Summary Of Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 31, 2015 |
Summary Of Significant Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates. In the course of preparing its consolidated financial statements, management makes various assumptions, judgments, and estimates to determine the reported amount of assets, liabilities, revenue, and expenses, and in the disclosures 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. Significant areas requiring the use of assumptions, judgments and estimates include (i) oil and natural gas reserves; (ii) cash flow estimates used in ceiling tests of oil and natural gas properties; (iii) depreciation and amortization; (iv) impairment of undeveloped properties and other assets; (v) assigning fair value and allocating purchase price in connection with business combinations; (vi) accrued revenue and related receivables; (vii) valuation of commodity derivative instruments and equity derivative instruments; (viii) accrued liabilities; (ix) valuation of share-based payments and (x) income taxes. Although management believes these estimates are reasonable, actual results could differ from these estimates. The Company has evaluated subsequent events and transactions for matters that may require recognition or disclosure in these financial statements. |
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Principles of Consolidation | Principles of Consolidation. The accounts of Triangle and its wholly-owned subsidiaries are presented in the accompanying consolidated financial statements. All intercompany transactions and balances are eliminated in consolidation. Triangle generally uses the equity method of accounting for investments in entities in which Triangle has an ownership between 20% and 50% and exercises significant influence. |
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These consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries: (i) TUSA, incorporated in the State of Colorado, and its wholly-owned subsidiaries, (ii) RockPile, organized in the State of Delaware, and its wholly-owned subsidiaries, (iii) Elmworth, incorporated in the Province of Alberta, Canada, (iv) Triangle Real Estate Properties, LLC, organized in the State of Colorado, and its wholly-owned subsidiaries, (v) Integrated Operating Solutions, LLC, organized in the State of Colorado, (vi) Ranger Fabrication, LLC, organized in the State of Delaware, and its wholly-owned subsidiaries, and (vii) Triangle Caliber Holdings, LLC, organized in the State of Delaware, and its wholly-owned subsidiaries. Additionally, Triangle Caliber Holdings, LLC is a joint venture partner in Caliber. The investment in Caliber is accounted for utilizing the equity method of accounting. |
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Cash And Cash Equivalents | |
Cash and Cash Equivalents. Cash and cash equivalents, including cash in banks in the United States and Canada, consist of highly liquid investments that are readily convertible into cash and have original maturities of three months or less when purchased. |
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Accounts Receivable And Credit Policies | |
Accounts Receivable and Credit Policies. The components of accounts receivable include the following (in thousands): |
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| | For the Years Ended January 31, | | | |
| | | 2015 | | | 2014 | | | |
Oil and natural gas sales | | $ | 21,445 | | $ | 25,866 | | | |
Joint interest billings | | | 72,235 | | | 43,660 | | | |
Oilfield services revenue | | | 59,408 | | | 29,109 | | | |
Other | | | 11,350 | | | 7,828 | | | |
Total accounts receivable | | $ | 164,438 | | $ | 106,463 | | | |
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The Company’s accounts receivable result primarily from (i) oil and natural gas purchasers, (ii) billings to joint working interest partners in properties operated by the Company and (iii) trade receivables for oilfield services revenue. The Company’s trade and accrued revenue receivables are dispersed among various customers and purchasers and most of the Company’s significant purchasers are large companies with strong credit ratings. If customers are considered a credit risk, letters of credit or parental guarantees are the primary security obtained to support the extension of credit. For most joint working interest partners, the Company may have the right of offset against related oil and natural gas revenues. |
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The following table provides the percentage of revenue derived from oil and natural gas sales to customers and oilfield services customers who comprise 10% or more of the Company’s consolidated annual revenue (the customers in each year are not necessarily the same from year to year): |
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| | Fiscal Years Ended January 31, |
| | 2015 | | 2014 | | 2013 |
Oil & Gas Customer A | | | 13% | | | 22% | | | N/A |
Oil & Gas Customer B | | | 12% | | | 15% | | | N/A |
Oil & Gas Customer C | | | 12% | | | N/A | | | N/A |
Oilfield Services Customer A | | | 15% | | | N/A | | | N/A |
Oilfield Services Customer B | | | 12% | | | 13% | | | N/A |
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Although a substantial portion of our oil and natural gas sales and our oilfield services revenues may be to a few large customers, we do not believe the loss of any one customer would have a material adverse effect on our exploration and production business as we believe that other purchasers would be available. While we believe that there are numerous operators in the Williston Basin in need of pressure pumping and related oilfield services, a severe and sustained downturn in commodities pricing could result in the loss of a significant customer. However, we do not believe that the loss of a significant customer would have a material adverse impact on the Company. |
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Inventories | Inventories. Inventories, included in other current assets, consist of well equipment, sand, chemicals and/or ceramic proppant for hydraulic pressure pumping and complementary well completion services. Inventories are stated at the lower of cost or market (net realizable value) on an average cost basis with consideration given to deterioration, obsolescence and other factors utilized in evaluating net realizable value. |
