 million for the New Credit Facility. On November 6, 2018, lenders under the EEH Credit Agreement increased the borrowing base from $225 million to $275 million . |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Revenue Recognition – On January 1, 2018, we adopted the FASB accounting standards update for “Revenue from Contracts with Customers,” which superseded the revenue recognition requirements in “Topic 605, Revenue Recognition,” using the modified retrospective method. Adoption of this standard did not have a significant impact on our consolidated statements of operations or cash flows. We implemented processes to ensure new contracts are reviewed for the appropriate accounting treatment and generate the disclosures required under the new standard. Revenues for the sale of oil, natural gas and natural gas liquids are recognized as the product is delivered to our customers’ custody transfer points and collectability is reasonably assured. We fulfill the performance obligations under our customer contracts through daily delivery of oil, natural gas and natural gas liquids to our customers’ custody transfer points and revenues are recorded on a monthly basis. The prices received for oil, natural gas and natural gas liquids sales under our contracts are generally derived from stated market prices which are then adjusted to reflect deductions including transportation, fractionation and processing. As a result, our revenues from the sale of oil, natural gas and natural gas liquids will decrease if market prices decline. The sales of oil, natural gas and natural gas liquids as presented on the Consolidated Statements of Operations represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling oil, natural gas and natural gas liquids on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis. To the extent actual volumes and prices of oil and natural gas sales are unavailable for a given reporting period because of timing or information not received from third parties, the expected sales volumes and prices for those properties are estimated and recorded. Statement of Cash Flows – In August 2016, the FASB issued updated guidance that clarifies how certain cash receipts and cash payments are presented in the statement of cash flows. This update provides guidance on eight specific cash flow issues. The standards update is effective for interim and annual periods beginning after December 15, 2017 and should be applied retrospectively to all periods presented. Early adoption is permitted. The Company adopted the new standard, as required, beginning with the first quarter of 2018, with no material impact on its Consolidated Financial Statements. Business Combinations – In January 2017, the FASB issued updated guidance that clarifies the definition of a business, which amends the guidance used in evaluating whether a set of acquired assets and activities represents a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not considered a business. As a result, acquisition fees and expenses will be capitalized to the cost basis of the property acquired, and the tangible and intangible components acquired will be recorded based on their relative fair values as of the acquisition date. The standard is effective for all public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted for periods for which financial statements have not yet been issued. The Company adopted the new standard, as required, beginning with the first quarter of 2018, with no material impact on its Consolidated Financial Statements. Compensation – Stock Compensation – In May 2017, the FASB issued updated guidance that provides clarity about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update is effective for annual periods beginning after December 15, 2017, and early adoption is permitted, including adoption in any interim period. The Company adopted the new standard, as required, beginning with the first quarter of 2018, with no material impact on its Consolidated Financial Statements. Leases – In February 2016, the FASB issued updated guidance on accounting for leases. The update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Similar to current guidance, the update continues to differentiate between finance leases and operating leases; however, this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The standards update is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. Entities are required to use a modified retrospective adoption, with certain relief provisions, for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements when adopted. The Company expects to adopt this update, as required, beginning with the first quarter of 2019. The Company is in the process of evaluating the impact of this guidance, if any, of the adoption of this guidance on its Consolidated Financial Statements. Intangibles - Goodwill and Other – In January 2017, the FASB issued updated guidance simplifying the test for goodwill impairment. The update eliminates Step 2 of the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company is in the process of evaluating the impact of this guidance, if any, on its Consolidated Financial Statements. Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the FASB issued updated guidance simplifying the guidance on nonemployee share-based payments. The update is effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company is in the process of evaluating the impact of this guidance, if any, on its Consolidated Financial Statements. Codification Improvements – In July 2018, the FASB issued an update which does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company is in the process of evaluating the impact of this update, if any, on its Consolidated Financial Statements. Fair Value Measurements – In August 2018, the FASB issued an update which modifies the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company is in the process of evaluating the impact of this update, if any, on its Consolidated Financial Statements. |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Consideration Transferred, Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the consideration transferred, fair value of assets acquired and liabilities assumed ( in thousands, except unit, share and share price amounts ): Consideration: Shares of Class A Common Stock issued pursuant to the Bold Contribution Agreement to certain employees of Bold 150,000 EEH Units issued to Bold Holdings 36,070,828 Total equity interest issued in the Bold Transaction 36,220,828 Closing per share price of Class A Common Stock as of May 9, 2017 $ 13.58 Total consideration transferred (1)(2) $ 491,879 Fair value of assets acquired: Cash and cash equivalents $ 2,355 Other current assets 10,078 Oil and gas properties (3) 557,704 Amount attributable to assets acquired $ 570,137 Fair value of liabilities assumed: Long-term debt (4) $ 58,000 Current liabilities 17,042 Deferred tax liability 2,857 Noncurrent asset retirement obligations 359 Amount attributable to liabilities assumed $ 78,258 (1) Consideration included 150,000 shares of Class A Common Stock recorded above based upon its fair value which was determined using its closing price of $13.58 per share on May 9, 2017. (2) Consideration was 36,070,828 EEH Units. Additionally, Bold Holdings purchased 36,070,828 shares of Class B Common Stock for $36,071 . Each EEH Unit, together with one share of Class B Common Stock, is convertible into one share of Class A Common Stock. The fair value of the consideration was determined using the closing price of the Company’s Class A Common Stock of $13.58 per share on May 9, 2017. (3) The market assumptions as to the future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of the future development and operating costs, projecting of future rates of production, expected recovery rate and risk adjusted discount rates used by the Company to estimate the fair value of the oil and natural gas properties represent Level 3 inputs; see Note 3. Fair Value Measurements , below. (4) Concurrent with the closing of the Bold Transaction, EEH assumed Bold’s outstanding borrowings of $58 million under its credit agreement. |
Schedule of Unaudited Pro forma Revenues and Expenses of Assets Acquired and Liabilities Assumed | Future results may vary significantly from the results reflected in this unaudited pro forma financial information ( in thousands, except per share amounts ): Three Months Ended Nine Months Ended 2017 2017 Revenue $ 28,409 $ 91,163 Income (loss) before taxes $ 3,408 $ (42,228 ) Net income (loss) $ 3,502 $ (39,711 ) Less: Net income (loss) available to noncontrolling interest $ 2,142 $ (24,316 ) Net income (loss) attributable to Earthstone Energy, Inc. $ 1,360 $ (15,395 ) Pro forma net income (loss) per common share attributable to Earthstone Energy, Inc.: Basic $ 0.06 $ (0.68 ) Diluted $ 0.06 $ (0.68 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value of Financial Assets and Liabilities | The following table summarizes the fair value of the Company’s financial assets and liabilities, by level within the fair-value hierarchy (in thousands) : September 30, 2018 Level 1 Level 2 Level 3 Total Financial assets Derivative asset - current $ — $ — $ — $ — Derivative asset - noncurrent — — — — Total financial assets $ — $ — $ — $ — Financial liabilities Derivative liability - current $ — $ 23,391 $ — $ 23,391 Derivative liability - noncurrent — 10,019 — 10,019 Total financial liabilities $ — $ 33,410 $ — $ 33,410 December 31, 2017 Financial assets Derivative asset - current $ — $ 184 $ — $ 184 Derivative asset - noncurrent — — — — Total financial assets $ — $ 184 $ — $ 184 Financial liabilities Derivative liability - current $ — $ 11,805 $ — $ 11,805 Derivative liability - noncurrent — 1,826 — 1,826 Total financial liabilities $ — $ 13,631 $ — $ 13,631 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Open Crude Oil and Natural Gas Derivative Contracts | The Company had the following open crude oil and natural gas derivative contracts as of September 30, 2018 : Price Swaps Period Commodity Volume (Bbls / MMBtu) Weighted Average Price ($/Bbl / $/MMBtu) Q4 2018 Crude Oil 413,700 $ 54.05 Q1 - Q4 2019 Crude Oil 1,624,100 $ 58.95 Q1 - Q4 2020 Crude Oil 732,000 $ 63.08 Q4 2018 Crude Oil (Basis Swap)(1) 243,800 $ (1.90 ) Q4 2018 Crude Oil (Basis Swap)(2) 92,000 $ 6.35 Q1 - Q4 2019 Crude Oil Basis Swap(1) 1,277,500 $ (6.39 ) Q1 - Q4 2019 Crude Oil (Basis Swap)(2) 365,000 $ 4.50 Q1 - Q4 2020 Crude Oil Basis Swap(1) 732,000 $ (5.38 ) Q4 2018 Natural Gas 610,000 $ 2.95 (1) The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX. (2) The basis differential price is between LLS Argus Crude and the WTI NYMEX. Subsequent to September 30, 2018, the Company entered into the following crude oil and natural gas derivative contracts: Price Swaps Period Commodity Volume (Bbls / MMBtu) Weighted Average Price ($/Bbl / $/MMBtu) Q1 - Q4 2019 Crude Oil 730,000 $ 73.05 Q1 - Q4 2020 Crude Oil 732,000 $ 68.67 Q1 - Q4 2019 Crude Oil Basis Swap(1) 730,000 $ (5.50 ) Q1 - Q4 2020 Crude Oil Basis Swap(1) 732,000 $ (0.10 ) Q1 - Q4 2019 Natural Gas 1,277,550 $ 2.87 Q1 - Q4 2019 Natural Gas (Basis Swap)(2) 1,277,550 $ (1.28 ) (1) The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX. (2) The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX. |
Schedule of Location and Fair Value Amounts of All Derivative Instruments | The following table summarizes the location and fair value amounts of all derivative instruments in the Condensed Consolidated Balance Sheets as well as the gross recognized derivative assets, liabilities, and amounts offset in the Condensed Consolidated Balance Sheets (in thousands) : September 30, 2018 December 31, 2017 Derivatives not designated as hedging contracts under ASC Topic 815 Balance Sheet Location Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Commodity contracts Derivative asset - current $ — $ — $ — $ 184 $ — $ 184 Commodity contracts Derivative liability - current $ 25,200 $ (1,809 ) $ 23,391 $ 11,805 $ — $ 11,805 Commodity contracts Derivative liability - noncurrent $ 10,025 $ (6 ) $ 10,019 $ 1,826 $ — $ 1,826 |
