Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 02, 2017 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Energy XXI Gulf Coast, Inc. | |
Entity Central Index Key | 1,404,973 | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 33,221,427 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 173,364 | $ 165,368 |
Accounts receivable | ||
Oil and natural gas sales | 49,200 | 68,143 |
Joint interest billings, net | 3,249 | 5,600 |
Other | 17,762 | 17,944 |
Prepaid expenses and other current assets | 16,096 | 25,957 |
Restricted cash | 6,378 | 32,337 |
Total Current Assets | 266,049 | 315,349 |
Property and Equipment | ||
Oil and natural gas properties, net - full cost method of accounting, including $219.1 million and $376.1 million of unevaluated properties not being amortized at September 30, 2017 and December 31, 2016, respectively | 869,810 | 1,097,479 |
Other property and equipment, net | 13,860 | 18,807 |
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment | 883,670 | 1,116,286 |
Other Assets | ||
Restricted cash | 25,675 | 25,583 |
Other assets | 26,840 | 28,244 |
Total Other Assets | 52,515 | 53,827 |
Total Assets | 1,202,234 | 1,485,462 |
Current Liabilities | ||
Accounts payable | 86,691 | 101,117 |
Accrued liabilities | 38,652 | 63,660 |
Asset retirement obligations | 64,066 | 56,601 |
Derivative financial instruments | 3,302 | |
Current maturities of long-term debt | 23 | 4,268 |
Total Current Liabilities | 192,734 | 225,646 |
Long-term debt, less current maturities | 73,946 | 74,229 |
Asset retirement obligations | 556,301 | 696,763 |
Derivative financial instruments | 574 | |
Other liabilities | 18,134 | 14,481 |
Total Liabilities | 841,689 | 1,011,119 |
Commitments and Contingencies (Note 13) | ||
Stockholders' Equity | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized and no shares outstanding at September 30, 2017 and December 31, 2016 | ||
Common stock, $0.01 par value, 100,000,000 shares authorized and [33,221,427 and 33,211,594 shares issued and outstanding at September 30, 2017 and December 31, 2016 respectively | 332 | 332 |
Additional paid-in capital | 887,026 | 880,286 |
Accumulated deficit | (526,813) | (406,275) |
Total Stockholders' Equity | 360,545 | 474,343 |
Total Liabilities and Stockholders' Equity | $ 1,202,234 | $ 1,485,462 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets [Abstract] | ||
Oil and natural gas properties, net - full cost method of accounting, unevaluated properties not being amortized | $ 219.1 | $ 376.1 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 33,221,427 | 33,211,594 |
Common stock, shares outstanding | 33,221,427 | 33,211,594 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Oil sales | $ 114,991 | $ 366,792 | ||
Natural gas liquids sales | 2,209 | 6,806 | ||
Natural gas sales | 12,261 | 44,382 | ||
(Loss) gain on derivative financial instruments | (12,466) | 644 | ||
Total Revenues | 116,995 | 418,624 | ||
Costs and Expenses | ||||
Lease operating | 77,822 | 238,315 | ||
Production taxes | 471 | 1,192 | ||
Gathering and transportation | (2,441) | 11,459 | ||
Pipeline facility fee | 10,495 | 31,483 | ||
Depreciation, depletion and amortization | 36,066 | 116,733 | ||
Accretion of asset retirement obligations | 9,892 | 32,339 | ||
Impairment of oil and natural gas properties | (2,357) | 40,849 | ||
General and administrative expense | 15,026 | 57,346 | ||
Reorganization items | (1,529) | |||
Total Costs and Expenses | 144,974 | 528,187 | ||
Operating Loss | (27,979) | (109,563) | ||
Other (Expense) Income | ||||
Other income, net | 52 | 154 | ||
Interest expense | (3,653) | (11,129) | ||
Total Other (Expense) Income , net | (3,601) | (10,975) | ||
Loss Before Reorganization Items and Income Taxes | (31,580) | (120,538) | ||
Loss Before Income Taxes | (31,580) | (120,538) | ||
Net Loss | (31,580) | (120,538) | ||
Net Loss Attributable to Common Stockholders | $ (31,580) | $ (120,538) | ||
Loss per Share | ||||
Basic and Diluted | $ (0.95) | $ (3.63) | ||
Weighted Average Number of Common Shares Outstanding | ||||
Basic and Diluted | 33,241 | 33,236 | ||
Predecessor | ||||
Revenues | ||||
Oil sales | $ 122,732 | $ 345,007 | ||
Natural gas liquids sales | 2,144 | 8,029 | ||
Natural gas sales | 17,735 | 46,890 | ||
(Loss) gain on derivative financial instruments | 6,774 | |||
Total Revenues | 142,611 | 406,700 | ||
Costs and Expenses | ||||
Lease operating | 65,170 | 219,593 | ||
Production taxes | 214 | 590 | ||
Gathering and transportation | 7,534 | 20,043 | ||
