Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 04, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
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 | |
Entity Common Stock, Shares Outstanding | 22,289,177 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 18,870 | $ 23,264 |
Accounts receivable: | ||
Oil, natural gas, and natural gas liquids revenues | 14,604 | 13,529 |
Joint interest billings and other | 1,276 | 4,924 |
Prepaid expenses and other current assets | 718 | 498 |
Current derivative asset | 19 | 3,694 |
Total current assets | 35,487 | 45,909 |
Oil and gas properties, successful efforts method: | ||
Proved properties | 340,086 | 283,644 |
Unproved properties | 59,724 | 34,609 |
Total oil and gas properties | 399,810 | 318,253 |
Accumulated depreciation, depletion, and amortization | (130,776) | (119,920) |
Net oil and gas properties | 269,034 | 198,333 |
Other noncurrent assets: | ||
Goodwill | 20,568 | 17,532 |
Office and other equipment, less accumulated depreciation of $1,315 and $1,028 at June 30, 2016 and December 31, 2015 | 1,705 | 1,934 |
Other noncurrent assets | 1,183 | 1,236 |
TOTAL ASSETS | 327,977 | 264,944 |
Current liabilities: | ||
Accounts payable | 10,493 | 11,580 |
Accrued expenses | 9,266 | 12,975 |
Revenues and royalties payable | 7,795 | 8,576 |
Current porting of long-term debt | 1,554 | |
Current derivative liability | 1,463 | |
Advances | 655 | 15,447 |
Total current liabilities | 31,226 | 48,578 |
Noncurrent liabilities: | ||
Long-term debt | 13,505 | 11,191 |
Asset retirement obligations | 5,597 | 5,075 |
Noncurrent derivative liability | 1,122 | |
Deferred tax liability | 664 | |
Other noncurrent liabilities | 198 | 227 |
Total noncurrent liabilities | 21,086 | 16,493 |
Commitments and Contingencies (Note 10) | ||
Equity: | ||
Preferred stock, $0.001 par value, 20,000,000 shares authorized; none issued or outstanding | ||
Common stock, $0.001 par value, 100,000,000 shares authorized; 22,289,177 and 13,835,128 shares issued and outstanding at June 30, 2016 and December 31, 2015 | 23 | 14 |
Additional paid-in capital | 451,462 | 358,086 |
Accumulated deficit | (175,360) | (157,767) |
Treasury stock, 15,357 shares at June 30, 2016 and December 31, 2015 | (460) | (460) |
Total equity | 275,665 | 199,873 |
TOTAL LIABILITIES AND EQUITY | $ 327,977 | $ 264,944 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Office and other equipment, accumulated depreciation | $ 1,315 | $ 1,028 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 22,289,177 | 13,835,128 |
Common stock, shares outstanding | 22,289,177 | 13,835,128 |
Treasury stock, shares | 15,357 | 15,357 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Oil, natural gas, and natural gas liquids revenues: | ||||
Oil | $ 8,097 | $ 12,163 | $ 13,636 | $ 21,201 |
Natural gas | 1,016 | 1,982 | 1,959 | 3,512 |
Natural gas liquids | 664 | 813 | 992 | 1,487 |
Total oil, natural gas, and natural gas liquids revenues | 9,777 | 14,958 | 16,587 | 26,200 |
Gathering income | 33 | 95 | 87 | 173 |
Gain on sales of oil and gas properties, net | 1,680 | 1,680 | ||
Total revenues | 9,810 | 16,733 | 16,674 | 28,053 |
Production costs: | ||||
Lease operating expense | 3,201 | 4,239 | 6,267 | 8,613 |
Severance taxes | 514 | 746 | 896 | 1,376 |
Rig idle and contract termination expense | 3,790 | 5,059 | ||
Depreciation, depletion, and amortization | 5,598 | 8,674 | 11,103 | 14,598 |
Re-engineering and workovers | 306 | 167 | 581 | 286 |
Exploration expense | 142 | 5 | 142 | |
General and administrative expense | 2,273 | 2,484 | 5,471 | 5,055 |
General and administrative expense - stock-based compensation | 561 | 561 | ||
Total operating costs and expenses | 16,243 | 16,452 | 29,943 | 30,070 |
(Loss) income from operations | (6,433) | 281 | (13,269) | (2,017) |
OTHER INCOME (EXPENSE) | ||||
Interest expense, net | (370) | (169) | (593) | (338) |
Net loss on derivative contracts | (4,228) | (1,318) | (3,463) | (644) |
Other income (expense), net | 45 | 163 | (82) | 257 |
Total other income (expense) | (4,553) | (1,324) | (4,138) | (725) |
Loss before income taxes | (10,986) | (1,043) | (17,407) | (2,742) |
Income tax expense (benefit) | 186 | (295) | 186 | (880) |
Net loss | $ (11,172) | $ (748) | $ (17,593) | $ (1,862) |
Net loss per common share: | ||||
Basic | $ (0.69) | $ (0.05) | $ (1.17) | $ (0.13) |
Diluted | $ (0.69) | $ (0.05) | $ (1.17) | $ (0.13) |
Weighted average common shares outstanding: | ||||
Basic | 16,121,568 | 13,835,128 | 14,978,348 | 13,835,128 |
Diluted | 16,121,568 | 13,835,128 | 14,978,348 | 13,835,128 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Equity (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands | Total | Lynden Arrangement [Member] | Common Stock [Member] | Common Stock [Member]Lynden Arrangement [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member]Lynden Arrangement [Member] | Accumulated Deficit [Member] | Treasury Stock [Member] |
Beginning Balance, amount at Dec. 31, 2015 | $ 199,873 | $ 14 | $ 358,086 | $ (157,767) | $ (460) | |||
Beginning Balance, shares at Dec. 31, 2015 | 13,835,128 | (15,357) | ||||||
Common stock issued, net of offering costs | 47,125 | $ 5 | 47,120 | |||||
Common stock issued, net of offering costs, shares | 4,753,770 | |||||||
Stock-based compensation expense | 561 | 561 | ||||||
Stock issued during period for acquisitions | $ 45,699 | $ 4 | $ 45,695 | |||||
Stock issued during period for acquisitions, shares | 3,700,279 | |||||||
Net loss | (17,593) | (17,593) | ||||||
Ending Balance, amount at Jun. 30, 2016 | $ 275,665 | $ 23 | $ 451,462 | $ (175,360) | $ (460) | |||
Ending Balance, shares at Jun. 30, 2016 | 22,289,177 | (15,357) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Statement Of Stockholders Equity [Abstract] | |
Common stock issued, offering costs | $ 2.7 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (17,593,000) | $ (1,862,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, depletion, and amortization | 11,103,000 | 14,598,000 |
Unrealized loss on derivative contracts | 6,260,000 | 3,081,000 |
Rig idle and termination expense | 5,059,000 | |
Accretion of asset retirement obligations | 261,000 | 282,000 |
Stock-based compensation | 561,000 | |
Deferred income taxes | (871,000) | |
Amortization of deferred financing costs | 142,000 | 130,000 |
Settlement of asset retirement obligations | (46,000) | |
Gain on sale of assets | (1,680,000) | |
Changes in assets and liabilities: | ||
Decrease in accounts receivable | 4,414,000 | 4,397,000 |
(Increase) decrease in prepaid expenses and other | (132,000) | 427,000 |
Decrease in accounts payable and accrued expenses | (6,634,000) | (18,356,000) |
Decrease in revenue and royalties payable | (780,000) | (2,895,000) |
Decrease in advances | (14,792,000) | (7,566,000) |
Net cash used in operating activities | (12,131,000) | (10,361,000) |
Cash flows from investing activities: | ||
Lynden Arrangement, net of cash acquired | (31,334,000) | |
Acquisitions of oil and gas property | (5,430,000) | |
Additions to oil and gas property and equipment | (6,749,000) | (42,888,000) |
Additions to other property and equipment | (44,000) | (279,000) |
Proceeds from sales of oil and gas properties | 3,506,000 | |
Net cash used in investing activities | (38,127,000) | (45,091,000) |
Cash flows from financing activities: | ||
Proceeds from borrowings | 36,597,000 | |
Repayment of borrowings | (37,788,000) | |
Issuance of common stock, net of offering costs of $2.7 million | 47,125,000 | |
Deferred financing costs | (70,000) | (125,000) |
Net cash provided by (used in) financing activities | 45,864,000 | (125,000) |
Net decrease in cash and cash equivalents | (4,394,000) | (55,577,000) |
Cash and cash equivalents at beginning of period | 23,264,000 | 100,447,000 |
Cash and cash equivalents at end of period | 18,870,000 | 44,870,000 |
Cash paid for: | ||
Interest | 416,000 | 175,000 |
Non-cash investing and financing activities: | ||
Common stock issued for Lynden Arrangement | 45,698,000 | |
Asset retirement obligations | $ 94,000 | $ 91,000 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Statement Of Cash Flows [Abstract] | ||