Summary of Realized and Unrealized Gains and Losses on Derivative Instruments | The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivatives instruments in the Condensed Consolidated Statements of Operations (in thousands) : Three Months Ended Nine Months Ended Derivatives not designated as hedging contracts under ASC Topic 815 Statement of Operations Location 2018 2017 2018 2017 Total (loss) gain on commodity contracts (Loss) gain on derivative contracts, net $ (13,105 ) $ (4,159 ) $ (19,963 ) $ 3,908 Cash (paid) received in settlements on commodity contracts (Loss) gain on derivative contracts, net (4,376 ) 496 (13,643 ) 229 (Loss) gain on commodity contracts, net $ (17,481 ) $ (3,663 ) $ (33,606 ) $ 4,137 |
Noncontrolling Interest (Tables
Noncontrolling Interest (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Summary of Changes in Noncontrolling Interest | The following table presents the changes in noncontrolling interest for the nine months ended September 30, 2018 : EEH Units Held By Earthstone and Lynden US % EEH Units Held By Others % Total EEH Units Outstanding As of December 31, 2017 27,584,638 43.3 % 36,052,169 56.7 % 63,636,807 EEH Units and Class B Common Stock converted to Class A Common Stock 389,135 (389,135 ) — EEH Units issued in connection with the vesting of restricted stock units 426,648 — 426,648 As of September 30, 2018 28,400,421 44.3 % 35,663,034 55.7 % 64,063,455 |
Summary of Activity for Equity Attributable to Noncontrolling Interest | The following table summarizes the activity for the equity attributable to the noncontrolling interest for the nine months ended September 30, 2018 ( in thousands ): 2018 As of December 31, 2017 $ 446,558 EEH Units and Class B Common Stock converted to Class A Common Stock (4,894 ) Net income attributable to noncontrolling interest 8,032 As of September 30, 2018 $ 449,696 |
Net Income (Loss) Per Common _2
Net Income (Loss) Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of Net Income (Loss) Per Common Share | A reconciliation of Net income (loss) per common share is as follows: Three Months Ended Nine Months Ended (In thousands, except per share amounts) 2018 2017 2018 2017 Net income (loss) attributable to Earthstone Energy, Inc. $ 224 $ 1,556 $ 6,195 $ (14,838 ) Net income (loss) per common share attributable to Earthstone Energy, Inc.: Basic $ 0.01 $ 0.07 $ 0.22 $ (0.66 ) Diluted $ 0.01 $ 0.07 $ 0.22 $ (0.66 ) Weighted average common shares outstanding Basic 28,257,376 22,905,023 28,011,298 22,638,977 Add potentially dilutive securities: Unvested restricted stock units 54,383 — 97,067 — Diluted weighted average common shares outstanding 28,311,759 22,905,023 28,108,365 22,638,977 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Unvested RSU Award Activity | The table below summarizes unvested RSU award activity for the nine months ended September 30, 2017 : Shares Weighted-Average Grant Date Fair Value Unvested RSUs at December 31, 2016 781,500 $ 12.53 Granted 254,500 $ 11.67 Forfeited (36,000 ) $ 13.30 Vested (594,380 ) $ 12.45 Unvested RSUs at September 30, 2017 405,620 $ 12.03 The table below summarizes unvested RSU award activity for the nine months ended September 30, 2018 : Shares Weighted-Average Grant Date Fair Value Unvested RSUs at December 31, 2017 969,245 $ 9.89 Granted 359,500 $ 9.33 Forfeited (44,165 ) $ 10.87 Vested (569,585 ) $ 9.89 Unvested RSUs at September 30, 2018 714,995 $ 9.55 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Summary of Asset Retirement Obligation Transactions | The following table summarizes the Company’s asset retirement obligation transactions recorded during the nine months ended September 30, (in thousands) : 2018 2017 Beginning asset retirement obligations $ 2,354 $ 6,013 Liabilities incurred 63 64 Liabilities settled (79 ) — Acquisitions — 359 Accretion expense 128 378 Divestitures (649 ) (3,629 ) Revision of estimates (182 ) 19 Ending asset retirement obligations $ 1,635 $ 3,204 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) $ / shares in Units, $ in Thousands | May 09, 2017USD ($)class_of_stock$ / sharesshares | Sep. 30, 2018$ / sharesshares | Dec. 31, 2017$ / shares |
Class A Common Stock | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Class B Common Stock | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Bold Contribution Agreement | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Number of classes of common stock | class_of_stock | 2 | ||
Closing sale price of common stock (in dollars per share) | $ / shares | $ 13.58 | ||
Bold Contribution Agreement | Earthstone Energy Holdings, LLC | Bold Energy Holdings, LLC | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
EEH Units issued to Bold Holdings (in shares) | 36,070,828 | ||
Bold Contribution Agreement | Lynden Energy Corporation | Earthstone Energy Holdings, LLC | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
EEH Units issued to Bold Holdings (in shares) | 5,865,328 | ||
Bold Contribution Agreement | Class A Common Stock | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||
Stock recapitalization ratio | 1 | ||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 1 | 1 | |
Bold Contribution Agreement | Class A Common Stock | 2014 Long Term Incentive Plan | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Shares of common stock issued in arrangement | 150,000 | ||
Bold Contribution Agreement | Class A Common Stock | Bold Energy Holdings, LLC | Earthstone Energy Holdings, LLC | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of ownership interest | 61.40% | ||
Bold Contribution Agreement | Class B Common Stock | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 1 | ||
Bold Contribution Agreement | Class B Common Stock | Bold Energy Holdings, LLC | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Cash from sale of stock | $ | $ 36,071 | ||