Pipeline facility fee | 10,165 | 30,495 | ||
Depreciation, depletion and amortization | 31,573 | 125,498 | ||
Accretion of asset retirement obligations | 19,437 | 53,399 | ||
Impairment of oil and natural gas properties | 86,820 | 569,929 | ||
General and administrative expense | 15,435 | 66,967 | ||
Total Costs and Expenses | 236,348 | 1,086,514 | ||
Operating Loss | (93,737) | (679,814) | ||
Other (Expense) Income | ||||
Other income, net | 62 | 610 | ||
Gain on early extinguishment of debt | 777,022 | |||
Interest expense | (4,838) | (217,044) | ||
Total Other (Expense) Income , net | (4,776) | 560,588 | ||
Loss Before Reorganization Items and Income Taxes | (98,513) | (119,226) | ||
Reorganization items | (32,633) | (46,834) | ||
Loss Before Income Taxes | (131,146) | (166,060) | ||
Income Tax Benefit | (138) | |||
Net Loss | (131,146) | (165,922) | ||
Preferred Stock Dividends | 2,730 | |||
Net Loss Attributable to Common Stockholders | $ (131,146) | $ (168,652) | ||
Loss per Share | ||||
Basic and Diluted | $ (1.34) | $ (1.74) | ||
Weighted Average Number of Common Shares Outstanding | ||||
Basic and Diluted | 97,824 | 97,096 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows From Operating Activities | ||
Net loss | $ (120,538) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation, depletion and amortization | 116,733 | |
Impairment of oil and natural gas properties | 40,849 | |
Change in fair value of derivative financial instruments | 3,876 | |
Accretion of asset retirement obligations | 32,339 | |
Amortization and write off of debt issuance costs and other | 11 | |
Deferred rent | 5,961 | |
Provision for loss on accounts receivable | 300 | |
Reorganization items | (3,886) | |
Stock-based compensation | 6,741 | |
Changes in operating assets and liabilities | ||
Accounts receivable | 21,176 | |
Prepaid expenses and other assets | 11,803 | |
Change in restricted cash | 25,868 | |
Settlement of asset retirement obligations | (39,784) | |
Accounts payable, accrued liabilities and other | (47,585) | |
Net Cash Provided by (Used in) Operating Activities | 53,864 | |
Cash Flows from Investing Activities | ||
Capital expenditures | (43,027) | |
Insurance payments received | 41 | |
Proceeds from the sale of other property and equipment | 1,326 | |
Net Cash Used in Investing Activities | (41,660) | |
Cash Flows from Financing Activities | ||
Payments on long-term debt | (4,147) | |
Debt issuance costs | (61) | |
Net Cash Used in Financing Activities | (4,208) | |
Net Increase (Decrease) in Cash and Cash Equivalents | 7,996 | |
Cash and Cash Equivalents, beginning of period | 165,368 | |
Cash and Cash Equivalents, end of period | $ 173,364 | |
Predecessor | ||
Cash Flows From Operating Activities | ||
Net loss | $ (165,922) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation, depletion and amortization | 125,498 | |
Impairment of oil and natural gas properties | 569,929 | |
Gain on early extinguishment of debt | (777,022) | |
Change in fair value of derivative financial instruments | 61,325 | |
Accretion of asset retirement obligations | 53,399 | |
Amortization and write off of debt issuance costs and other | 128,232 | |
Deferred rent | 6,262 | |
Provision for loss on accounts receivable | 3,200 | |
Stock-based compensation | 458 | |
Changes in operating assets and liabilities | ||
Accounts receivable | (22,119) | |
Prepaid expenses and other assets | (12,903) | |
Settlement of asset retirement obligations | (41,507) | |
Accounts payable, accrued liabilities and other | 14,590 | |
Net Cash Provided by (Used in) Operating Activities | (56,580) | |
Cash Flows from Investing Activities | ||
Capital expenditures | (43,782) | |
Insurance payments received | 3,872 | |
Transfer to restricted cash | (8,829) | |
Proceeds from the sale of other property and equipment | 1,070 | |
Other | (31) | |
Net Cash Used in Investing Activities | (47,700) | |
Cash Flows from Financing Activities | ||
Proceeds from the issuance of common and preferred stock, net of offering costs | 22 | |
Payments on long-term debt | (2,880) | |
Fees related to debt extinguishment | (1,446) | |
Debt issuance costs | (1,568) | |
Other | (25) | |
Net Cash Used in Financing Activities | (5,897) | |
Net Increase (Decrease) in Cash and Cash Equivalents | (110,177) | |
Cash and Cash Equivalents, beginning of period | 325,890 | |
Cash and Cash Equivalents, end of period | $ 215,713 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2017 | |
Organization | |