Issuance of common stock, offering costs | $ 2.7 | $ 2.7 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 1. Basis of Presentation and Summary of Significant Accounting Policies Earthstone Energy, Inc., a Delaware corporation (“Earthstone” or the “Company”) is an independent oil and gas exploration and production company focused on the acquisition, development, exploration and production of onshore, crude oil and natural gas reserves, with a current focus on the Eagle Ford trend and Midland Basin in Texas and the Williston Basin of North Dakota and Montana. The accompanying Unaudited Condensed Consolidated Financial Statements of Earthstone and its wholly-owned subsidiaries, which we refer to as “we,” “our” or “us,” have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. 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, 2015 is derived from the audited consolidated financial statements at that date. The preparation of financial statements in conformity with the generally accepted accounting principles of the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. For further information, see Note 2 Interim period results are not necessarily indicative of results of operations or cash flows for the full year and accordingly, certain information normally included in financial statements and the accompanying notes prepared in accordance with GAAP, has been condensed or omitted. These financial statements should be read in conjunction with the 2015 Form 10-K, and the Company’s other filings with the SEC. Recently Issued Accounting Standards Standards adopted in 2016 Debt Issuance Costs – In April 2015, the Financial Accounting Standards Board (“FASB”) issued updated guidance which changes the presentation of debt issuance costs in the financial statements. Under this updated guidance, debt issuance costs are presented on the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. In August 2015, the FASB subsequently issued a clarification as to the handling of debt issuance costs related to line-of-credit arrangements that allows the presentation of these costs as an asset. The standards update was effective for interim and annual periods beginning after December 15, 2015. The Company adopted this standards update, as required, effective January 1, 2016. The adoption of this standards update did not affect the Company’s method of amortizing debt issuance costs and did not have a material impact on its Condensed Consolidated Financial Statements. Measurement-Period Adjustments – In September 2015, the FASB issued updated guidance that eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. The updated guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The standards update was effective prospectively for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this standard update, as required, effective January 1, 2016, which did not have a material impact on its Condensed Consolidated Financial Statements. Stock Compensation - In March 2016, the FASB issued updated guidance on share-based payment accounting. The standards update is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The standards update is effective for interim and annual periods beginning after December 15, 2016 with early adoption permitted. The Company elected to early-adopt this standards update as of April 1, 2016 in connection with its initial grant of awards under the Company’s 2014 Long Term Incentive Plan. The Company has elected to record the impact of forfeitures on compensation cost as they occur. The Company is also permitted to withhold income taxes upon settlement of equity-classified awards at up to the maximum statutory tax rates. There was no retrospective adjustment as the Company did not have any outstanding equity awards prior to adoption. See . Standards not yet adopted Revenue Recognition - In May 2014, the FASB issued updated guidance for recognizing revenue from contracts with customers. The objective of this guidance is to establish principles for reporting information about the nature, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and change in judgments, and assets recognized from the costs to obtain or fulfill a contract. In August 2015, the FASB issued guidance deferring the effective date of this standards update for one year, to be effective for interim and annual periods beginning after December 15, 2017. In March 2016, the FASB issued guidance which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued further guidance on identifying performance obligations and clarification of the licensing implementation guidance. Early adoption of this updated guidance is permitted as of the original effective date of December 31, 2016. The Company expects to adopt this standards update, as required, beginning with the first quarter of 2018. The Company is in the process of evaluating the impact, if any, of the adoption of this guidance on its Condensed Consolidated Financial Statements. Leases – In February 2016, the FASB issued updated guidance on accounting for leases. This 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 standards update, as required, beginning with the first quarter of 2019. The Company is in the process of evaluating the impact, if any, of the adoption of this guidance on its Condensed Consolidated Financial Statements. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Note 2. Acquisitions and Divestitures Lynden Arrangement In May 2016, the Company acquired Lynden Energy Corp. (“Lynden”) in an all-stock transaction. The acquisition was effected through an arrangement (the “Arrangement”) instead of a merger because Lynden is incorporated in British Columbia, Canada. The Company acquired all the outstanding shares of common stock of Lynden through a newly formed Company subsidiary, with Lynden surviving in the transaction as a wholly-owned subsidiary of the Company. The Company issued 3,700,279 shares of its Common Stock to the holders of Lynden common stock in the transaction. The Arrangement was accounted for as a business combination in accordance with FASB Topic ASC 805, Business Combinations 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 allocation is still preliminary with respect to final tax amounts and certain accruals and includes the use of estimates based on information that was available to management at the time these condensed consolidated financial statements were prepared. Additional changes to the purchase price allocation may results in a corresponding change to goodwill in the period of the change. The following table summarizes the consideration transferred, fair value of assets acquired and liabilities assumed and resulting goodwill ( in thousands, except share and share price amount Consideration: Shares of Earthstone Common Stock issued in the Arrangement 3,700,279 Closing price of Earthstone Common Stock as of May 18, 2016 $ 12.35 Total consideration to Lynden shareholders $ 45,698 Fair Value of Liabilities Assumed: Credit facility (4) $ 36,597 Current liabilities 1,837 Deferred tax liability (1) 664 Asset retirement obligations 167 Total consideration plus liabilities assumed $ 84,963 Fair Value of Assets Acquired: Cash and cash equivalents (4) $ 5,263 Current assets 1,948 Proved oil and gas properties (2)(3) 48,116 Unproved oil and gas properties 26,600 Amount attributable to assets acquired $ 81,927 Goodwill (5) $ 3,036 1. This amount represents the recorded book value to tax difference in the oil and natural gas properties as of the date of the Arrangement on a tax effected basis of approximately 34.5%. 2. The weighted average commodity prices utilized in the determination of the fair value of oil and natural gas properties was $64.73 per barrel of oil, $3.68 per Mcf of natural gas and $19.34 per barrel of oil equivalent for natural gas liquids, after adjustments for transportation fees and regional price differentials. 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 4 Fair Value Measurements, 4. Concurrent with the Arrangement, the Company paid off the outstanding balance of $36.6 million on the Lynden credit facility. The settlement of the debt and the cash acquired is equal to the $31.3 million net cash outflow associated with the Arrangement. 5 Goodwill was determined to be the excess consideration exchanged over the fair value of the net assets of Lynden on May 18, 2016. The goodwill resulted from the expected synergies of the management team and balance sheet of the Company combined with the key assets acquired in the Midland Basin area. The goodwill recognized will not be deductible for tax purposes. The following unaudited supplemental pro forma condensed results of operations present consolidated information as though the Arrangement had been completed as of January 1, 2015. The unaudited supplemental pro forma financial information was derived from the historical consolidated and combined statements of operations for Lynden and the Company and adjusted to include: (i) depletion expense applied to the adjusted basis of the properties acquired, (ii) accretion expense associated with the asset retirement obligations recorded using the Company’s assumptions about the future liabilities and (iii) interest expense based on the combined debt of the Company post- acquisition. 