Shares of common stock issued in arrangement | 36,070,828 | ||
Bold Contribution Agreement | Class B Common Stock | Earthstone Energy Holdings, LLC | Bold Energy Holdings, LLC | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Cash from sale of stock | $ | $ 36,071 | ||
EEH Units issued to Bold Holdings (in shares) | 16,791,296 |
Acquisitions and Divestitures
Acquisitions and Divestitures - Schedule of Consideration Transferred, Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ / shares in Units, $ in Thousands | May 09, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Class A Common Stock | |||
Business Acquisition [Line Items] | |||
Total consideration transferred | $ 0 | $ 2,037 | |
Class B Common Stock | |||
Business Acquisition [Line Items] | |||
Total consideration transferred | $ 0 | $ 489,842 | |
Bold Transaction | |||
Business Acquisition [Line Items] | |||
Shares of common stock issued in arrangement | 36,220,828 | ||
Closing per share price of common stock (in dollars per share) | $ 13.58 | ||
Total consideration transferred | $ 491,879 | ||
Fair value of assets acquired: | |||
Cash and cash equivalents | 2,355 | ||
Other current assets | 10,078 | ||
Oil and gas properties | 557,704 | ||
Amount attributable to assets acquired | 570,137 | ||
Fair value of liabilities assumed: | |||
Long-term debt | 58,000 | ||
Current liabilities | 17,042 | ||
Deferred tax liability | 2,857 | ||
Noncurrent asset retirement obligations | 359 | ||
Amount attributable to liabilities assumed | $ 78,258 | ||
Bold Transaction | Class A Common Stock | |||
Business Acquisition [Line Items] | |||
Shares of common stock issued in arrangement | 150,000 | ||
Closing per share price of common stock (in dollars per share) | $ 13.58 | ||
Bold Transaction | Class B Common Stock | |||
Business Acquisition [Line Items] | |||
Closing per share price of common stock (in dollars per share) | $ 13.58 | ||
Bold Transaction | Bold Energy III LLC | Certain Employees | Class A Common Stock | |||
Business Acquisition [Line Items] | |||
Shares of common stock issued in arrangement | 150,000 | ||
Bold Transaction | Bold Energy Holdings, LLC | |||
Business Acquisition [Line Items] | |||
Shares of common stock issued in arrangement | 36,070,828 | ||
Bold Transaction | Bold Energy Holdings, LLC | Class B Common Stock | |||
Business Acquisition [Line Items] | |||
EEH Units issued to Bold Holdings (in shares) | 36,070,828 | ||
Bold Contribution Agreement | |||
Business Acquisition [Line Items] | |||
Closing per share price of common stock (in dollars per share) | $ 13.58 | ||
Bold Contribution Agreement | Class A Common Stock | |||
Fair value of liabilities assumed: | |||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 1 | 1 | |
Bold Contribution Agreement | Class B Common Stock | |||
Fair value of liabilities assumed: | |||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 1 | ||
Bold Contribution Agreement | Bold Energy Holdings, LLC | Class B Common Stock | |||
Business Acquisition [Line Items] | |||
Shares of common stock issued in arrangement | 36,070,828 | ||
Fair value of liabilities assumed: | |||
Cash from sale of stock | $ 36,071 | ||
Earthstone Energy Holdings, LLC | Bold Transaction | Bold Energy Holdings, LLC | |||
Business Acquisition [Line Items] | |||
EEH Units issued to Bold Holdings (in shares) | 36,070,828 | ||
Earthstone Energy Holdings, LLC | Bold Contribution Agreement | Bold Energy Holdings, LLC | |||
Business Acquisition [Line Items] | |||
EEH Units issued to Bold Holdings (in shares) | 36,070,828 | ||
Earthstone Energy Holdings, LLC | Bold Contribution Agreement | Bold Energy Holdings, LLC | Class B Common Stock | |||
Business Acquisition [Line Items] | |||
EEH Units issued to Bold Holdings (in shares) | 16,791,296 | ||
Fair value of liabilities assumed: | |||
Cash from sale of stock | $ 36,071 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures - Schedule of Unaudited Pro forma Revenues and Expenses of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Business Acquisition [Line Items] | ||||
Net income (loss) | $ 564 | $ 4,008 | $ 14,227 | $ (50,230) |
Bold Transaction | ||||
Business Acquisition [Line Items] | ||||
Revenue | 28,409 | 91,163 | ||
Income (loss) before taxes | 3,408 | (42,228) | ||
Net income (loss) | 3,502 | (39,711) | ||
Less: Net income (loss) available to noncontrolling interest | 2,142 | (24,316) | ||
Net income (loss) attributable to Earthstone Energy, Inc. | $ 1,360 | $ (15,395) | ||
Pro forma net loss per common share attributable to Earthstone Energy, Inc.: | ||||
Basic (in dollars per share) | $ 0.06 | $ (0.68) | ||
Diluted (in dollars per share) | $ 0.06 | $ (0.68) |
Acquisitions and Divestitures_3
Acquisitions and Divestitures - Narrative (Details) - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 20, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Business Acquisition [Line Items] | ||||||
Proceeds from sales of oil and gas properties | $ 5,840 | $ 5,054 | ||||
Gain on sale of oil and gas properties | $ 4,096 | $ 2,157 | 4,608 | $ 3,848 | ||
Bold Transaction | ||||||
Business Acquisition [Line Items] | ||||||
Revenues | $ 31,600 | 83,200 | ||||
Direct operating expenses | 13,400 | $ 35,500 | ||||
Eagle Ford | ||||||
Business Acquisition [Line Items] | ||||||
Proceeds from sales of oil and gas properties | $ 5,500 | |||||
Gain on sale of oil and gas properties | $ 4,600 | |||||
Williston Basin | ||||||
Business Acquisition [Line Items] | ||||||
Proceeds from sales of oil and gas properties | $ 27,300 | |||||
Purchase price adjustment | $ 300 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financial assets | ||
Derivative asset - current | $ 0 | $ 184 |
Financial liabilities | ||
Derivative liability - current | 23,391 | 11,805 |
Derivative liability - noncurrent | 10,019 | 1,826 |
Fair Value on a Recurring Basis | ||
Financial assets | ||
Derivative asset - current | 0 | 184 |
Derivative asset - noncurrent | 0 | 0 |