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Oil And Natural Gas Properties | Oil and Natural Gas Properties. We use the full cost method of accounting for our oil and natural gas operations. All costs associated with property acquisition, exploration, and development activities in the United States and Canada are capitalized into a United States full cost pool and a Canadian full cost pool, respectively. The cost pools are amortized on a unit-of-production basis using proved oil and natural gas reserves. Exploration and development costs include dry hole costs, geological and geophysical costs, direct overhead related to exploration and development activities, and other costs incurred for the purpose of finding oil and natural gas reserves. Salaries and benefits paid to employees directly involved in the exploration and development of properties, as well as other internal costs that can be directly identified with acquisition, exploration, and development activities, are also capitalized. Expenditures for maintenance and repairs are charged to production expense in the period incurred. Under the full cost method of accounting, no gain or loss is recognized upon the disposition of oil and natural gas properties unless such disposition would significantly alter the relationship between capitalized costs and proved reserves. |
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The capitalized costs of unevaluated properties, including those of wells in progress, are excluded from the costs being amortized. We do not have major development projects that are excluded from costs being amortized. On a quarterly basis, we evaluate excluded costs for inclusion in the costs to be amortized resulting from the determination of proved reserves or impairments. To the extent that the evaluation indicates these properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. |
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Under the full cost method of accounting, we do not currently recognize consolidated service income (such as pressure pumping services) for wells that we operate, and we recognize consolidated service income for other wells to the extent such income exceeds our share of costs incurred and estimated to be incurred in connection with the drilling and completion of a well, for our related property interests acquired within the twelve-month period preceding performance of the service. To the extent income cannot be recognized currently, we charge such service income against service revenue and credit the well’s capitalized costs. The deferred income is indirectly recognized later through a lower amortization rate as proved reserves are produced. |
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Amortization of proved oil and natural gas properties is computed on the units-of-production method, whereby capitalized costs, including future development costs and asset retirement costs, are amortized over total estimated proved reserves by country-wide cost pool. |
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Companies that follow the full cost method of accounting are required to make quarterly “ceiling test” calculations for each full cost pool. This test ensures that the country-wide cost pool’s total capitalized costs for oil and natural gas properties (net of accumulated amortization and deferred income taxes) do not exceed the sum of (i) the present value discounted at 10% of estimated future net cash flows from the Company’s proved oil and natural gas reserves in that country, (ii) the pool’s cost of properties not being amortized, (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, and (iv) all related tax effects. If the cost pool’s net capitalized costs exceed this “ceiling,” the excess is charged to expense. Any recorded ceiling-test impairment of oil and natural gas properties is not reversible at a later date. |
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At January 31, 2015, the calculated value of the ceiling limitation approximated the carrying value of our oil and natural gas properties subject to the test and no impairment was necessary. However, Triangle will likely be required to recognize an impairment of oil and natural gas properties in future periods if oil and natural gas prices remain at current prices or continue to decline or if there is a negative impact on one or more of the other components of the calculation and such an impairment will likely be material. |
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Oil And Natural Gas Reserves | Oil and Natural Gas Reserves. Amortization of the capitalized costs of oil and natural gas properties, including estimated future development and abandonment costs, is provided for using the equivalent unit-of-production method based upon estimates of proved oil and natural gas reserves. Changes in our estimates of proved reserve quantities will cause corresponding changes in amortization expense for the revision period and for periods thereafter as the reserves are produced. In some cases, a reduction in reserve estimates will lead to a full cost ceiling limitation charge in the period of the revision. The process of estimating quantities of oil and natural gas reserves is complex, requiring significant decisions and judgments in the evaluation of available geological, geophysical, engineering and economic data. The data for a given field may change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and varying economic conditions, particularly as to the economic viability of proved undeveloped reserves in light of upfront development costs. As a result, material revisions to existing reserve estimates may occur from time to time. |
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Oilfield Services Equipment and Other Property And Equipment | Oilfield Services Equipment and Other Property and Equipment. Oilfield services equipment and other property and equipment as of January 31, 2014 and 2013 consisted of the following: |
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| | For the Years Ended January 31, | | | |
(in thousands) | | 2015 | | 2014 | | | |
Land | | $ | 7,888 | | $ | 2,512 | | | |
Building and leasehold improvements | | | 33,625 | | | 18,388 | | | |
Oilfield service equipment | | | 116,354 | | | 56,355 | | | |
Vehicles | | | 4,811 | | | 2,288 | | | |
Software, computers and office equipment | | | 5,327 | | | 3,016 | | | |