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 M Six Months Ended June 30, 2016 2015 2016 2015 (Unaudited) Revenue $ 12,737 $ 21,299 $ 22,084 $ 36,319 (Loss) income before taxes $ (10,190 ) $ 415 $ (16,904 ) $ (1,556 ) Net (loss) income available to Earthstone common stockholders $ (10,847 ) $ 207 $ (17,796 ) $ (1,085 ) Pro Forma net (loss) income per common share: Basic and diluted $ (0.62 ) $ 0.01 $ (1.01 ) $ (0.06 ) Beginning at the Effective Time, for both the three and six months ended June 30, 2016, the Company recognized $1.4 million of oil, natural gas and natural gas liquids sales related to the Lynden assets and $1.0 million of operating expenses, inclusive of depletion. During the three and six months ended June 30, 2016, the Company recognized $0.3 million and $0.7 million, respectively, of non-recurring transaction costs related to this acquisition. Other Acquisitions In June 2015, the Company acquired a 50% operated working interests in approximately 1,000 gross acres in southern Gonzales County, Texas. The acreage, acquired for future Eagle Ford development, is 100% held-by-production by two gross Austin Chalk wells with gross production of 44 barrels of oil equivalent per day as of the time of acquisition. Also during June 2015, the Company acquired 400 gross acres in northern Karnes County, Texas, which is adjacent to the 1,000 gross acres in southern Gonzales County, Texas. Subsequent trades in Karnes County reduced the gross acreage from 400 to 350 gross acres (117 net acres). The following table summarizes the consideration paid to acquire the properties and the estimated fair values of the assets acquired and liabilities assumed (in thousands) Purchase price $ 4,066 Estimated fair value of assets acquired: Proved oil and natural gas properties $ 588 Unproved oil and natural gas properties 3,496 Total assets acquired $ 4,084 Estimated fair value of liabilities assumed: Asset retirement obligations $ 13 Other liabilities 5 Total liabilities assumed $ 18 Consideration paid $ 4,066 Pro forma financial information, assuming the acquisition occurred at the beginning of each period presented, has not been presented because the effect on the Company’s results for each of those periods is not material. The results of the above acquisitions have been included in the Company’s Condensed Consolidated Financial Statements since the date of each acquisition. In June 2015, the Company acquired additional acreage and working interest in wells located within existing Bakken spacing units primarily located in the Banks Field of McKenzie County, North Dakota, for $1.4 million plus purchase price adjustments of $2.0 million for the revenues, net of production taxes and operating expenses and capital costs incurred for the existing wells. The acquisition included 164 net acres which allowed the Company to increase its working interest in approximately 41 producing wells and 21 wells that are in the drilling and completion phase. In August 2015, the Company acquired a 33% working interest in approximately 1,650 gross acres, in southern Gonzales County, Texas for $3.3 million. Divestitures In April 2015, the Company sold substantially all of its Louisiana properties located primarily in DeSoto and Caddo Parishes for cash consideration of $3.4 million, recording a gain of $1.6 million. The effective date of the transaction was March 1, 2015. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 3. Derivative Financial Instruments The Company is exposed to certain risks relating to its ongoing business operations, such as commodity price risk. Derivative contracts are utilized to economically hedge the Company’s exposure to price fluctuations and reduce the variability in the Company’s cash flows associated with anticipated sales of future oil and natural gas production. The Company follows FASB ASC Topic 815, Derivatives and Hedging, The Company’s crude oil and natural gas derivative positions consist of swaps. Swaps are designed so that the Company receives or makes payments based on a differential between fixed and variable prices for crude oil and natural gas. The Company has elected to not designate any of its derivative contracts for hedge accounting. Accordingly, the Company records the net change in the mark-to-market valuation of these derivative contracts, as well as all payments and receipts on settled derivative contracts, in “ Net loss on derivative contracts With an individual derivative counterparty, the Company may have multiple hedge positions that expire at various points in the future and result in fair value asset and liability positions. At the end of each reporting period, those positions are offset to a single fair value asset or liability for each commodity by counterparty, and the netted balance is reflected in the Condensed Consolidated Balance Sheets as an asset or a liability. 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 June 30, 2016: Period Instrument Commodity Volume in MMBtu / Bbls Fixed Price July 2016 - December 2018 Swap Crude Oil 150,000 $ 51.45 January 2017 - December 2017 Swap Crude Oil 120,000 $ 46.75 July 2016 - December 2016 Swap Crude Oil 60,000 $ 45.17 January 2018 - December 2018 Swap Crude Oil 60,000 $ 50.10 July 2016 - December 2016 Swap Crude Oil 60,000 $ 48.10 January 2017 - December 2017 Swap Crude Oil 60,000 $ 49.30 July 2016 - March 2017 Swap Crude Oil 45,000 $ 42.30 July 2016 - March 2017 Swap Crude Oil 45,000 $ 42.30 July 2016 - December 2016 Swap Crude Oil 30,000 $ 60.80 July 2016 - December 2016 Swap Crude Oil 30,000 $ 60.80 January 2017 - December 2017 Swap Natural Gas 480,000 $ 2.785 July 2016 - December 2016 Swap Natural Gas 420,000 $ 2.530 July 2016 - December 2017 Swap Natural Gas 360,000 $ 2.975 January 2017 - December 2017 Swap Natural Gas 240,000 $ 2.860 July 2016 - December 2016 Swap Natural Gas 60,000 $ 2.380 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) June 30, 2016 December 31, 2015 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 Current derivative assets $ 629 $ (610 ) $ 19 $ 3,694 $ — $ 3,694 Commodity contracts Current derivative liabilities $ (2,073 ) $ 610 $ (1,463 ) $ — $ — $ — Commodity contracts Noncurrent derivative liabilities $ (1,122 ) $ — $ (1,122 ) $ — $ — $ — The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivative instruments in the Company’s Condensed Consolidated Statements of Operations (in thousands) Three Months Ended June 30, Six Months Ended June 30, Derivatives not designated as hedging contracts under ASC Topic 815 Statement of Operations Location 2016 2015 2016 2015 Unrealized loss on commodity contracts Net loss on derivative contracts $ (5,034 ) $ (2,261 ) $ (6,260 ) $ (3,081 ) Realized gain on commodity contracts Net loss on derivative contracts $ 806 $ 943 $ 2,797 $ 2,437 $ (4,228 ) $ (1,318 ) $ (3,463 ) $ (644 ) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 4. Fair Value Measurements FASB ASC Topic 820, Fair Value Measurements and Disclosure The three-level fair value hierarchy for disclosure of fair value measurements defined by ASC Topic 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 six months ended June 30, 2016. 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) June 30, 2016 Level 1 Level 2 Level 3 Total Financial assets Current derivative assets $ — $ 19 $ — $ 19 Total financial assets $ — $ 19 $ — $ 19 Financial liabilities Current derivative liabilities $ — $ (1,463 ) $ — $ (1,463 ) Noncurrent derivative liabilities — (1,122 ) — (1,122 ) Total financial liabilities $ — $ (2,585 ) $ — $ (2,585 ) December 31, 2015 Financial assets Current derivative assets $ — $ 3,694 $ — $ 3,694 Total financial assets $ — $ 3,694 $ — $ 3,694 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 on its credit facility has a floating interest rate structure, therefore its carrying amounts approximates its fair value. 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. Fair value measurements of certain assets acquired and certain liabilities assumed in business combinations are based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired properties is based on market and cost approaches. Asset retirement obligation estimates are derived from historical costs as well as management’s expectations of future cost environments. As there is no corroborating market activity to support the assumptions, the Company has designated these liabilities as Level 3 as well. The Company did not recognize any impairment write-downs with respect to its oil and natural gas properties or goodwill during the six months ended June 30, 2016 or 2015. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Equity | Note 5. Equity Common Stock Offering In June 2016, the Company completed a public offering of 4,753,770 shares of common stock (including 253,770 shares purchased pursuant to the underwriter’s overallotment option), at an issue price of $10.50 per share. The Company received net proceeds from this offering of $47.1 million, after deducting underwriters’ fees and offering expenses of $2.7 million. The Company used a portion of the net proceeds from the offering to repay outstanding indebtedness under its revolving credit facility with the remainder held in cash for general corporate purposes. Earnings (Loss) Per Share The following table presents the reconciliation of the numerator and denominator for calculating earnings per share ( in thousands, except share and per share amounts Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Basic EPS: Net loss $ (11,172 ) $ (748 ) $ (17,593 ) $ (1,862 ) Weighted average common shares outstanding 16,121,568 13,835,128 14,978,348 13,835,128 Basic loss per common share $ (0.69 ) $ (0.05 ) $ (1.17 ) $ (0.13 ) Diluted EPS: Net loss $ (11,172 ) $ (748 ) $ (17,593 ) $ (1,862 ) Weighted average common shares outstanding 16,121,568 13,835,128 14,978,348 13,835,128 Add: Dilutive effect of restricted stock units — — — — Diluted weighted average common shares outstanding 16,121,568 13,835,128 14,978,348 13,835,128 Diluted loss per common share $ (0.69 ) $ (0.05 ) $ (1.17 ) $ (0.13 ) For the three and six months ended June 30, 2016, the Company excluded 37,334 and 18,480 shares, respectively for the dilutive effect of restricted stock units in calculating diluted earnings per share as the effect was anti-dilutive due to the net loss incurred for these periods. For the three and six months ended June 30, 2015, there were no restricted stock units issued or outstanding under the Company’s long-term incentive plan. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | Note 6. Stock-Based Compensation Incentive Plan In December 2014, our stockholders approved and adopted, effective on December 19, 2014, the 2014 Long-Term Incentive Plan (the “2014 Plan”), which remains in effect until December 18, 2024. In October 2015, the 2014 Plan was amended to increase the number of shares of our common stock authorized to be issued. Under the 2014 Plan, the board of directors is authorized to grant stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance units, performance bonuses, stock awards and other incentive awards to the Company’s employees or those of its subsidiaries or affiliates as well as persons rendering consulting or advisory services and non-employee directors, subject to the conditions set forth in the 2014 Plan. The 2014 Plan currently provides that a maximum of 1,500,000 shares of the Company’s common stock may be issued in conjunction with awards granted under the 2014 Plan. Awards that are forfeited or awards settled in cash are available for future issuance under the 2014 Plan. As of June 30, 2016 727,500 shares of common stock remained available for issuance under the 2014 Plan. The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. Restricted Stock Units Restricted stock units (“RSUs”) represents a contingent right to receive one share of the Company’s common stock and vest upon satisfaction of the requisite service conditions. Prior to the RSUs vesting, recipients have no ownership interest in the Company’s common stock, no rights to vote and no rights to receive any dividends. The RSUs grant date fair values are based on the Company’s closing common stock price at the date of grant. Expense is recognized on a straight-line basis over the requisite service period of the entire award ensuring compensation cost recognized is consistent with the number of awards vested. Forfeitures are accounted for as they occur through reversal of the previously recognized expense on the awards that were forfeited during the period. During the six months ended June 30, 2016, the Company granted 772,500 RSUs with a weighted average grant date fair value of $12.55. The RSUs vest over a 19 or 34 month period with one-third of the award vesting at the end of either seven or 10 months and the remaining two-thirds vesting monthly thereafter. As of June 30, 2016, all 772,500 RSUs were unvested. For both the three and six months ended June 30, 2016, the Company recognized $0.6 million of stock-based compensation expense. There was no stock-based compensation expense recognized for the comparable periods in 2015. At June 30, 2016, the Company had $9.1 million of unrecognized compensation expense related to unvested RSUs to be recognized over a weighted-average period of 1.5 years. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Note 7. Debt Credit Facility In December 2014, the Company entered into a credit agreement providing for a $500.0 million four-year senior secured revolving credit facility. At June 30, 2016, the borrowing base under the credit agreement was $75.0 million and is subject to redetermination during May and November of each year. As of June 30, 2016, outstanding borrowings under the credit agreement bear interest at a rate elected by the Company that is equal to a base rate (which is equal to the greater of the prime rate, the Federal Funds effective rate plus 0.50%, and 1-month LIBOR plus 1.00%) or LIBOR, in each case plus the applicable margin. The applicable margin ranges from 1.25% to 2.25% for base rate loans and from 2.25% to 3.25% for LIBOR loans, in each case depending on the amount of the loan outstanding in relation to the borrowing base. The Company is obligated to pay a quarterly commitment fee of 0.50% per year on the unused portion of the borrowing base, which fee is also dependent on the amount of the loan outstanding in relation to the borrowing base. The Company is also required to pay customary letter of credit fees. Principal amounts outstanding under the credit facility are due and payable in full at maturity on December 19, 2018. All of the obligations under the credit agreement, and the guarantees of those obligations, are secured by substantially all of the Company’s assets. As of June 30, 2016, the Company had a $75.0 million borrowing base, with $10.0 million of debt outstanding, (bearing an interest rate of 2.715%), $0.2 million of letters of credit outstanding, resulting in $64.8 million of borrowing base availability under its credit facility. The credit facility contains a number of customary covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability to incur additional indebtedness, create liens on asset, pay dividends, and repurchase its capital stock. In addition, the Company is required to maintain certain financial ratios, including a minimum modified current ratio which includes the available borrowing base of 1.0 to 1.0 and a maximum annualized quarterly leverage ratio of 4.0 to 1.0. The Company is also required to submit an audited annual report 120 days after the end of each fiscal period. As of June 30, 2016 and December 31, 2015, the Company was in compliance with these covenants under the credit facility. Interest expense for the three and six months ended June 30, 2016, includes amortization of deferred financing costs of $72,000 and $0.1, million, respectively. Interest expense for the three and six months ended June 30, 2015, includes amortization of deferred financing costs of $65,000 and $0.1, million, respectively. As of June 30, 2016 and December 31, 2015, $0.8 million of costs, net of amortization, associated with the credit facility have been capitalized. These costs are included in Other noncurrent assets Promissory Note In July 2016, the Company issued a $5.1 million unsecured promissory note to a drilling rig contractor in settlement of rig idle charges and the termination amount of the contract. These expenses from late January 2016 through June 30, 2016 were recognized in the Company’s Condensed Consolidated Statement of Operations in the line item Rig idle and contract termination expense |
Asset Retirement Obligations
Asset Retirement Obligations | 6 Months Ended |
Jun. 30, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Note 8. Asset Retirement Obligations The Company has asset retirement obligations associated with the future plugging and abandonment of oil and natural gas properties and related facilities. The accretion of the asset retirement obligation is included in “Lease operating expense” The following table summarizes the Company’s asset retirement obligation transactions recorded during the six months ended June 30, 2016 (in thousands) 2016 Asset retirement obligations at December 31, 2015 $ 5,075 Liabilities incurred 106 Accretion expense 261 Acquisitions 167 Revision of estimates (12 ) Asset retirement obligations at June 30, 2016 $ 5,597 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. Income Taxes For both the three and six months ended June 30, 2016, the Company recorded $0.2 million of income tax expense related to its Lynden subsidiaries which include Lynden USA, Inc., a company with taxable income in the United States and its Canadian parent company, Lynden Energy, Inc. (collectively the “Lynden subsidiaries”). The Company’s corporate structure requires the filing of two separate consolidated U.S. Federal income tax returns. Taxable income of Earthstone, excluding the Lynden subsidiaries cannot be offset by tax attributes, including net operating losses of the Lynden subsidiaries, nor can taxable income of the Lynden subsidiaries