Total financial assets | 0 | 184 |
Financial liabilities | ||
Derivative liability - current | 23,391 | 11,805 |
Derivative liability - noncurrent | 10,019 | 1,826 |
Total financial liabilities | 33,410 | 13,631 |
Level 1 | Fair Value on a Recurring Basis | ||
Financial assets | ||
Derivative asset - current | 0 | 0 |
Derivative asset - noncurrent | 0 | 0 |
Total financial assets | 0 | 0 |
Financial liabilities | ||
Derivative liability - current | 0 | 0 |
Derivative liability - noncurrent | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 2 | Fair Value on a Recurring Basis | ||
Financial assets | ||
Derivative asset - current | 0 | 184 |
Derivative asset - noncurrent | 0 | 0 |
Total financial assets | 0 | 184 |
Financial liabilities | ||
Derivative liability - current | 23,391 | 11,805 |
Derivative liability - noncurrent | 10,019 | 1,826 |
Total financial liabilities | 33,410 | 13,631 |
Level 3 | Fair Value on a Recurring Basis | ||
Financial assets | ||
Derivative asset - current | 0 | 0 |
Derivative asset - noncurrent | 0 | 0 |
Total financial assets | 0 | 0 |
Financial liabilities | ||
Derivative liability - current | 0 | 0 |
Derivative liability - noncurrent | 0 | 0 |
Total financial liabilities | $ 0 | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Schedule of Open Crude Oil and Natural Gas Derivative Contracts (Details) | 1 Months Ended | 9 Months Ended |
Nov. 07, 2018MMBTU$ / MMBTU$ / bblbbl | Sep. 30, 2018MMBTU$ / MMBTU$ / bblbbl | |
Q4 2018 | Natural Gas | ||
Derivative [Line Items] | ||
Natural gas volume (MMBtu) | MMBTU | 610,000 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / MMBTU | 2.95 | |
Q4 2018 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 413,700 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | 54.05 | |
Q1 - Q4 2019 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 1,624,100 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | 58.95 | |
Q1 - Q4 2020 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 732,000 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | 63.08 | |
Q4 2018 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 243,800 | |
Q4 2018 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 92,000 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | 6.35 | |
Q1 - Q4 2019 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 1,277,500 | |
Q1 - Q4 2019 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 365,000 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | 4.50 | |
Q1 - Q4 2020 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 732,000 | |
Short | Q4 2018 | Crude Oil | ||
Derivative [Line Items] | ||
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | (1.90) | |
Short | Q1 - Q4 2019 | Crude Oil | ||
Derivative [Line Items] | ||
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | (6.39) | |
Short | Q1 - Q4 2020 | Crude Oil | ||
Derivative [Line Items] | ||
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | (5.38) | |
Subsequent Event | Q1 - Q4 2019 | Natural Gas | ||
Derivative [Line Items] | ||
Natural gas volume (MMBtu) | MMBTU | 1,277,550 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / MMBTU | 2.87 | |
Subsequent Event | Q1 - Q4 2019 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 730,000 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | 73.05 | |
Subsequent Event | Q1 - Q4 2020 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 732,000 | |
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | 68.67 | |
Subsequent Event | Q1 - Q4 2019 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 730,000 | |
Subsequent Event | Q1 - Q4 2020 | Crude Oil | ||
Derivative [Line Items] | ||
Crude oil volume (Bbl) | bbl | 732,000 | |
Subsequent Event | Q1 - Q4 2019 | Natural Gas | ||
Derivative [Line Items] | ||
Natural gas volume (MMBtu) | MMBTU | 1,277,550 | |
Subsequent Event | Short | Q1 - Q4 2019 | Crude Oil | ||
Derivative [Line Items] | ||
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | (5.50) | |
Subsequent Event | Short | Q1 - Q4 2020 | Crude Oil | ||
Derivative [Line Items] | ||
Weighted Average Price ($/Bbl / $/MMBtu) | $ / bbl | (0.10) | |
Subsequent Event | Short | Q1 - Q4 2019 | Natural Gas | ||
Derivative [Line Items] | ||
Weighted Average Price ($/Bbl / $/MMBtu) | $ / MMBTU | (1.28) |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Location and Fair Value Amounts of All Derivative Instruments (Details) - Derivatives Not Designated as Hedging Contracts - Commodity Contracts - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Derivative asset - current | ||
Derivative Asset [Abstract] | ||
Gross Recognized Assets | $ 0 | $ 184 |
Gross Amounts Offset, Assets | 0 | 0 |
Total financial assets | 0 | 184 |
Derivative liability - current | ||
Derivative Liability [Abstract] | ||
Gross Recognized Liabilities | 25,200 | 11,805 |
Gross Amounts Offset, Liabilities | (1,809) | 0 |
Total financial liabilities | 23,391 | 11,805 |
Derivative liability - noncurrent | ||
Derivative Liability [Abstract] | ||
Gross Recognized Liabilities | 10,025 | 1,826 |
Gross Amounts Offset, Liabilities | (6) | 0 |
Total financial liabilities | $ 10,019 | $ 1,826 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Summary of Realized and Unrealized Gains and Losses on Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Cash (paid) received in settlements on commodity contracts | $ 13,643 | $ (229) | ||
(Loss) gain on commodity contracts, net | $ (17,481) | $ (3,663) | (33,606) | 4,137 |
Derivatives Not Designated as Hedging Contracts | (Loss) Gain On Derivative Contracts, Net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (loss) gain on commodity contracts | (13,105) | (4,159) | (19,963) | 3,908 |
Cash (paid) received in settlements on commodity contracts | $ (4,376) | $ 496 | $ (13,643) | $ 229 |
Oil and Natural Gas Properties
Oil and Natural Gas Properties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Oil And Natural Gas Properties [Line Items] | ||||
Impairment of proved and unproved oil and gas properties | $ 833 | $ 92 | $ 833 | $ 66,740 |