Capital leases | | | 853 | | | — | | | |
Total depreciable assets | | | 168,858 | | | 82,559 | | | |
Accumulated depreciation | | | -35,189 | | | -12,800 | | | |
Depreciable assets, net | | | 133,669 | | | 69,759 | | | |
Assets not placed in service | | | 1,247 | | | 1,333 | | | |
Total oilfield service equipment and other property & equipment, net | | $ | 134,916 | | $ | 71,092 | | | |
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Expenditures for replacements, renewals, and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Oilfield services equipment and other property and equipment are evaluated for impairment to determine if current circumstances and market conditions indicate the carrying amount may not be recoverable. We have not found or recognized any impairment losses on such property and equipment. Depreciation is recorded using the straight-line method (to the extent of estimated salvage values) over the estimated useful lives of the related assets ranging from 3-20 years. |
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Deferred Financing Costs | Deferred Loan Costs. Deferred financing costs include origination, legal, engineering, and other fees incurred to issue debt. Deferred financing costs are amortized to interest expense using the effective interest method over the respective borrowing term. |
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Investment In Unconsolidated Entities | Equity Investment. The Company accounts for its investments in unconsolidated entities by the equity method. The Company’s share of earnings (loss) in the unconsolidated entity is included in other income (loss) on the consolidated statements of operations after elimination of intra-company profits and losses. The Company records losses of the unconsolidated entities only to the extent of the Company’s investment. |
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We evaluate our equity method investment for impairment when there are indicators of impairment. If indicators suggest impairment, we will perform an impairment test to assess whether an adjustment is necessary. The impairment test considers whether the fair value of our equity method investment has declined and if any such decline is other than temporary. If a decline in fair value is determined to be other than temporary, the investment’s carrying value is written down to fair value. |
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Asset Retirement Obligations | Asset Retirement Obligations. We recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Oil and natural gas producing companies incur this liability for their working interest in a well at the time the well is drilled or acquired. The liability reflects a discounted present value of estimated future costs related to the plugging of wells, the removal of facilities and equipment, and site restorations. Subsequent to initial measurement, the asset retirement liability is required to be accreted each period. Capitalized costs are depleted as a component of the full cost pool amortization base. |
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Derivatives Instruments | Derivative Instruments. The Company enters into derivative contracts, primarily costless collars and swaps, to hedge future crude oil and natural gas production in order to mitigate the risk of market price fluctuations. All derivative instruments are recorded on the balance sheet at fair value. The Company has elected not to apply hedge accounting to any of its derivative transactions and, consequently, the Company recognizes mark-to-market gains and losses in earnings currently, rather than deferring such amounts in other comprehensive income for those commodity derivatives that qualify as cash flow hedges. |
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The Company holds equity investment derivatives (Class A Warrants (Series 1 through Series 4)) in Caliber. Our equity investment derivatives are measured at fair value and are included in equity investment on the consolidated balance sheet. Net gains and losses on equity investment derivatives are recorded based on the changes in the fair values of the derivative instruments and included in our consolidated statements of operations. |
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Income Taxes | Income Taxes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in income tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance if management believes that it is more likely than not that some portion or all of the net deferred tax assets will not be fully realized on future income tax returns. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, available taxes in carryback periods, tax planning strategies and projected future taxable income in making this assessment. |
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The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company’s policy is to recognize interest and/or penalties related to uncertain tax positions in interest expense. |
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Revenue Recognition | Oil, Natural Gas and Natural Gas Liquids Revenue. The Company recognizes revenues from the sale of crude oil, natural gas and natural gas liquids when the product is delivered at a fixed or determinable price, title has transferred, and/or collectability is reasonably assured and evidenced by a contract. There were no oil or natural gas sales imbalances at January 31, 2015, 2014, or 2013. |
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Oilfield Services Revenue. The Company enters into arrangements with its customers to provide hydraulic fracturing services and other oilfield services, which can be either on a spot market basis or under term contracts. We only enter into arrangements with customers for which we believe collectability is reasonably assured. Revenue is recognized and customers are invoiced upon the completion of each job, which generally consists of numerous fracturing stages and complementary completion services. Once a job has been completed to the customer’s satisfaction, a field ticket is written that includes charges for the service performed and the chemicals and proppants consumed during the course of the service. The field ticket also includes charges for the mobilization of the equipment to the location, additional equipment used on the job, if any, and other miscellaneous consumables. Rates for services performed on a spot market basis are based on agreed-upon market rates. |