be offset by tax attributes of Earthstone, excluding the Lynden subsidiaries. The effective tax rate for both the three and six month ended June 30, 2016 for the Lynden subsidiaries was 34.5%, which included approximately 0.5% for the estimated portion of the subsidiaries income subject to state income tax. The Company, excluding the Lynden subsidiaries, recorded no income tax expense or benefit because property impairments recorded during the year ended December 31, 2015 reduced the book value of the Company’s properties below their tax basis requiring the Company to record a net deferred tax asset. Because the future realization of this deferred tax asset could not be assured, the Company recorded a 100% valuation allowance against its deferred tax asset. The pre-tax loss recorded for the three and six months ended June 30, 2016, increased the Company’s net deferred tax asset but did not result in a recognized tax benefit because the realization of the Company’s net tax asset still cannot be assured, therefore, the valuation allowance also was increased and offset the tax benefit that would have resulted from the net operating loss. For the three and six months ended June 30, 2015, the Company recorded an income tax benefit of $0.3 million and $0.9 million, respectively, all of which was deferred. The effective tax rate for the three and six month ended June 30, 2015 was 28% and 32 0.7 The Company provides for deferred income taxes on the difference between the tax basis of an asset or liability and its carrying amount in the Condensed Consolidated Financial Statements in accordance with FASB ASC Topic 740, Income Taxes |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies In the course of its business affairs and operations, the Company is subject to possible loss contingencies arising from federal, state, and local environmental, health and safety laws and regulations and third party litigation. Commitments As a part of the 2013 Eagle Ford Acquisition, the Company and its primary working interest partner in the area ratified several long-term natural gas purchasing and natural gas processing contracts. As is customary in the industry, the Company has reserved gathering and processing capacity in a pipeline. In one of the contracts, the Company and its primary working interest partner have a volume commitment, whereby the owner of the pipeline is paid a fee of $0.45 per MMBtu to hold 10,000 MMBtu per day of capacity. Since the time of the acquisition, the volume commitment has not been met. The rate and terms under this purchasing and processing contract expire on June 1, 2021. As of June 30, 2016, the Company’s share of the remaining commitment on this contract is approximately $4.1 million. Contingencies Environmental The Company’s operations are subject to risks normally associated with the exploration for and the production of oil and natural gas, including blowouts, fires, and environmental risks such as oil spills or natural gas leaks that could expose the Company to liabilities associated with these risks. In the Company’s acquisition of existing or previously drilled well bores, the Company may not be aware of prior environmental safeguards, if any, that were taken at the time such wells were drilled or during such time the wells were operated. The Company maintains comprehensive insurance coverage that it believes is adequate to mitigate the risk of any adverse financial effects associated with these risks. However, should it be determined that a liability exists with respect to any environmental cleanup or restoration, the liability to cure such a violation could still accrue to the Company. No claim has been made, nor is the Company aware of any liability which the Company may have, as it relates to any environmental cleanup, restoration, or the violation of any rules or regulations relating thereto. 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. In July 2015, EF Non-Op, LLC, a subsidiary of the Company, filed suit in the 125 th EF Non-Op, LLC vs. BHP Billiton Petroleum Properties (N.A.), LP (F/K/A Petrohawk Properties, LP), |
Basis of Presentation and Sum19
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Standards adopted in 2016 Debt Issuance Costs – In April 2015, the Financial Accounting Standards Board (“FASB”) issued updated guidance which changes the presentation of debt issuance costs in the financial statements. Under this updated guidance, debt issuance costs are presented on the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. In August 2015, the FASB subsequently issued a clarification as to the handling of debt issuance costs related to line-of-credit arrangements that allows the presentation of these costs as an asset. The standards update was effective for interim and annual periods beginning after December 15, 2015. The Company adopted this standards update, as required, effective January 1, 2016. The adoption of this standards update did not affect the Company’s method of amortizing debt issuance costs and did not have a material impact on its Condensed Consolidated Financial Statements. Measurement-Period Adjustments – In September 2015, the FASB issued updated guidance that eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. The updated guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The standards update was effective prospectively for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this standard update, as required, effective January 1, 2016, which did not have a material impact on its Condensed Consolidated Financial Statements. Stock Compensation - In March 2016, the FASB issued updated guidance on share-based payment accounting. The standards update is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The standards update is effective for interim and annual periods beginning after December 15, 2016 with early adoption permitted. The Company elected to early-adopt this standards update as of April 1, 2016 in connection with its initial grant of awards under the Company’s 2014 Long Term Incentive Plan. The Company has elected to record the impact of forfeitures on compensation cost as they occur. The Company is also permitted to withhold income taxes upon settlement of equity-classified awards at up to the maximum statutory tax rates. There was no retrospective adjustment as the Company did not have any outstanding equity awards prior to adoption. See . Standards not yet adopted Revenue Recognition - In May 2014, the FASB issued updated guidance for recognizing revenue from contracts with customers. The objective of this guidance is to establish principles for reporting information about the nature, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and change in judgments, and assets recognized from the costs to obtain or fulfill a contract. In August 2015, the FASB issued guidance deferring the effective date of this standards update for one year, to be effective for interim and annual periods beginning after December 15, 2017. In March 2016, the FASB issued guidance which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued further guidance on identifying performance obligations and clarification of the licensing implementation guidance. Early adoption of this updated guidance is permitted as of the original effective date of December 31, 2016. The Company expects to adopt this standards update, as required, beginning with the first quarter of 2018. The Company is in the process of evaluating the impact, if any, of the adoption of this guidance on its Condensed Consolidated Financial Statements. Leases – In February 2016, the FASB issued updated guidance on accounting for leases. This 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 standards update, as required, beginning with the first quarter of 2019. The Company is in the process of evaluating the impact, if any, of the adoption of this guidance on its Condensed Consolidated Financial Statements. |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Lynden Arrangement [Member] | |
Business Acquisition [Line Items] | |