Organization | ENERGY XXI GULF COAST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 — Organization Nature of Operations Energy XXI Gulf Coast, Inc. (“EGC”), a Delaware corporation, was incorporated on February 7, 2006. Prior to emergence from the Chapter 11 Cases, EGC was an indirect wholly-owned operating subsidiary of Energy XXI Ltd (“EXXI Ltd”). We are headquartered in Houston, Texas and have historically engaged in the acquisition, exploration, development and operation of oil and natural gas properties onshore in Louisiana and Texas and offshore in the Gulf of Mexico Shelf (“GoM Shelf”), which is an area in less than 1,000 feet of water. Emergence from Chapter 11 On April 14, 2016, EXXI Ltd, an exempt company incorporated under the laws of Bermuda and predecessor of the Reorganized EGC (as defined below), EGC, EPL Oil & Gas Inc., then an indirect wholly-owned subsidiary of EXXI Ltd (“EPL”) and certain other indirect wholly-owned subsidiaries of EXXI Ltd filed voluntary petitions for reorganization in the Bankruptcy Court seeking relief under the provisions of Chapter 11. On December 13, 2016, the Bankruptcy Court entered the Confirmation Order and on December 30, 2016, the Debtors emerged from bankruptcy. On the Emergence Date, the Debtors satisfied the conditions to effectiveness, the Plan became effective in accordance with its terms and the Debtors emerged from Chapter 11 Cases. In connection therewith, EXXI Ltd and its subsidiaries completed a series of internal reorganization transactions pursuant to which EXXI Ltd transferred all of its remaining assets to EGC (the “Reorganized EGC”), as the new parent entity. Accordingly, Reorganized EGC succeeded to the entire business and operations previously consolidated for accounting purposes by EXXI Ltd. In accordance with Accounting Standards Codification (“ASC”) 852, Reorganizations (“ASC 852”), the Reorganized EGC applied fresh start accounting upon the Predecessor’s emergence from bankruptcy and it evaluated transaction activity between the Emergence Date and December 31, 2016 and concluded that an accounting convenience date of December 31, 2016 (the “Convenience Date”) was appropriate. For reporting purposes, the pre-reorganization predecessor reflects the business that was transferred to the Reorganized EGC. The financial statements of the pre-reorganization predecessor are EXXI Ltd’s consolidated financial statements. Our common stock began trading on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “EXXI” at the opening of business on February 28, 2017. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements [Abstract] | |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | Note 2 – Summary of Significant Accounting Policies and Recent Accounting Pronouncements Principles of Consolidation and Reporting. The accompanying consolidated financial statements on September 30, 2017 include the accounts of Reorganized EGC and its wholly-owned subsidiaries and for the prior periods, the accompanying consolidated financial statements include the accounts of EXXI Ltd and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). All intercompany accounts and transactions are eliminated in consolidation. Our interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated. The Predecessor’s consolidated financial statements for the prior periods include certain reclassifications, including a $3.6 million and $12.3 million reclassification from lease operating expenses to gathering and transportation expenses and a $10.2 million and $30.5 million reclassification from gathering and transportation expenses to pipeline facility fee expense for the three and nine months ended September 30, 2016, respectively, to conform to the current presentation. Those reclassifications did not have any impact on the Predecessor’s previously reported consolidated result of operations or cash flows. For periods subsequent to filing the Bankruptcy Petitions, we have prepared the Predecessor’s consolidated financial statements in accordance with ASC 852. ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Correction of Immaterial Errors. Our unaudited consolidated financial statements include certain adjustments that pertain to prior periods. For the three months ended September 30, 2017, impairment of oil and natural gas properties includes a non-cash credit of $2.4 million related to the utilization of incorrect capitalized asset retirement costs within the first quarter 2017 full cost ceiling test computation and oil sales includes $2.0 million of additional revenue relating to prior periods. Additionally, the nine months ended September 30, 2017 includes non-cash credit adjustments to reorganization items of $3. 