Summary Of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 30, 2015 |
Summary Of Significant Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates. In the course of preparing its condensed 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 condensed consolidated 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 condensed consolidated financial statements. All significant 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. The investment in Caliber is accounted for utilizing the equity method of accounting |
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Oil And Natural Gas Properties | Oil and Natural Gas Properties. The Company follows the full-cost method of accounting for its oil and natural gas properties. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, including salaries, benefits and other internal costs directly identified with these activities, and oil and natural gas property acquisitions are capitalized. The net book value of oil and natural gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and natural gas reserves, discounted at ten percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous twelve months, held flat for the life of the production, except where prices are defined by contractual arrangements. |
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Any excess of the net book value of proved oil and natural gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as “Impairment of oil and natural gas properties” in the accompanying condensed consolidated statements of operations. The ceiling limitation is evaluated quarterly. |
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At April 30, 2015, the carrying value of our oil and natural gas properties exceeded the calculated value of the ceiling limitation resulting in an impairment of $192.0 million. Triangle will likely be required to recognize an additional impairment of oil and natural gas properties in future periods if oil and natural gas prices remain at current levels or continue to decline and such impairment will likely be material. |
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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 consisted of the following as of: |
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(in thousands) | | 31-Jan-15 | | 30-Apr-15 |
Land | | $ | 7,888 | | $ | 7,888 |
Building and leasehold improvements | | | 33,625 | | | 34,160 |
Oilfield service equipment | | | 116,354 | | | 121,653 |
Vehicles | | | 4,811 | | | 5,521 |
Software, computers and office equipment | | | 5,327 | | | 6,050 |
Capital leases | | | 853 | | | 853 |
Total depreciable assets | | | 168,858 | | | 176,125 |
Accumulated depreciation | | | -35,189 | | | -44,998 |
Depreciable assets, net | | | 133,669 | | | 131,127 |
Assets not placed in service | | | 1,247 | | | 1,530 |
Total oilfield service equipment and other property & equipment, net | | $ | 134,916 | | $ | 132,657 |
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Income Taxes | Income Taxes. The Company computes its quarterly tax provision using the effective tax rate method based on applying the anticipated annual effective rate to its year-to-date income or loss, except for discrete items. Income tax on discrete items is computed and recorded in the period in which the specific transaction occurs. |
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As noted above, the carrying value of our oil and natural gas properties exceeded the calculated value of the ceiling limitation resulting in an impairment of $192.0 million. This impairment results in Triangle having three years of cumulative historical pre-tax losses and a net deferred tax asset position. Additionally, Triangle will likely be required to recognize additional impairments of its oil and natural gas properties in future periods if oil and natural gas prices remain at current levels or continue to decline and such impairments will likely be material. Triangle also had net operating loss carryovers ("NOLs") for federal income tax purposes of $136.9 million at January 31, 2015. These losses and expected future losses were a key consideration that led Triangle to provide a valuation allowance against its net deferred tax assets as of April 30, 2015 since it cannot conclude that it is more likely than not that its net deferred tax assets will be fully realized in future periods. |
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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. At each reporting period, 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. Future events or new evidence which may lead the Company to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings; sustained or continued improvements in oil prices; and taxable events that could result from one or more transactions. The Company will continue to evaluate whether the valuation allowance is needed in future reporting periods. |
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In the current period the Company recorded the benefit of reversing its net deferred tax liability. As long as the Company concludes that it will continue to have a need for a valuation allowance against its net deferred tax assets, the Company likely will not have any additional income tax expense or benefit other than for federal alternative minimum tax expense, a release of a portion of the valuation allowance for net operating loss carryback claims or for state income taxes. |