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Share-Based Compensation | Share-Based Compensation. Share-based compensation is measured at the estimated grant date fair value of the awards and is recognized over the requisite service period (usually the vesting period). The Company estimates forfeitures in calculating the cost related to stock-based compensation as opposed to recognizing these forfeitures and the corresponding reduction in expense as they occur. Compensation expense is then adjusted based on the actual number of awards for which the requisite service period is rendered. |
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Earnings Per Share | Earnings per Share. Basic earnings per common share is computed by dividing net income (loss) attributable to the common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted net income per common share reflects increases in average shares outstanding from the potential dilution, under the treasury stock method, that could occur upon (i) exercise of stock options, (ii) vesting of restricted stock units, and (iii) conversion of convertible debt. The treasury stock method assumes exercise, vesting or conversion at the beginning of a period for securities outstanding at the end of a period. Also, the treasury stock method for calculating dilution assumes that the increase in the number of shares is reduced by the number of shares which could have been repurchased by the Company at the quarter’s average stock price using assumed proceeds from (a) the exercise cost of the options and (b) the foregone future compensation expense of hypothetical early vesting of the outstanding restricted stock units. The assumed proceeds are adjusted for income tax effects. In the event of a net loss, no potential common shares are included in the calculation of shares outstanding, as their inclusion would be anti-dilutive. |
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The following table details the weighted average dilutive and anti-dilutive securities, which consist of options and unvested restricted stock, for the periods presented (in thousands): |
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| | For the Years Ended January 31, |
| | 2015 | | 2014 | | 2013 |
Dilutive | | | 17,421 | | | 15,979 | | | — |
Anti-dilutive shares | | | 6,905 | | | 5,250 | | | 4,500 |
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The table below sets forth the computations of net income (loss) per common share (basic and diluted) for the years ended January 31, 2015, 2014, and 2013: |
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| | For the Years Ended January 31, |
(in thousands, except per share data) | | 2015 | | 2014 | | 2013 |
Net income (loss) attributable to common stockholders | | $ | 93,397 | | $ | 73,480 | | $ | -13,760 |
Effect of 5% convertible note conversion | | | 4,135 | | | 3,392 | | | — |
Net income (loss) attributable to common stockholders after effect of debt conversion | | $ | 97,532 | | $ | 76,872 | | $ | -13,760 |
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Basic weighted average common shares outstanding | | | 83,611 | | | 68,579 | | | 44,475 |
Effect of dilutive securities | | | 17,421 | | | 15,979 | | | — |
Diluted weighted average common shares outstanding | | | 101,032 | | | 84,558 | | | 44,475 |
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Basic net income (loss) per share | | $ | 1.12 | | $ | 1.07 | | $ | -0.31 |
Diluted net income (loss) per share | | $ | 0.97 | | $ | 0.91 | | $ | -0.31 |
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Recent Accounting Developments | New Pronouncements Issued But Not Yet Adopted. In April 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 modifies the criteria for disposals to qualify as discontinued operations and expands related disclosures. The guidance is effective for annual and interim reporting periods beginning after December 15, 2014. Adoption of this amendment will not have a material effect on our financial position or results of operations. |
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In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective for the Company beginning in fiscal year 2017 and can be adopted by the Company either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the effect that adopting this new accounting guidance will have on our consolidated results of operations, cash flows and financial position. |
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In August 2014, the FASB issued ASU No. 2014-15, which requires management of public and private companies to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable) and, if so, to disclose that fact. Management will be required to make this evaluation for both annual and interim reporting periods, if applicable. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The Company does not expect the adoption of this amendment to have a material impact on its consolidated financial statements. |
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Accounting standard-setting organizations frequently issue new or revised accounting rules. We regularly review new pronouncements to determine their impact, if any, on our consolidated financial statements. Other than the standards discussed above, there are no significant accounting standards applicable to Triangle which have not been adopted. |
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Reclassifications | Reclassifications. Certain amounts in the consolidated balance sheet as of January 31, 2014, and in our consolidated statement of operations for the years ended January 31, 2014 and 2013, have been reclassified to conform to the financial statement presentation for the period ended January 31, 2015. The balance sheet reclassifications relate to changes in the captions presented in the balance sheet. The statement of operations reclassifications relate to the break out of amortization of deferred loan costs from interest expense and amounts related to revisions in the Elmworth abandonment obligation were reclassified from accretion of asset retirement obligations to depreciation and amortization expense. Such reclassifications had no impact on consolidated total assets, stockholders’ equity or net income previously reported. |
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