8 million to adjust the fresh start accounting opening balance sheet related to asset retirement obligations and other property, plant and equipment, a credit adjustment to oil sales of $1.6 million for additional revenue related to 2016, and non-cash adjustments of $0.7 million for other immaterial errors. The amounts are not deemed material with respect to the prior year, the previous quarters in 2017, or the anticipated results for fiscal year 2017. Fresh-start Accounting. Upon emergence from bankruptcy, in accordance with ASC 852 related to fresh-start accounting, Reorganized EGC became a new entity for financial reporting purposes. Upon adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values as of the Convenience Date. The effects of the Plan and the application of fresh-start accounting were reflected in our consolidated balance sheet as of December 31, 2016 and the related adjustments thereto were recorded in the consolidated statement of operations of the Predecessor as reorganization items in the 2016 Transition Report. Accordingly, Reorganized EGC’s consolidated financial statements as of and subsequent to December 31, 2016 are not and will not be comparable to the Predecessor consolidated financial statements prior to the Convenience Date. Our consolidated financial statements and related footnotes are presented with a black line division which delineates the lack of comparability between amounts presented for the three and nine months ended September 30, 2017 and comparable prior periods. Although our accounting policies are the same as that of our Predecessor’s, our financial results for future periods following the application of fresh-start accounting will be different from historical trends, and the differences may be material. Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates of proved reserves are key components of our depletion rate for our proved oil and natural gas properties and the full cost ceiling test limitation. The Predecessor’s proved reserves quantities of 86.6 MMBOE as of June 30, 2016 were estimated and compiled by its internal reservoir engineers and audited by Netherland, Sewell & Associates, Inc., independent oil and gas consultants (“NSAI”). As of December 31, 2016, proved reserves quantities of 121.9 MMBOE were independently estimated and compiled by our internal reservoir engineers. Pursuant to the terms of our Exit Facility, a third party engineer report is required annually, with the first report due by May 31, 2017 and we engaged NSAI to provide that report. The first NSAI report was delivered by us on May 23, 2017, and NSAI estimated our proved reserves quantities of 109.4 MMBOE as of March 31, 2017 in accordance with the guidelines established by the SEC. Other items subject to estimates and assumptions include fair value estimates used in fresh start accounting; accounting for acquisitions and dispositions; carrying amounts of property, plant and equipment; asset retirement obligations; deferred income taxes; valuation of derivative financial instruments; reorganization items and liabilities subject to compromise, among others. Accordingly, our accounting estimates require the exercise of judgment by management in preparing such estimates. While we believe that the estimates and assumptions used in preparation of our consolidated financial statements are appropriate, actual results could differ from those estimates, and any such differences may be material. Interim Financial Statements. The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2016 Transition Report. Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014‑09, Revenue from Contracts with Customers (“ASU 2014‑09”), as a new Accounting Standards Codification (ASC) Topic, ASC 606. ASU 2014‑09 is effective for us beginning in the first quarter of 2018. In May 2016, the FASB issued ASU 2016-11, which rescinds certain SEC guidance in the related ASC, including guidance related to the use of the "entitlements" method of revenue recognition used by EGC. We have developed a project plan for the implementation of ASC 606 in the first quarter of 2018. Based on our assessment to date of revenue contracts with customers against the requirements of the standard, we have not identified any changes to the timing of revenue recognition based on the requirements