Schedule of Consideration Paid to Acquire Net Assets and Estimated Values of Net Assets | The following table summarizes the consideration transferred, fair value of assets acquired and liabilities assumed and resulting goodwill ( in thousands, except share and share price amount Consideration: Shares of Earthstone Common Stock issued in the Arrangement 3,700,279 Closing price of Earthstone Common Stock as of May 18, 2016 $ 12.35 Total consideration to Lynden shareholders $ 45,698 Fair Value of Liabilities Assumed: Credit facility (4) $ 36,597 Current liabilities 1,837 Deferred tax liability (1) 664 Asset retirement obligations 167 Total consideration plus liabilities assumed $ 84,963 Fair Value of Assets Acquired: Cash and cash equivalents (4) $ 5,263 Current assets 1,948 Proved oil and gas properties (2)(3) 48,116 Unproved oil and gas properties 26,600 Amount attributable to assets acquired $ 81,927 Goodwill (5) $ 3,036 1. This amount represents the recorded book value to tax difference in the oil and natural gas properties as of the date of the Arrangement on a tax effected basis of approximately 34.5%. 2. The weighted average commodity prices utilized in the determination of the fair value of oil and natural gas properties was $64.73 per barrel of oil, $3.68 per Mcf of natural gas and $19.34 per barrel of oil equivalent for natural gas liquids, after adjustments for transportation fees and regional price differentials. 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 4 Fair Value Measurements, 4. Concurrent with the Arrangement, the Company paid off the outstanding balance of $36.6 million on the Lynden credit facility. The settlement of the debt and the cash acquired is equal to the $31.3 million net cash outflow associated with the Arrangement. 5 Goodwill was determined to be the excess consideration exchanged over the fair value of the net assets of Lynden on May 18, 2016. The goodwill resulted from the expected synergies of the management team and balance sheet of the Company combined with the key assets acquired in the Midland Basin area. The goodwill recognized will not be deductible for tax purposes. |
Schedule of Unaudited Pro forma Revenues and Expenses of Assets Acquired and Liabilities Assumed | The following unaudited supplemental pro forma condensed results of operations present consolidated information as though the Arrangement had been completed as of January 1, 2015. The unaudited supplemental pro forma financial information was derived from the historical consolidated and combined statements of operations for Lynden and the Company and adjusted to include: (i) depletion expense applied to the adjusted basis of the properties acquired, (ii) accretion expense associated with the asset retirement obligations recorded using the Company’s assumptions about the future liabilities and (iii) interest expense based on the combined debt of the Company post- acquisition. 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 M Six Months Ended June 30, 2016 2015 2016 2015 (Unaudited) Revenue $ 12,737 $ 21,299 $ 22,084 $ 36,319 (Loss) income before taxes $ (10,190 ) $ 415 $ (16,904 ) $ (1,556 ) Net (loss) income available to Earthstone common stockholders $ (10,847 ) $ 207 $ (17,796 ) $ (1,085 ) Pro Forma net (loss) income per common share: Basic and diluted $ (0.62 ) $ 0.01 $ (1.01 ) $ (0.06 ) |
Other Acquisitions [Member] | |
Business Acquisition [Line Items] | |
Schedule of Consideration Paid to Acquire Net Assets and Estimated Values of Net Assets | The following table summarizes the consideration paid to acquire the properties and the estimated fair values of the assets acquired and liabilities assumed (in thousands) Purchase price $ 4,066 Estimated fair value of assets acquired: Proved oil and natural gas properties $ 588 Unproved oil and natural gas properties 3,496 Total assets acquired $ 4,084 Estimated fair value of liabilities assumed: Asset retirement obligations $ 13 Other liabilities 5 Total liabilities assumed $ 18 Consideration paid $ 4,066 |
Derivative Financial Instrume21
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Outstanding Commodity Derivative Instruments | The Company had the following open crude oil and natural gas derivative contracts as of June 30, 2016: Period Instrument Commodity Volume in MMBtu / Bbls Fixed Price July 2016 - December 2018 Swap Crude Oil 150,000 $ 51.45 January 2017 - December 2017 Swap Crude Oil 120,000 $ 46.75 July 2016 - December 2016 Swap Crude Oil 60,000 $ 45.17 January 2018 - December 2018 Swap Crude Oil 60,000 $ 50.10 July 2016 - December 2016 Swap Crude Oil 60,000 $ 48.10 January 2017 - December 2017 Swap Crude Oil 60,000 $ 49.30 July 2016 - March 2017 Swap Crude Oil 45,000 $ 42.30 July 2016 - March 2017 Swap Crude Oil 45,000 $ 42.30 July 2016 - December 2016 Swap Crude Oil 30,000 $ 60.80 July 2016 - December 2016 Swap Crude Oil 30,000 $ 60.80 January 2017 - December 2017 Swap Natural Gas 480,000 $ 2.785 July 2016 - December 2016 Swap Natural Gas 420,000 $ 2.530 July 2016 - December 2017 Swap Natural Gas 360,000 $ 2.975 January 2017 - December 2017 Swap Natural Gas 240,000 $ 2.860 July 2016 - December 2016 Swap Natural Gas 60,000 $ 2.380 |
Summary of Gross and Net Information about Commodity 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) June 30, 2016 December 31, 2015 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 Current derivative assets $ 629 $ (610 ) $ 19 $ 3,694 $ — $ 3,694 Commodity contracts Current derivative liabilities $ (2,073 ) $ 610 $ (1,463 ) $ — $ — $ — Commodity contracts Noncurrent derivative liabilities $ (1,122 ) $ — $ (1,122 ) $ — $ — $ — |
Realized and Unrealized Gains and Losses from Commodity Derivative Instruments | The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivative instruments in the Company’s Condensed Consolidated Statements of Operations (in thousands) Three Months Ended June 30, Six Months Ended June 30, Derivatives not designated as hedging contracts under ASC Topic 815 Statement of Operations Location 2016 2015 2016 2015 Unrealized loss on commodity contracts Net loss on derivative contracts $ (5,034 ) $ (2,261 ) $ (6,260 ) $ (3,081 ) Realized gain on commodity contracts Net loss on derivative contracts $ 806 $ 943 $ 2,797 $ 2,437 $ (4,228 ) $ (1,318 ) $ (3,463 ) $ (644 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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) June 30, 2016 Level 1 Level 2 Level 3 Total Financial assets Current derivative assets $ — $ 19 $ — $ 19 Total financial assets $ — $ 19 $ — $ 19 Financial liabilities Current derivative liabilities $ — $ (1,463 ) $ — $ (1,463 ) Noncurrent derivative liabilities — (1,122 ) — (1,122 ) Total financial liabilities $ — $ (2,585 ) $ — $ (2,585 ) December 31, 2015 Financial assets Current derivative assets $ — $ 3,694 $ — $ 3,694 Total financial assets $ — $ 3,694 $ — $ 3,694 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of the Numerator and Denominator for Calculating Earnings Per Share | The following table presents the reconciliation of the numerator and denominator for calculating earnings per share ( in thousands, except share and per share amounts Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Basic EPS: Net loss $ (11,172 ) $ (748 ) $ (17,593 ) $ (1,862 ) Weighted average common shares outstanding 16,121,568 13,835,128 14,978,348 13,835,128 Basic loss per common share $ (0.69 ) $ (0.05 ) $ (1.17 ) $ (0.13 ) Diluted EPS: Net loss $ (11,172 ) $ (748 ) $ (17,593 ) $ (1,862 ) Weighted average common shares outstanding 16,121,568 13,835,128 14,978,348 13,835,128 Add: Dilutive effect of restricted stock units — — — — Diluted weighted average common shares outstanding 16,121,568 13,835,128 14,978,348 13,835,128 Diluted loss per common share $ (0.69 ) $ (0.05 ) $ (1.17 ) $ (0.13 ) |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 six months ended June 30, 2016 (in thousands) 2016 Asset retirement obligations at December 31, 2015 $ 5,075 Liabilities incurred 106 Accretion expense 261 Acquisitions 167 Revision of estimates (12 ) Asset retirement obligations at June 30, 2016 $ 5,597 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2016ashares | May 31, 2016USD ($)shares | Aug. 31, 2015USD ($)a | Jun. 30, 2015USD ($)aBoeWell | Apr. 30, 2015USD ($) | Jun. 30, 2016USD ($)a | Jun. 30, 2015USD ($)a | Jun. 30, 2016USD ($)a | Jun. 30, 2015USD ($)a | |
Business Acquisition [Line Items] | |||||||||
Common stock issued, net of offering costs, shares | shares | 4,753,770 | ||||||||
Sales of oil, natural gas and natural gas liquids recognized | $ 9,777 | $ 14,958 | $ 16,587 | $ 26,200 | |||||
Total consideration | $ 45,698 | ||||||||
Cash consideration | $ 3,400 | ||||||||
Gain (loss) on sale of properties | $ 1,600 | $ 1,680 | $ 1,680 | ||||||
Effective date of transaction | Mar. 1, 2015 | ||||||||
Southern Gonzales County [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Acquisition of operating interests | 33.00% | 50.00% | |||||||
Company acquired gross acres | a | 1,650 | 1,000 | 1,000 | 1,000 | |||||
Number of wells acquired | Well | 2 | ||||||||
Percentage of acres held for production | 100.00% | ||||||||
Gross production, barrels of oil equivalents per day | Boe | 44 | ||||||||
Working interest acquired | $ 3,300 | ||||||||
Northern Kames County [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Company acquired gross acres | a | 350 | 400 | 350 | 400 | 350 | 400 | |||
Net acres | a | 117 | 117 | 117 | ||||||
Banks Field of McKenzie County [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of wells acquired | Well | 41 | ||||||||
Total consideration | $ 1,400 | ||||||||
Purchase price adjustment for revenues, net for production taxes, operating expenses and capital costs | $ 2,000 | ||||||||