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As of April 30, 2015, the Company had no unrecognized tax benefits. The Company’s management does not believe that there are any new items or changes in facts or judgments that should impact the Company’s position during the first three months of fiscal year 2016. Given the substantial net operating loss carryforwards at both the federal and state levels, neither significant interest expense nor penalties charged for any examining agents’ tax adjustments of income tax returns are anticipated, as any such adjustments would very likely only adjust net operating loss carryforwards. |
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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: |
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| | For the Three Months Ended April 30, |
| | 2014 | | 2015 |
Dilutive | | | 17,362,426 | | | — |
Anti-dilutive shares | | | 6,000,000 | | | 10,910,078 |
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The table below sets forth the computations of net income (loss) per common share (basic and diluted) for the periods presented: |
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| | For the Three Months Ended April 30, |
(in thousands, except per share data) | | 2014 | | 2015 |
Net income (loss) attributable to common stockholders | | $ | 14,542 | | $ | -180,199 |
Effect of 5% convertible note conversion | | | 918 | | | — |
Net income (loss) attributable to common stockholders after effect of debt conversion | | $ | 15,460 | | $ | -180,199 |
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Basic weighted average common shares outstanding | | | 85,952 | | | 75,256 |
Effect of dilutive securities | | | 17,362 | | | — |
Diluted weighted average common shares outstanding | | | 103,314 | | | 75,256 |
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Basic net income (loss) per share | | $ | 0.17 | | $ | -2.39 |
Diluted net income (loss) per share | | $ | 0.15 | | $ | -2.39 |
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Reclassifications | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Basis of Presentation. These unaudited condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and are expressed in U.S. dollars. Preparation in accordance with GAAP requires us to (i) adopt accounting policies within accounting rules set by the Financial Accounting Standards Board (“FASB”) and by the Securities and Exchange Commission (“SEC”), and (ii) make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and other disclosed amounts. |
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Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. We believe the disclosures made are adequate to make the information not misleading. We recommend that these unaudited condensed consolidated financial statements be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2015, as filed with the SEC (“Fiscal 2015 Form 10-K”). In the opinion of management, all material adjustments considered necessary for a fair presentation of the Company’s interim results have been reflected. All such adjustments are considered to be of a normal recurring nature. The results for interim periods are not necessarily indicative of annual results. |
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No condensed consolidated statement of comprehensive income (loss) is presented because the Company had no comprehensive income or loss activity in the periods presented. |
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Use of Estimates. In the course of preparing its condensed 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 condensed consolidated financial statements. |
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Principles of Consolidation. The accounts of Triangle and its wholly-owned subsidiaries are presented in the accompanying condensed consolidated financial statements. All significant 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. The investment in Caliber is accounted for utilizing the equity method of accounting. |
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Oil and Natural Gas Properties. The Company follows the full-cost method of accounting for its oil and natural gas properties. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, including salaries, benefits and other internal costs directly identified with these activities, and oil and natural gas property acquisitions are capitalized. The net book value of oil and natural gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and natural gas reserves, discounted at ten percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous twelve months, held flat for the life of the production, except where prices are defined by contractual arrangements. |
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Any excess of the net book value of proved oil and natural gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as “Impairment of oil and natural gas properties” in the accompanying condensed consolidated statements of operations. The ceiling limitation is evaluated quarterly. |
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At April 30, 2015, the carrying value of our oil and natural gas properties exceeded the calculated value of the ceiling limitation resulting in an impairment of $192.0 million. Triangle will likely be required to recognize an additional impairment of oil and natural gas properties in future periods if oil and natural gas prices remain at current levels or continue to decline and such impairment will likely be material. |
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Oilfield Services Equipment and Other Property and Equipment. Oilfield services equipment and other property and equipment consisted of the following as of: |