of ASC 606 that would have a material impact on our consolidated financial statements. We plan to adopt ASC 606 using the modified retrospective method that requires application of the new standard prospectively from the date of adoption with a cumulative effect adjustment, if any, recorded to retained earnings as of January 1, 2018. In February 2016, the FASB issued ASU No. 2016‑02, Leases ( “ ASU 2016‑02”), 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. To meet that objective, the FASB amended the FASB Accounting Standards Codification and created Topic 842, Leases . The guidance in this ASU supersedes Topic 840, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In the normal course of business, we enter into capital and operating lease agreements to support our operations. We are in the initial stages of evaluating the provisions of ASU 2016‑02 to determine the quantitative effects it will have on our consolidated financial statements and related disclosures. We believe the adoption and implementation of this ASU could have a material impact on our balance sheet resulting from an increase in both assets and liabilities relating to our leasing activities. In March 2016, the FASB issued ASU No. 2016‑09 (“ASU 2016‑09”), Compensation - Stock Compensation , to reduce complexity and enhance several aspects of accounting and disclosure for share-based payment transactions, including the accounting for income taxes, award forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016‑09 was effective for annual and interim periods beginning after December 15, 2016, with earlier application permitted. Our adoption of ASU 2016‑09 on January 1, 2017 had no effect on our consolidated financial position, results of operations or cash flows. In June 2016, the FASB issued ASU No. 2016‑13, Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016‑13”). ASU 2016‑13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s incurred loss approach with an expected loss model for instruments measured at amortized cost. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. We have not yet determined the effect of this standard on our consolidated financial position, results of operations or cash flows. In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”). The new guidance in ASU 2016‑15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new standard is effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. We do not expect the adoption of ASU 2016‑15 will have a material impact on our statement of cash flows and related disclosures. In November 2016, the FASB issued ASU No. 2016‑18 , Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016‑18). ASU 2016‑18 requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. This ASU will be effective for annual and interim periods beginning after December 15, 2017, with earlier application permitted. We do not expect the adoption of ASU 2016‑18 will have a material impact on our statement of cash flows and related disclosures. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment | |
Property and Equipment | Note 3 – Property and Equipment Property and equipment consists of the following ( in thousands ): Successor As of September 30, As of December 31, 2017 2016 Oil and natural gas properties - full cost method of accounting Proved properties $ 1,207,737 $ 1,127,616 Less: accumulated depreciation, depletion, amortization and impairment (557,033) (406,275) Proved properties, net 650,704 721,341 Unevaluated properties 219,106 376,138 Oil and natural gas properties, net 869,810 1,097,479 Other property and equipment 17,998 18,807 Less: accumulated depreciation and impairment (4,138) - Other property and equipment, net 13,860 18,807 Total property and equipment, net of accumulated depreciation, depletion, amortization and impairment $ 883,670 $ 1,116,286 Under the full cost method of accounting, at the end of each financial reporting period, we compare the present value of estimated future net cash flows from proved reserves (computed using the unweighted arithmetic average of the first-day-of-the-month historical price, net of applicable differentials, for each month within the previous 12‑month period discounted at 10%, plus the lower of cost or fair market value of unevaluated properties and excluding cash flows related to estimated abandonment costs associated with developed properties) to the net capitalized costs of oil and natural gas properties, net of related deferred income taxes. We refer to this comparison