Net acres acquired | a | 164 | ||||||||
Number of drilling wells acquired | Well | 21 | ||||||||
Lynden Arrangement [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Common stock issued, net of offering costs, shares | shares | 3,700,279 | ||||||||
Sales of oil, natural gas and natural gas liquids recognized | $ 1,400 | $ 1,400 | |||||||
Operating expenses inclusive of depletion | 1,000 | 1,000 | |||||||
Material non-recurring transaction costs | $ 300 | $ 700 | |||||||
Total consideration | $ 45,698 |
Acquisitions and Divestitures26
Acquisitions and Divestitures - Schedule of Consideration Paid to Acquire Net Assets and Estimated Values of Net Assets (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 6 Months Ended | ||
May 31, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | ||||
Total consideration | $ 45,698 | |||
Fair Value of Assets Acquired: | ||||
Goodwill | $ 20,568 | $ 17,532 | ||
Lynden Arrangement [Member] | ||||
Business Acquisition [Line Items] | ||||
Shares of Earthstone Common Stock issued in the Arrangement | 3,700,279 | |||
Closing price of Earthstone Common Stock as of May 18, 2016 | $ 12.35 | |||
Total consideration | $ 45,698 | |||
Fair Value of Liabilities Assumed: | ||||
Credit facility | 36,597 | |||
Current liabilities | 1,837 | |||
Deferred tax liability | 664 | |||
Asset retirement obligations | 167 | |||
Total consideration plus liabilities assumed | 84,963 | |||
Fair Value of Assets Acquired: | ||||
Cash and cash equivalents | 5,263 | |||
Current assets | 1,948 | |||
Amount attributable to assets acquired | 81,927 | |||
Goodwill | 3,036 | |||
Total consideration plus liabilities assumed | 84,963 | |||
Lynden Arrangement [Member] | Proved Oil and Gas Properties [Member] | ||||
Fair Value of Assets Acquired: | ||||
Oil and gas properties | 48,116 | |||
Lynden Arrangement [Member] | Unproved Oil and Gas Properties [Member] | ||||
Fair Value of Assets Acquired: | ||||
Oil and gas properties | $ 26,600 | |||
Other Acquisitions [Member] | ||||
Business Acquisition [Line Items] | ||||
Total consideration | $ 4,066 | |||
Fair Value of Liabilities Assumed: | ||||
Asset retirement obligations | 13 | |||
Total consideration plus liabilities assumed | 4,066 | |||
Other liabilities | 5 | |||
Amount attributable to liabilities assumed | 18 | |||
Fair Value of Assets Acquired: | ||||
Amount attributable to assets acquired | 4,084 | |||
Total consideration plus liabilities assumed | 4,066 | |||
Other Acquisitions [Member] | Proved Oil and Gas Properties [Member] | ||||
Fair Value of Assets Acquired: | ||||
Oil and gas properties | 588 | |||
Other Acquisitions [Member] | Unproved Oil and Gas Properties [Member] | ||||
Fair Value of Assets Acquired: | ||||
Oil and gas properties | $ 3,496 |
Acquisitions and Divestitures27
Acquisitions and Divestitures - Schedule of Consideration Paid to Acquire Net Assets and Estimated Values of Net Assets (Parenthetical) (Details) - Lynden Arrangement [Member] $ in Thousands | 1 Months Ended |
May 31, 2016USD ($)$ / bbl$ / Mcf$ / Boe | |
Business Acquisition [Line Items] | |
Exchange tax rate | 34.50% |
Weighted average commodity prices of oil | $ / bbl | 64.73 |
Weighted average commodity prices of natural gas | $ / Mcf | 3.68 |
Weighted average commodity prices of oil equivalent for natural gas liquids | $ / Boe | 19.34 |
Credit facility, outstanding balance paid off | $ 36,597 |
Settlement of debt | $ 31,300 |
Acquisitions and Divestitures28
Acquisitions and Divestitures - Schedule of Unaudited Pro forma Revenues and Expenses of Assets Acquired and Liabilities Assumed (Details) - Lynden Arrangement [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Business Acquisition [Line Items] | ||||
Revenue | $ 12,737 | $ 21,299 | $ 22,084 | $ 36,319 |
(Loss) income before taxes | (10,190) | 415 | (16,904) | (1,556) |
Net (loss) income available to Earthstone common stockholders | $ (10,847) | $ 207 | $ (17,796) | $ (1,085) |
Pro Forma net (loss) income per common share: | ||||
Basic and diluted | $ (0.62) | $ 0.01 | $ (1.01) | $ (0.06) |
Derivative Financial Instrume29
Derivative Financial Instruments - Schedule of Open Crude Oil and Natural Gas Derivative Contracts (Details) | 6 Months Ended |
Jun. 30, 2016MMBTU$ / bbl$ / MMBTUbbl | |
Swap July 2016 - December 2018 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 150,000 |
Fixed Price, Bbls | $ / bbl | 51.45 |
Swap January 2017 - December 2017 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 120,000 |
Fixed Price, Bbls | $ / bbl | 46.75 |
Swap July 2016 - December 2016 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 60,000 |
Fixed Price, Bbls | $ / bbl | 45.17 |
Swap January 2018 - December 2018 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 60,000 |
Fixed Price, Bbls | $ / bbl | 50.10 |
Swap July 2016 - December 2016 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 60,000 |
Fixed Price, Bbls | $ / bbl | 48.10 |
Swap January 2017 - December 2017 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 60,000 |
Fixed Price, Bbls | $ / bbl | 49.30 |
Swap July 2016 - March 2017 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 45,000 |
Fixed Price, Bbls | $ / bbl | 42.30 |
Swap July 2016 - March 2017 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 45,000 |
Fixed Price, Bbls | $ / bbl | 42.30 |
Swap July 2016 - December 2016 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 30,000 |
Fixed Price, Bbls | $ / bbl | 60.80 |
Swap July 2016 - December 2016 [Member] | Crude Oil [Member] | |
Derivative [Line Items] | |
Volume in Bbls | bbl | 30,000 |
Fixed Price, Bbls | $ / bbl | 60.80 |
Swap January 2017 - December 2017 [Member] | Natural Gas [Member] | |
Derivative [Line Items] | |
Volume in MMBtu | MMBTU | 480,000 |
Fixed Price, MMBtu | $ / MMBTU | 2.785 |
Swap July 2016 - December 2016 [Member] | Natural Gas [Member] | |
Derivative [Line Items] | |
Volume in MMBtu | MMBTU | 420,000 |
Fixed Price, MMBtu | $ / MMBTU | 2.530 |
Swap July 2016 - December 2017 [Member] | Natural Gas [Member] | |
Derivative [Line Items] | |
Volume in MMBtu | MMBTU | 360,000 |
Fixed Price, MMBtu | $ / MMBTU | 2.975 |
Swap January 2017 - December 2017 [Member] | Natural Gas [Member] | |
Derivative [Line Items] | |
Volume in MMBtu | MMBTU | 240,000 |
Fixed Price, MMBtu | $ / MMBTU | 2.860 |
Swap July 2016 - December 2016 [Member] | Natural Gas [Member] | |
Derivative [Line Items] | |
Volume in MMBtu | MMBTU | 60,000 |
Fixed Price, MMBtu | $ / MMBTU | 2.380 |
Derivative Financial Instrume30
Derivative Financial Instruments - Schedule of Location and Fair Value Amounts of All Derivative Instruments (Details) - Derivatives Not Designated as Hedging Contracts [Member] - Commodity Contracts [Member] - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current Derivative Assets [Member] | ||
Derivatives Fair Value [Line Items] | ||
Gross Recognized Assets | $ 629 | $ 3,694 |
Gross Amounts Offset, Assets | (610) | |
Net Recognized Assets | 19 | $ 3,694 |
Current Derivative Liabilities [Member] | ||
Derivatives Fair Value [Line Items] | ||
Gross Recognized Liabilities | (2,073) | |
Gross Amounts Offset, Liabilities | 610 | |
Net Recognized Liabilities | (1,463) | |
Noncurrent Derivative Liabilities [Member] | ||
Derivatives Fair Value [Line Items] | ||
Gross Recognized Liabilities | (1,122) | |
Net Recognized Liabilities | $ (1,122) |
Derivative Financial Instrume31
Derivative Financial Instruments - Summary of Gross and Net Information About Commodity Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Derivative Instruments Gain Loss [Line Items] | ||||
Unrealized loss on commodity contracts | $ (6,260) | $ (3,081) | ||
Net loss on derivative contracts | $ (4,228) | $ (1,318) | (3,463) | (644) |
Derivatives Not Designated as Hedging Contracts [Member] | Net Loss On Derivative Contracts [Member] | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Unrealized loss on commodity contracts | (5,034) | (2,261) | (6,260) | (3,081) |
Realized gain on commodity contracts | $ 806 | $ 943 | $ 2,797 | $ 2,437 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value assets transfer from Level 1 to Level 2 | $ 0 | |
Fair value assets transfer from Level 2 to Level 1 | 0 | |
Fair value liabilities transfer from Level 1 to Level 2 | 0 | |
Fair value liabilities transfer from Level 2 to Level 1 | 0 | |
Impairment of goodwill | 0 | $ 0 |
Level 3 [Member] | Fair Value on a Nonrecurring Basis [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Impairment of oil and natural gas properties | $ 0 | $ 0 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Financial assets | ||
Current derivative assets | $ 19 | $ 3,694 |
Financial liabilities | ||
Current derivative liabilities | (1,463) | |
Noncurrent derivative liabilities | (1,122) | |
Fair Value on a Recurring Basis [Member] | ||
Financial assets | ||
Current derivative assets | 19 | 3,694 |