Proved Oil and Natural Gas Properties | ||||
Oil And Natural Gas Properties [Line Items] | ||||
Depletion expenses | 12,700 | 10,200 | $ 33,000 | 27,900 |
Impairment of proved and unproved oil and gas properties | 63,000 | |||
Unproved Oil and Gas Properties | ||||
Oil And Natural Gas Properties [Line Items] | ||||
Impairment of proved and unproved oil and gas properties | $ 800 | $ 100 | $ 3,700 | |
Unproved Oil and Gas Properties | Minimum | ||||
Oil And Natural Gas Properties [Line Items] | ||||
Unproved oil and gas lease term | 3 years | |||
Unproved Oil and Gas Properties | Maximum | ||||
Oil And Natural Gas Properties [Line Items] | ||||
Unproved oil and gas lease term | 5 years |
Noncontrolling Interest - Summ
Noncontrolling Interest - Summary of Changes in Noncontrolling Interest (Details) | 9 Months Ended | |
Sep. 30, 2018shares | Dec. 31, 2017 | |
Class A Common Stock | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 27,584,638 | |
Outstanding, ending balance (in shares) | 28,400,421 | |
Earthstone Energy Holdings, LLC | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 63,636,807 | |
Outstanding, ending balance (in shares) | 64,063,455 | |
Earthstone Energy Holdings, LLC | Restricted Stock Units | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
EEH Units issued in connection with the vesting of restricted stock units (in shares) | 426,648 | |
Earthstone Energy Holdings, LLC | Bold Transaction | Class A Common Stock | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 0 | |
Earthstone Energy Incorporation And Lynden United States Of America Incorporation | Earthstone Energy Holdings, LLC | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 27,584,638 | |
Outstanding, ending balance (in shares) | 28,400,421 | |
Percentage of EEH Units Held By Earthstone and Lynden | 44.30% | 43.30% |
Earthstone Energy Incorporation And Lynden United States Of America Incorporation | Earthstone Energy Holdings, LLC | Restricted Stock Units | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
EEH Units issued in connection with the vesting of restricted stock units (in shares) | 426,648 | |
Earthstone Energy Incorporation And Lynden United States Of America Incorporation | Earthstone Energy Holdings, LLC | Bold Transaction | Class A Common Stock | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 389,135 | |
Other Entities | Earthstone Energy Holdings, LLC | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 36,052,169 | |
Outstanding, ending balance (in shares) | 35,663,034 | |
Percentage of EEH Units Held By Others | 55.70% | 56.70% |
Other Entities | Earthstone Energy Holdings, LLC | Bold Transaction | Class A Common Stock | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | (389,135) |
Noncontrolling Interest - Su_2
Noncontrolling Interest - Summary of Activity for Equity Attributable to Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
December 31, 2017 | $ 446,558 | |||
Net income attributable to noncontrolling interest | $ 340 | $ 2,452 | 8,032 | $ (35,392) |
September 30, 2018 | 449,696 | 449,696 | ||
Bold Transaction | ||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
December 31, 2017 | 446,558 | |||
EEH Units and Class B Common Stock converted to Class A Common Stock | (4,894) | |||
Net income attributable to noncontrolling interest | 8,032 | |||
September 30, 2018 | $ 449,696 | $ 449,696 |
Net Income (Loss) Per Common _3
Net Income (Loss) Per Common Share - Reconciliation of Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Earthstone Energy, Inc. | $ 224 | $ 1,556 | $ 6,195 | $ (14,838) |
Net income (loss) per common share attributable to Earthstone Energy, Inc.: | ||||
Basic (in dollars per share) | $ 0.01 | $ 0.07 | $ 0.22 | $ (0.66) |
Diluted (in dollars per share) | $ 0.01 | $ 0.07 | $ 0.22 | $ (0.66) |
Weighted average common shares outstanding | ||||
Basic (in shares) | 28,257,376 | 22,905,023 | 28,011,298 | 22,638,977 |
Add potentially dilutive securities: | ||||
Unvested restricted stock units (in shares) | 54,383 | 0 | 97,067 | 0 |
Diluted weighted average common shares outstanding (in shares) | 28,311,759 | 22,905,023 | 28,108,365 | 22,638,977 |
Net Income (Loss) Per Common _4
Net Income (Loss) Per Common Share - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to noncontrolling interest | $ 340,000 | $ 2,452,000 | $ 8,032,000 | $ (35,392,000) |
Dilutive effect on Net income (loss) per common share attributable to Earthstone Energy, Inc | $ 0 | $ 0 |
Common Stock (Details)
Common Stock (Details) $ in Thousands | Oct. 17, 2018shares | May 09, 2017USD ($)class_of_stockshares | Oct. 31, 2018shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017shares | Dec. 31, 2017USD ($)shares |
Bold Contribution Agreement | ||||||||
Capital Unit [Line Items] | ||||||||
Number of classes of common stock | class_of_stock | 2 | |||||||
Member Units | Bold Contribution Agreement | ||||||||
Capital Unit [Line Items] | ||||||||
Stock conversion (in shares) | 1 | |||||||
Class A Common Stock | ||||||||
Capital Unit [Line Items] | ||||||||
Common stock, shares issued (in shares) | 28,400,421 | 28,400,421 | 27,584,638 | |||||
Common stock, shares outstanding (in shares) | 28,400,421 | 28,400,421 | 27,584,638 | |||||
Common stock issued, value | $ | $ 28 | $ 28 | $ 28 | |||||
Class A Common Stock | Bold Contribution Agreement | ||||||||
Capital Unit [Line Items] | ||||||||
Stock recapitalization ratio | 1 | |||||||
Common stock, shares issued (in shares) | 150,000 | |||||||
Common stock issued, value | $ | $ 2,000 | |||||||
Stock conversion (in shares) | 1 | 1 | ||||||
Class A Common Stock | 2014 Plan | ||||||||
Capital Unit [Line Items] | ||||||||
Common shares issued during period under stock plan | 115,574 | 126,751 | 569,585 | 594,380 | ||||
Treasury Stock, Common, Shares | 30,511 | 29,441 | 142,937 | 29,441,000 | ||||
Class B Common Stock | ||||||||
Capital Unit [Line Items] | ||||||||