as a “ceiling test.” If the net capitalized costs of these oil and natural gas properties exceed the estimated discounted future net cash flows, we are required to write-down the value of our oil and natural gas properties to the amount of the discounted cash flows. For the nine months ended September 30, 2017, our ceiling test computations resulted in cumulative impairments of our oil and natural gas properties of $4 0.8 million, which are primarily the result of a $44.1 million ceiling impairment recorded during the first quarter of 2017. During the first quarter of 2017, we incurred an impairment primarily due to the difference in the present value of estimated future net cash flows from proved reserves as of March 31, 2017 prepared by NSAI compared with the present value of estimated future net cash flows from proved reserves as of December 31, 2016 prepared by our internal reservoir engineers. The primary non-commodity price factors contributing to the difference between the NSAI March 31, 2017 SEC reserve report and the internally-prepared December 31, 2016 SEC reserve report are: (i) technical reassessments, (ii) higher capital costs and (iii) production during the first quarter of 2017. The impact of those factors was partially offset by higher SEC average commodity prices for both crude oil and natural gas. If oil and natural gas prices decline or our costs increase, we may incur further impairment to our full cost pool. Costs associated with unevaluated properties, all of which were recorded as part of fresh start accounting, are transferred to evaluated properties either (i) ratably over a period of the related field’s proved reserve life, or (ii) upon determination as to whether there are any proved reserves related to the unevaluated properties or the costs are impaired or capital costs associated with the development of these properties will not be available. For the nine months ended September 30, 2017, the costs associated with unevaluated properties decreased by $15 7 million, of which $10 5.2 million was transferred to evaluated properties due to the forward price outlook and management intent making certain unevaluated properties uneconomical and the remaining $ 51.8 million was the ratable amortization to the evaluated properties. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt | |
Long-Term Debt | Note 4 – Long-Term Debt As of September 30, 2017 and December 31, 2016 our outstanding debt consisted of the following ( in thousands ): Successor September 30, 2017 December 31, 2016 Exit Facility $ 73,996 $ 73,996 4.14% Promissory Note due October 2017 - 4,001 Capital lease obligations 23 500 Total debt 74,019 78,497 Less: debt issue costs 50 - Less: current maturities 23 4,268 Total long-term debt $ 73,946 $ 74,229 Exit Facility Pursuant to the Plan, on the Emergence Date, the Company, as Borrower, and the other Reorganized Debtors entered into a secured Exit Facility which matures on December 30, 2019. The Exit Facility is secured by mortgages on at least 90% of the value of our and our subsidiary guarantors’ proved developed producing reserves as well as our total proved reserves. The Exit Facility consists of two facilities: (i) a term loan facility (the “Exit Term Loan”) resulting from the conversion of the remaining drawn amount plus accrued default interest, fees and expenses under the Debtors’ Second Amended and Restated First Lien Credit Agreement (the “Prepetition Revolving Credit Facility”) of approximately $74 million and (ii) a revolving credit facility (the “Exit Revolving Facility”) resulting from the conversion of the former EGC tranche of the Prepetition Revolving Credit Facility which provides, subject to the limitations noted below, for the making of revolving loans and the issuance of letters of credit. Interest on the outstanding amount of the Exit Term Loan, at the Company’s option, will accrue at an interest rate equal to either: (i) the Alternative Base Rate (as defined in the Exit Facility) plus 3.5% per annum or (ii) the one-month LIBO Rate (as defined in the Exit Facility) plus 4.5% per annum. Interest on the Exit Term Loan bearing interest at the Alternative Base Rate will be payable quarterly; interest on the Exit Term Loan bearing interest at the LIBO Rate will be payable monthly. On the Emergence Date, the aggregate credit capacity under the Exit Revolving Facility was approximately $227.8 million, all of which was utilized to maintain in effect outstanding letters of credit, including $225 million