Net Recognized Assets | 19 | 3,694 |
Financial liabilities | ||
Current derivative liabilities | (1,463) | |
Noncurrent derivative liabilities | (1,122) | |
Net Recognized Liabilities | (2,585) | |
Fair Value on a Recurring Basis [Member] | Level 2 [Member] | ||
Financial assets | ||
Current derivative assets | 19 | 3,694 |
Net Recognized Assets | 19 | $ 3,694 |
Financial liabilities | ||
Current derivative liabilities | (1,463) | |
Noncurrent derivative liabilities | (1,122) | |
Net Recognized Liabilities | $ (2,585) |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Capital Unit [Line Items] | |||||
Common stock issued, net of offering costs, shares | 4,753,770 | ||||
Shares issued, price per share | $ 10.50 | $ 10.50 | $ 10.50 | ||
Net proceeds from issuance of common stock | $ 47,100 | $ 47,125 | |||
Stock issuance costs | $ 2,700 | $ 2,700 | |||
Restricted Stock Units [Member] | |||||
Capital Unit [Line Items] | |||||
Dilutive effect of restricted stock units excluded from calculating diluted earnings per share | 37,334 | 18,480 | |||
2014 Long Term Incentive Plan [Member] | Restricted Stock Units [Member] | |||||
Capital Unit [Line Items] | |||||
Shares issued | 0 | 0 | 0 | 0 | |
Shares outstanding | 0 | 0 | 0 | 0 | |
Underwriter’s Overallotment Option [Member] | |||||
Capital Unit [Line Items] | |||||
Common stock issued, net of offering costs, shares | 253,770 |
Equity - Reconciliation of the
Equity - Reconciliation of the Numerator and Denominator for Calculating Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Basic EPS: | ||||
Net loss | $ (11,172) | $ (748) | $ (17,593) | $ (1,862) |
Weighted average common shares outstanding | 16,121,568 | 13,835,128 | 14,978,348 | 13,835,128 |
Basic loss per common share | $ (0.69) | $ (0.05) | $ (1.17) | $ (0.13) |
Diluted EPS: | ||||
Net loss | $ (11,172) | $ (748) | $ (17,593) | $ (1,862) |
Weighted average common shares outstanding | 16,121,568 | 13,835,128 | 14,978,348 | 13,835,128 |
Diluted weighted average common shares outstanding | 16,121,568 | 13,835,128 | 14,978,348 | 13,835,128 |
Diluted loss per common share | $ (0.69) | $ (0.05) | $ (1.17) | $ (0.13) |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock-based compensation expense recognized | $ 561,000 | $ 561,000 | |||
Restricted Stock Units [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Number of shares of common stock that each holder has contingent right to receive upon vesting | 1 | ||||
Unrecognized compensation expense related to unvested stock | $ 9,100,000 | $ 9,100,000 | |||
Unrecognized compensation expense related to unvested stock to be recognized over weighted-average period | 1 year 6 months | ||||
2014 Long Term Incentive Plan [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Maximum number of shares available to issue | 1,500,000 | ||||
Common stock remained available for issuance | 727,500 | 727,500 | |||
2014 Long Term Incentive Plan [Member] | Restricted Stock Units [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares granted | 772,500 | ||||
Shares granted, Weighted average grant date fair value | $ 12.55 | ||||
Description of vesting shares | The RSUs vest over a 19 or 34 month period with one-third of the award vesting at the end of either seven or 10 months and the remaining two-thirds vesting monthly thereafter. | ||||
Unvested shares | 772,500 | 772,500 | |||
Stock-based compensation expense recognized | $ 600,000 | $ 0 | $ 600,000 | $ 0 | |
2014 Long Term Incentive Plan [Member] | Restricted Stock Units [Member] | Maximum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 34 months | ||||
2014 Long Term Incentive Plan [Member] | Restricted Stock Units [Member] | Maximum [Member] | Tranche 1 [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 10 months | ||||
2014 Long Term Incentive Plan [Member] | Restricted Stock Units [Member] | Minimum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 19 months | ||||
2014 Long Term Incentive Plan [Member] | Restricted Stock Units [Member] | Minimum [Member] | Tranche 1 [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 7 months |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jul. 31, 2016 | Dec. 31, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 13,505,000 | $ 13,505,000 | $ 11,191,000 | ||||
Amortization of deferred financing costs | 72,000 | $ 65,000 | 142,000 | $ 130,000 | |||
Current porting of long-term debt | 1,554,000 | 1,554,000 | |||||
Unsecured Promissory Note [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | 3,500,000 | 3,500,000 | |||||
Current porting of long-term debt | 1,600,000 | 1,600,000 | |||||
Unsecured Promissory Note [Member] | Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit, maturity period | 3 years | ||||||
Debt instrument, principal amount | $ 5,100,000 | ||||||
Debt Instrument, maturity date | 2019-07 | ||||||
Debt instrument, interest rate payment percentage for first 12 months | 8.00% | ||||||
Debt instrument, interest rate payment percentage for subsequent 12 months | 10.00% | ||||||
Debt instrument, interest rate payment percentage for last 12 months | 12.00% | ||||||
Pre-payment penalty | $ 0 | ||||||
Debt instrument, effective interest rate percentage | 9.10% | ||||||
Other Noncurrent Assets [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Deferred financing cost, net of amortization | 800,000 | 800,000 | $ 800,000 | ||||
Four Year Senior Secured Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 500,000,000 | ||||||
Line of credit, maturity period | 4 years | ||||||
Current borrowing base under credit agreement | 75,000,000 | $ 75,000,000 | |||||
Commitment fee percentage | 0.50% | ||||||
Debt outstanding maturity | Dec. 19, 2018 | ||||||
Long-term debt | $ 10,000,000 | $ 10,000,000 | |||||
Long-term debt, percentage bearing interest rate | 2.715% | 2.715% | |||||
Letters of credit outstanding amount | $ 200,000 | $ 200,000 | |||||
Borrowing base available under credit facility | $ 64,800,000 | $ 64,800,000 | |||||
Line of credit facility, covenant terms | The credit facility contains a number of customary covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability to incur additional indebtedness, create liens on asset, pay dividends, and repurchase its capital stock. In addition, the Company is required to maintain certain financial ratios, including a minimum modified current ratio which includes the available borrowing base of 1.0 to 1.0 and a maximum annualized quarterly leverage ratio of 4.0 to 1.0. The Company is also required to submit an audited annual report 120 days after the end of each fiscal period. | ||||||
Four Year Senior Secured Revolving Credit Facility [Member] | Federal Funds Effective Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 0.50% | ||||||
Four Year Senior Secured Revolving Credit Facility [Member] | LIBOR Adjusted Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 1.00% | ||||||
Four Year Senior Secured Revolving Credit Facility [Member] | LIBOR Adjusted Rate [Member] | Minimum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 2.25% | ||||||
Four Year Senior Secured Revolving Credit Facility [Member] | LIBOR Adjusted Rate [Member] | Maximum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 3.25% | ||||||
Four Year Senior Secured Revolving Credit Facility [Member] | Base Rate [Member] | Minimum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 1.25% | ||||||
Four Year Senior Secured Revolving Credit Facility [Member] | Base Rate [Member] | Maximum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Applicable margin percentage | 2.25% |
Asset Retirement Obligations -
Asset Retirement Obligations - Summary of Asset Retirement Obligation Transactions (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Asset retirement obligations, Beginning balance | $ 5,075 | |
Liabilities incurred | 106 | |
Accretion expense | 261 | $ 282 |
Acquisitions | 167 | |
Revision of estimates | (12) | |
Asset retirement obligations, Ending balance | $ 5,597 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Line Items] | ||||
Income tax expense (benefit) | $ 186 | $ (295) | $ 186 | $ (880) |
Valuation allowance against deferred tax asset, percent | 100.00% | |||
Effective tax rate | 28.00% | 32.00% | ||
States income tax rate | 0.70% | |||
Lynden Arrangement [Member] | ||||
Income Tax Disclosure [Line Items] | ||||
Income tax expense (benefit) | $ 200 | $ 200 | ||
Effective tax rate | 34.50% | 34.50% | ||
States income tax rate | 0.50% | 0.50% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - Natural Gas Purchasing and Natural Gas Processing Contract [Member] $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($)MMBTU$ / MMBTU | |
Loss Contingencies [Line Items] | |
Pipeline fee paid | $ / MMBTU | 0.45 |
Holding pipeline capacity | MMBTU | 10,000 |
Purchasing and processing contract expiry date | Jun. 1, 2021 |
Company's share of remaining commitment amount | $ | $ 4.1 |