Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation. The accompanying Unaudited Consolidated Financial Statements include the accounts of the Company. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements include all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly, in all material respects, the Company's interim results. However, operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. The Company's 2016 Annual Report on Form 10-K includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report on Form 10-Q. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated financial statements included in the Company's 2016 Annual Report on Form 10-K. Use of Estimates. In the course of preparing the Company's consolidated financial statements in accordance with GAAP, management makes various assumptions, judgments and estimates to determine the reported amount of assets, liabilities, revenues and expenses and in the disclosure of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts initially established. Areas requiring the use of assumptions, judgments and estimates include volumes of oil, natural gas and NGL reserves used in calculating depreciation, depletion and amortization ("DD&A"), the amount of expected future net cash flows used in determining possible impairments of proved oil and gas properties and the amount of future capital costs used in these calculations. Assumptions, judgments and estimates also are required in determining asset retirement obligations, the timing of dry hole costs, impairments of unproved oil and gas properties, valuing deferred tax assets and estimating fair values of derivative instruments and stock-based payment awards. Accounts Receivable. Accounts receivable is comprised of the following: As of September 30, 2017 As of December 31, 2016 (in thousands) Accrued oil, gas and NGL sales $ 33,170 $ 26,542 Due from joint interest owners 9,164 4,366 Other 14 1,952 Allowance for doubtful accounts (259 ) (23 ) Total accounts receivable $ 42,089 $ 32,837 Oil and Gas Properties. The Company's oil, gas and NGL exploration and production activities are accounted for using the successful efforts method. Under this method, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending determination of whether the well has found proved reserves. If an exploratory well does not find proved reserves, the costs of drilling the well are charged to expense and remain within cash flows from investing activities in the Unaudited Consolidated Statements of Cash Flows. If an exploratory well does find proved reserves, the costs remain capitalized and are included within additions to oil and gas properties and remain within cash flows from investing activities in the Unaudited Consolidated Statements of Cash Flows. The costs of development wells are capitalized whether proved reserves are added or not. Oil and gas lease acquisition costs are also capitalized. Upon sale or retirement of depreciable or depletable property, the cost and related accumulated DD&A are eliminated from the accounts and the resulting gain or loss is recognized. Other exploration costs, including certain geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense as incurred. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts. Unproved oil and gas property costs are transferred to proved oil and gas properties if the properties are subsequently determined to be productive or are assigned proved reserves. Proceeds from sales of partial interests in unproved leases are accounted for as a recovery of cost without recognizing any gain until all costs are recovered. Unproved oil and gas properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, commodity price outlooks, future plans to develop acreage, recent sales prices of comparable properties and other relevant matters. Materials and supplies consist primarily of tubular goods and well equipment to be used in future drilling operations or repair operations and are carried at the lower of cost or market. The following table sets forth the net capitalized costs and associated accumulated DD&A and non-cash impairments relating to the Company's oil, natural gas and NGL producing activities: As of September 30, 2017 As of December 31, 2016 (in thousands) Proved properties $ 218,746 $ 306,075 Wells and related equipment and facilities 1,035,764 1,164,354 Support equipment and facilities 34,317 63,238 Materials and supplies 3,959 5,706 Total proved oil and gas properties (1) $ 1,292,786 $ 1,539,373 Unproved properties 33,713 27,790 Wells and facilities in progress 36,822 31,040 Total unproved oil and gas properties, excluded from amortization (1) $ 70,535 $ 58,830 Accumulated depreciation, depletion, amortization and impairment (1) (393,340 ) (543,154 ) Total oil and gas properties, net (1) $ 969,981 $ 1,055,049 (1) Excludes oil and gas properties held for sale of $145.1 million , comprised of $410.7 million of proved oil and gas properties and $0.4 million of unproved oil and gas properties, net of accumulated depreciation, depletion, amortization and impairment of $266.0 million . Held for sale balances are included in current assets as assets held for sale, net of amortization and impairment, in the Unaudited Consolidated Balance Sheet as of September 30, 2017 . See Note 4 for additional information on assets held for sale. The Company reviews oil and natural gas properties for impairment on a quarterly basis or whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. The Company estimates the expected undiscounted future net cash flows of its oil and gas properties using proved and risked probable and possible reserves based on the Company's development plans and best estimate of future production, commodity pricing, reserve risking, gathering and transportation deductions, production tax rates, lease operating expenses and future development costs. The Company compares such undiscounted future net cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. If the undiscounted future net cash flows exceed the carrying amount of the oil