Common stock, shares issued (in shares) | 35,663,034 | 35,663,034 | 36,052,169 | |||||
Common stock, shares outstanding (in shares) | 35,663,034 | 35,663,034 | 36,052,169 | |||||
Common stock issued, value | $ | $ 36 | $ 36 | $ 36 | |||||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 183,894 | 389,135 | ||||||
Class B Common Stock | Bold Contribution Agreement | ||||||||
Capital Unit [Line Items] | ||||||||
Stock conversion (in shares) | 1 | |||||||
Subsequent Event | ||||||||
Capital Unit [Line Items] | ||||||||
Common shares issued during period under stock plan | 32,315,695 | |||||||
Subsequent Event | Class B Common Stock | ||||||||
Capital Unit [Line Items] | ||||||||
Common shares issued during period under stock plan | 32,315,695 | |||||||
EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 210,856 |
Stock-Based Compensation - Nar
Stock-Based Compensation - Narrative (Details) - USD ($) | Jun. 06, 2018 | Feb. 28, 2018 | May 09, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Restricted Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Performance-based restricted stock granted (in shares) | 359,500 | 254,500 | |||||||
PSUs outstanding (in shares) | 714,995 | 405,620 | 714,995 | 405,620 | 969,245 | 781,500 | |||
Weighted average fair value per share (in dollars per share) | $ 9.55 | $ 12.03 | $ 9.55 | $ 12.03 | $ 9.89 | $ 12.53 | |||
Performance Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Threshold trading days | 30 days | ||||||||
Remaining vesting period of unrecognized compensation expense (in years) | 1 year 2 months 29 days | ||||||||
2014 Plan | Restricted Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares authorized to be issued under the plan | 6,400,000 | ||||||||
Stock-based compensation expense | $ 1,200,000 | $ 1,700,000 | $ 4,900,000 | $ 4,600,000 | |||||
Unrecognized compensation expense related to unvested stock | 6,400,000 | $ 6,400,000 | |||||||
Weighted average remaining vesting period of unrecognized compensation expense | 11 months 5 days | ||||||||
2014 Plan | Restricted Stock Units | Class A Common Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Increase in number of shares authorized to be issued under the plan | 600,000 | ||||||||
2014 Plan | Restricted Stock Units | Bold Contribution Agreement | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares authorized to be issued under the plan | 5,800,000 | ||||||||
2014 Plan | Restricted Stock Units | Bold Contribution Agreement | Class A Common Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Increase in number of shares authorized to be issued under the plan | 4,300,000 | ||||||||
Number of shares of common stock that each holder has contingent right to receive | 1 | ||||||||
2014 Plan | Performance Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 300,000 | $ 0 | $ 700,000 | $ 0 | |||||
Performance-based restricted stock granted (in shares) | 252,500 | ||||||||
PSUs outstanding (in shares) | 252,500 | 252,500 | 0 | ||||||
Unrecognized compensation expense related to PSU awards | $ 2,800,000 | $ 2,800,000 | |||||||
Weighted average fair value per share (in dollars per share) | $ 13.75 | $ 13.75 | |||||||
Minimum | Performance Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Relative Total Shareholder Return, percentage | 0.00% | ||||||||
Minimum | Performance Stock Units | Class A Common Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Potential shares issuable under grant | 0 | ||||||||
Maximum | Performance Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Relative Total Shareholder Return, percentage | 200.00% | ||||||||
Maximum | Performance Stock Units | Class A Common Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Potential shares issuable under grant | 505,000 |
Stock-Based Compensation - Sum
Stock-Based Compensation - Summary of Unvested RSU Award Activity (Details) - Restricted Stock Units - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Shares | ||
Unvested RSUs at beginning period (in shares) | 969,245 | 781,500 |
Granted (in shares) | 359,500 | 254,500 |
Forfeited (in shares) | (44,165) | (36,000) |
Vested (in shares) | (569,585) | (594,380) |
Unvested RSUs at end period (in shares) | 714,995 | 405,620 |
Weighted-Average Grant Date Fair Value | ||
Unvested RSUs at beginning of period, Weighted-Average Grant Date Fair Value (in dollars per share) | $ 9.89 | $ 12.53 |
Granted, Weighted-Average Grant Date Fair Value (in dollars per share) | 9.33 | 11.67 |
Forfeited, Weighted-Average Grant Date Fair Value (in dollars per share) | 10.87 | 13.30 |
Vested, Weighted-Average Grant Date Fair Value (in dollars per share) | 9.89 | 12.45 |
Unvested RSUs at end of period, Weighted-Average Grant Date Fair Value (in dollars per share) | $ 9.55 | $ 12.03 |
Long-Term Debt (Details)
Long-Term Debt (Details) | May 23, 2018USD ($) | May 09, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | |||||||
Repayments of borrowings | $ 60,300,000 | ||||||
Long-term debt outstanding | $ 35,000,000 | $ 35,000,000 | $ 25,000,000 | ||||
Long-term debt, percentage bearing annual interest rate | 3.915% | 3.915% | |||||
Amount of borrowings | $ 70,300,000 | $ 70,300,000 | |||||
Averaged interest rate on borrowings | 3.94% | 4.21% | 3.91% | 4.01% | |||
Commitment fees on borrowings | $ 100,000 | $ 100,000 | $ 600,000 | $ 200,000 | |||
Amortization of deferred financing costs | 100,000 | 100,000 | 228,000 | 195,000 | |||
Bold Transaction | Four Year Senior Secured Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Repayments of borrowings | $ 10,000,000 | ||||||
EEH Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Credit agreement, covenant, current ratio | 1 | ||||||
Credit agreement, covenant, leverage ratio | 4 | ||||||
EBITDAX multiplier | 4 | ||||||
Current borrowing base under EEH credit agreement | 225,000,000 | 225,000,000 | |||||
Long-term debt outstanding | 35,000,000 | 35,000,000 | $ 25,000,000 | ||||
Additional borrowing base available under credit agreement | 190,000,000 | 190,000,000 | |||||