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| | | | | | |
| | |
(in thousands) | | 31-Jan-15 | | 30-Apr-15 |
Land | | $ | 7,888 | | $ | 7,888 |
Building and leasehold improvements | | | 33,625 | | | 34,160 |
Oilfield service equipment | | | 116,354 | | | 121,653 |
Vehicles | | | 4,811 | | | 5,521 |
Software, computers and office equipment | | | 5,327 | | | 6,050 |
Capital leases | | | 853 | | | 853 |
Total depreciable assets | | | 168,858 | | | 176,125 |
Accumulated depreciation | | | -35,189 | | | -44,998 |
Depreciable assets, net | | | 133,669 | | | 131,127 |
Assets not placed in service | | | 1,247 | | | 1,530 |
Total oilfield service equipment and other property & equipment, net | | $ | 134,916 | | $ | 132,657 |
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Income Taxes. The Company computes its quarterly tax provision using the effective tax rate method based on applying the anticipated annual effective rate to its year-to-date income or loss, except for discrete items. Income tax on discrete items is computed and recorded in the period in which the specific transaction occurs. |
|
As noted above, the carrying value of our oil and natural gas properties exceeded the calculated value of the ceiling limitation resulting in an impairment of $192.0 million. This impairment results in Triangle having three years of cumulative historical pre-tax losses and a net deferred tax asset position. Additionally, Triangle will likely be required to recognize additional impairments of its oil and natural gas properties in future periods if oil and natural gas prices remain at current levels or continue to decline and such impairments will likely be material. Triangle also had net operating loss carryovers ("NOLs") for federal income tax purposes of $136.9 million at January 31, 2015. These losses and expected future losses were a key consideration that led Triangle to provide a valuation allowance against its net deferred tax assets as of April 30, 2015 since it cannot conclude that it is more likely than not that its net deferred tax assets will be fully realized in future periods. |
|
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. At each reporting period, 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. Future events or new evidence which may lead the Company to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings; sustained or continued improvements in oil prices; and taxable events that could result from one or more transactions. The Company will continue to evaluate whether the valuation allowance is needed in future reporting periods. |
|
In the current period the Company recorded the benefit of reversing its net deferred tax liability. As long as the Company concludes that it will continue to have a need for a valuation allowance against its net deferred tax assets, the Company likely will not have any additional income tax expense or benefit other than for federal alternative minimum tax expense, a release of a portion of the valuation allowance for net operating loss carryback claims or for state income taxes. |
|
As of April 30, 2015, the Company had no unrecognized tax benefits. The Company’s management does not believe that there are any new items or changes in facts or judgments that should impact the Company’s position during the first three months of fiscal year 2016. Given the substantial net operating loss carryforwards at both the federal and state levels, neither significant interest expense nor penalties charged for any examining agents’ tax adjustments of income tax returns are anticipated, as any such adjustments would very likely only adjust net operating loss carryforwards. |
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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. |
|
The following table details the weighted average dilutive and anti-dilutive securities, which consist of options and unvested restricted stock, for the periods presented: |
| | | | | | |
| | For the Three Months Ended April 30, |
| | 2014 | | 2015 |
Dilutive | | | 17,362,426 | | | — |
Anti-dilutive shares | | | 6,000,000 | | | 10,910,078 |
|
The table below sets forth the computations of net income (loss) per common share (basic and diluted) for the periods presented: |
| | | | | | |
| | For the Three Months Ended April 30, |
(in thousands, except per share data) | | 2014 | | 2015 |
Net income (loss) attributable to common stockholders | | $ | 14,542 | | $ | -180,199 |
Effect of 5% convertible note conversion | | | 918 | | | — |
Net income (loss) attributable to common stockholders after effect of debt conversion | | $ | 15,460 | | $ | -180,199 |
| | | | | | |
Basic weighted average common shares outstanding | | | 85,952 | | | 75,256 |
Effect of dilutive securities | | | 17,362 | | | — |
Diluted weighted average common shares outstanding | | | 103,314 | | | 75,256 |
| | | | | | |
Basic net income (loss) per share | | $ | 0.17 | | $ | -2.39 |
Diluted net income (loss) per share | | $ | 0.15 | | $ | -2.39 |
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Reclassifications. Certain amounts in our unaudited condensed consolidated statement of operations for the three months ended April 30, 2014 have been reclassified to conform to the financial statement presentation for the period ended April 30, 2015. The unaudited condensed consolidated 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 that 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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