and gas properties, no impairment is taken. If the carrying amount of a property exceeds the undiscounted future net cash flows, the Company will impair the carrying value to fair value based on an analysis of quantitative and qualitative factors existing as of the balance sheet date. The Company does not believe that the undiscounted future net cash flows of its oil and gas properties represent the applicable market value. The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the projected cash flows. In addition, oil and gas properties are assessed for impairment once they meet the criteria to be classified as held for sale. Assets held for sale are carried at the lower of carrying cost or fair value less costs to sell. The fair value of the assets is determined using a market approach, based on an estimated selling price, as evidenced by current marketing activities, if possible. If an estimated selling price is not available, the Company utilizes the income valuation technique, which involves calculating the present value of future net cash flows as discussed above. If the carrying amount of the assets exceeds the fair value less costs to sell, an impairment will result to reduce the value of the properties down to fair value less costs to sell. The Company recognized non-cash impairment, dry hole costs and abandonment expense in the Unaudited Consolidated Statements of Operations as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands) Impairment of unproved oil and gas properties (1) $ — $ — $ 8,010 $ 183 Dry hole costs — 1 — 71 Abandonment expense and lease expirations 261 973 326 1,512 Total impairment, dry hole costs and abandonment expense $ 261 $ 974 $ 8,336 $ 1,766 (1) The Company recognized a non-cash impairment charge associated with unproved oil and gas properties in the Cottonwood Gulch area of the Piceance Basin during the nine months ended September 30, 2017 . The Company has no current plan to develop this acreage. The provision for DD&A of oil and gas properties is calculated on a field-by-field basis using the unit-of-production method. Natural gas and NGLs are converted to an oil equivalent, Boe, at the standard rate of six Mcf to one Boe and forty-two gallons to one Boe, respectively. Estimated future dismantlement, restoration and abandonment costs are taken into consideration by this calculation. Accounts Payable and Accrued Liabilities. Accounts payable and accrued liabilities are comprised of the following: As of September 30, 2017 As of December 31, 2016 (in thousands) Accrued drilling, completion and facility costs $ 33,325 $ 15,594 Accrued lease operating, gathering, transportation and processing expenses 4,589 4,261 Accrued general and administrative expenses 8,653 6,375 Accrued interest payable 23,500 12,264 Prepayments from partners 11,249 332 Trade payables 2,323 7,900 Other 2,039 2,721 Total accounts payable and accrued liabilities $ 85,678 $ 49,447 Environmental Liabilities. Environmental expenditures that relate to an existing condition caused by past operations and that do not contribute to current or future revenue generation are expensed. Environmental liabilities are accrued when environmental assessments and/or clean-ups are probable, and the costs can be reasonably estimated. Recent case law in Wyoming has exposed the Company to potential obligations for plugging and abandoning wells, and associated reclamation, for assets that were sold to other industry parties in prior years. If such third parties become unable to fulfill their contractual obligations to the Company as provided for in the applicable purchase and sale agreements, regulatory agencies and landowners may demand that the Company perform such activities. The Company recognized $0.8 million associated with these obligations in other operating expenses in the Consolidated Statement of Operations for the nine months ended September 30, 2017 . Revenue Recognition. Oil, gas and NGL revenues are recognized when production is sold to a purchaser at a fixed or determinable price, when delivery has occurred and title has transferred, and collectability of the revenue is reasonably assured. The Company uses the sales method to account for gas and NGL imbalances. Under this method, revenues are recorded on the basis of gas and NGLs actually sold by the Company. In addition, the Company records revenues for its share of gas and NGLs sold by other owners that cannot be volumetrically balanced in the future due to insufficient remaining reserves. The Company also reduces revenues for other owners' volumetric share of gas and NGLs sold by the Company that cannot be volumetrically balanced in the future due to insufficient remaining reserves. The Company's remaining over- and under-produced gas and NGLs balancing positions are taken into account in determining the Company's proved oil, gas and NGL reserves. Imbalances at September 30, 2017 and 2016 were not material. Derivative Instruments and Hedging Activities. The Company periodically uses derivative financial instruments to achieve a more predictable cash flow from its oil, natural gas and NGL sales by reducing its exposure to price fluctuations. Derivative instruments are recorded at fair market value and are included in the Unaudited Consolidated Balance Sheets as assets or liabilities and in the Unaudited Consolidated Statements of Operations as commodity derivative gain (loss). Income Taxes. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when assets are recovered or liabilities are settled. Deferred income taxes also include tax credits and net operating losses that are available to offset future income taxes. Deferred income taxes are measured by applying currently enacted tax rates. Deferred tax assets are regularly reviewed, considering all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, taxable strategies and results of recent operations. The assumptions about future taxable income require significant judgment to determine whether it is more likely than not that the deferred tax asset will be realized. If it is determined that the deferred tax asset will not be realized, then a valuation allowance will be recorded against the deferred tax asset. The Company began recording a full valuation allowance against the deferred tax asset during the period ending September 30, 2015 and continues to do so as of September 30, 2017 . The Company accounts for uncertainty in income taxes for tax positions taken or expected to be taken in a tax return. Only tax positions that meet the more-likely-than-not recognition threshold are recognized. The Company does not have any uncertain tax positions recorded as of September 30, 2017 . Earnings/Loss Per Share. Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding during each period. Diluted net income per common share is calculated by dividing net income attributable to common stock by the weighted average number of common shares outstanding and other dilutive securities. Potentially dilutive securities for the diluted net income per common share calculations consist of nonvested equity shares of common stock and in-the-money outstanding stock options to purchase the Company's common stock. No potential common shares are included in the computation of any diluted per share amount when a net loss exists, as was the case for the three and nine months ended September 30, 2017 and 2016 . The following table sets forth the calculation of basic and diluted income (loss) per share: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (in thousands, except per share amounts) Net income (loss) $ (28,842 ) $ (26,186 ) $ (60,404 ) $ (121,101 ) Basic weighted-average common shares outstanding in period 74,886 58,852 74,743 53,082 Diluted weighted-average common shares outstanding in period 74,886 58,852 74,743 53,082 Basic net income (loss) per common share $ (0.39 ) $ (0.44 ) $ (0.81 ) $ (2.28 ) Diluted net income (loss) per common share $ (0.39 ) $ (0.44 ) $ (0.81 ) $ (2.28 ) New Accounting Pronouncements. In May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-09, Stock Compensation-Scope of Modification Accounting . The objective of this update is to provide clarity and reduce both diversity in practice and cost and complexity when applying a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect the standard to have a significant impact on the Company's financial statements or disclosures. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the definition of a business . The objective of this update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect the standard to have a significant impact on the Company's financial statements or disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments . The objective of this update is to address eight specific cash flow issues in order to reduce the existing diversity in practice. ASU 2016-15 is effective for the annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect the standard to have a significant impact on the Company's financial statements or disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting . The objective of this update is to simplify the current guidance for stock compensation. The areas for simplification involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 was effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The standard was adopted effective January 1, 2017 and did not have a significant impact on the Company's disclosures or financial statements. As of January 1, 2017, the Company did not have excess tax benefits associated with its stock compensation and therefore there was no tax impact upon adoption of this standard. In addition, the employee taxes paid on the statement of cash flows when shares were withheld for taxes were already classified as a financing activity; therefore, there was no cash flow statement impact upon adoption of this standard. The Company elected to account for forfeitures as they occur as opposed to estimating the number of awards that are expected to vest. Per ASU 2016-09, the election is considered a change in accounting principle, with the cumulative effect of the change reported as an adjustment to the beginning equity balance. The Company reported an increase to accumulated deficit and additional paid in capital ("APIC") of $0.2 million related to equity award compensation and an increase to accumulated deficit and derivative and other noncurrent liabilities of $0.3 million related to liability award compensation. The cumulative effect of accounting change is reported in the Consolidated Statement of Stockholders' Equity. In February 2016, the FASB issued ASU 2016-02, Leases . The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company has performed an initial assessment by compiling and analyzing contracts and leasing arrangements that may be affected. The Company is still evaluating the impact of adopting this standard. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes . The objective of this update is to require deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. ASU 2015-17 was effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The standard was adopted January 1, 2017 on a prospective basis and did not have a significant impact on the Company's disclosures and financial statements. Prior periods were not retrospectively adjusted. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The objective of this update is to clarify the principles for recognizing revenue and to develop a common revenue standard. The FASB subsequently issued ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, which provided additional implementation guidance and deferred the effective date of ASU 2014-09. The standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. The standard will be adopted using the modified retrospective transition method, effective January 1, 2018. The Company has performed an assessment of its current existing revenue contracts and is in the process of implementing additional control procedures. The Company does not expect the standard to have a significant impact on the Company's financial statements or disclosures. |