Capitalized costs associated with borrowings | $ 100,000 | $ 300,000 | |||||
EEH Credit Agreement | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee percentage | 0.375% | ||||||
EEH Credit Agreement | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee percentage | 0.50% | ||||||
EEH Credit Agreement | London Interbank Offered Rate (LIBOR) | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 1.75% | ||||||
EEH Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 2.75% | ||||||
EEH Credit Agreement | Prime Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 0.75% | ||||||
EEH Credit Agreement | Prime Rate | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 1.75% | ||||||
Earthstone Energy Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Capitalized costs associated with borrowings | $ 100,000 | $ 1,200,000 | |||||
Write-off of Deferred Financing Costs | Bold Transaction | Four Year Senior Secured Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Remaining unamortized deferred financing costs | $ 500,000 | ||||||
Line of Credit | EEH Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit, borrowing base | $ 225,000,000 | $ 185,000,000 | |||||
Reduction in basis points | 0.50% |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||||
Beginning asset retirement obligations | $ 2,354 | $ 6,013 | ||
Liabilities incurred | 63 | 64 | ||
Liabilities settled | (79) | 0 | ||
Acquisitions | 0 | 359 | ||
Accretion expense | $ 44 | $ 72 | 128 | 378 |
Divestitures | (649) | (3,629) | ||
Revision of estimates | (182) | 19 | ||
Ending asset retirement obligations | $ 1,635 | $ 3,204 | $ 1,635 | $ 3,204 |
Related Party Transactions (Det
Related Party Transactions (Details) - Flatonia Energy, LLC - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Payments made to related party | $ 0 | $ 6,400,000 | $ 12,400,000 | $ 20,800,000 | |
Payments received from related party | 700,000 | $ 800,000 | 4,800,000 | $ 3,200,000 | |
Amounts receivable from related party | 800,000 | 800,000 | $ 1,300,000 | ||
Amounts payable to related party | $ 0 | $ 0 | $ 0 | ||
Class A Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Percentage of common stock acquired | 10.30% | ||||
Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Percentage of common stock acquired | 4.60% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Aug. 18, 2017well | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Loss Contingencies [Line Items] | |||||
Litigation settlement expense | $ 4,775 | $ 0 | $ 4,775 | $ 0 | |
Trinity Royal Partners, LP | |||||
Loss Contingencies [Line Items] | |||||
Number of properties under litigation case | well | 2 | ||||
Litigation settlement expense | $ 4,800 | $ 3,100 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Line Items] | |||||
Tax Act, provisional income tax expense | $ 7,800 | ||||
Income tax expense | $ 172 | $ (94) | $ 119 | $ (10,046) | |
Tax Act, discrete income tax benefit, refundable AMT tax credit | 500 | ||||
Deferred income tax expense (benefit) | 119 | (10,046) | |||
Earthstone Energy Holdings, LLC | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax expense (benefit) | 1,100 | ||||
Deferred income tax expense (benefit) | 300 | 200 | |||
Lynden US | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax expense (benefit) | $ 300 | (2,700) | |||
Bold Transaction | Earthstone Energy Holdings, LLC | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax expense (benefit) | $ (7,500) |
Subsequent Events (Details)
Subsequent Events (Details) | Oct. 17, 2018USD ($)awelllocationshares | Oct. 08, 2018USD ($)a | Dec. 31, 2018USD ($)$ / shares | Oct. 17, 2019USD ($) | Nov. 06, 2018USD ($) | Nov. 02, 2018USD ($) | Sep. 30, 2018$ / shares | May 23, 2018USD ($) | Dec. 31, 2017$ / shares | May 09, 2017USD ($) |
Subsequent Event [Line Items] | ||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||||
Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of acres acquired | a | 20,800 | 3,899 | ||||||||
Working interest acquired (as a percent) | 100.00% | |||||||||
Number of acres sold | a | 1,222 | |||||||||
Working interest sold (as a percent) | 39.00% | |||||||||
Payments to acquire acreage | $ 950,000,000 | $ 27,800,000 | ||||||||
Number of operated horizontal drilling locations | location | 488 | |||||||||
Number of non-operated horizontal drilling locations | location | 349 | |||||||||
Number of existing vertical and horizontal wells, gross | well | 125 | |||||||||
Number of existing vertical and horizontal wells, net | well | 67.4 | |||||||||
Cash payments to acquire oil and gas property | $ 650,000,000 | |||||||||
Amount of equity issued | $ 300,000,000 | |||||||||
Shares issued in transaction | shares | 32,315,695 | |||||||||
Line of Credit | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit, borrowing base | $ 550,000,000 | |||||||||
Line of Credit | EEH Credit Agreement | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit, borrowing base | $ 225,000,000 | $ 185,000,000 | ||||||||
Line of Credit | EEH Credit Agreement | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit, borrowing base | $ 275,000,000 | |||||||||
New Credit Facility | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit, borrowing base | $ 475,000,000 | |||||||||
Bridge Facility | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit, borrowing base | $ 500,000,000 | |||||||||
Class B Common Stock | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Shares issued in transaction | shares | 32,315,695 | |||||||||
Scenario, Forecast | Senior Notes | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Proceeds from Issuance of Unsecured Debt | $ 500,000,000 | |||||||||
Scenario, Forecast | Convertible Preferred Stock | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Proceeds from issuance of preferred stock | $ 225,000,000 | |||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||||||||
Scenario, Forecast | Class A Common Stock | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Cash from sale of stock | $ 30,000,000 |