of letters of credit issued in favor of ExxonMobil to secure certain plugging and abandonment obligations related to assets in the GoM. On April 26, 2016, pursuant to the redetermination of our plugging and abandonment liabilities with ExxonMobil, it was agreed that subsequent to the Predecessor Company’s emergence from the Chapter 11 proceedings, the letters of credit issued in favor of ExxonMobil would be reduced to $200 million from the existing amount of $225 million and, on March 13, 2017, the letters of credit issued in favor of ExxonMobil were reduced to $200 million. Each existing letter of credit may be renewed or replaced (in each case, in an outstanding amount not to exceed the outstanding amount of the existing letter of credit). Following the reduction of $25 million in the letters of credit issued in favor of ExxonMobil, the credit capacity under the Exit Revolving Facility was permanently reduced by 50% of the $25 million reduction in the letters of credit, or $12.5 million. The remaining 50%, or $12.5 million, of such aggregate reduction is available for borrowing, under specific circumstances, as revolving loans subject to a maximum for all such loans of (i) $25 million prior to the date the borrowing base is initially determined and (ii) the borrowing base, on and after the date the borrowing base is initially determined. The borrowing base will be initially determined at a date elected by the Company, and will be redetermined semi-annually thereafter. Currently, the Company has not elected a date for the initial borrowing base determination. The Company must make a mandatory prepayment of the revolving loans and, if necessary, cash collateralize the outstanding letters of credit if a reduction in the revolving credit capacity would cause the revolving credit exposure to exceed the revolving credit capacity. On or after the determination of the borrowing base, the Company must also make a mandatory prepayment of the revolving loans and, if necessary, cash collateralize the outstanding letters of credit not in favor of ExxonMobil if a borrowing base deficiency arises. The Exit Facility contains covenants and events of default customary for reserve-based lending facilities. In addition, for each fiscal quarter ending on and after March 31, 2018, the Company must maintain a Current Ratio (as defined in the Exit Facility) of no less than 1.00 to 1.00 and a First Lien Leverage Ratio (as defined in the Exit Facility) of no greater than 4.00 to 1.00 calculated on a trailing four quarter basis. Furthermore, for each fiscal quarter ending on and after March 31, 2018, if the Asset Coverage Ratio (as defined in the Exit Facility) is less than 1.50 to 1.00, the Company must make a mandatory prepayment of the Exit Term Loan in an amount equal to the lesser of (i) 7.5% of the aggregate outstanding principal amount of the Exit Term Loan on the Emergence Date and (ii) the then outstanding principal amount of the Exit Term Loan. Based upon the Company’s current expectations with respect to its capital resources, capital expenditures, results from operations and commodity prices, the Company believes that it is reasonably likely that it will be required to make a mandatory prepayment with respect to each fiscal quarter beginning with the quarter ending March 31, 2018. In that case, the first such payment of approximately $5.55 million would be required to be paid during the fiscal quarter ending June 30, 2018. Any such mandatory prepayment would not, in and of itself, constitute a default under the Exit Facility. Interest on the outstanding amount of revolving loans borrowed under the Exit Revolving Facility, at the Company’s option, will accrue at an interest rate equal to either (i) the Alternative Base Rate plus 3.5% per annum or (ii) the one, three or six month LIBO Rate plus 4.5% per annum. Interest on revolving loans that bear interest at the Alternative Base Rate will be payable quarterly; interest on revolving loans that bear interest at the LIBO Rate will be payable at the end of each interest period or, if an interest period exceeds three months, at the end of every three months. The stated amount of each letter of credit issued under the Exit Revolving Facility accrues fees at the rate of 4.5% per annum. There is an issuance fee of 0.25% per annum charged on the stated amount of each letter of credit issued after the Emergence Date. Unused credit capacity under the Exit Revolving Facility will accrue a commitment fee of 0.50% payable quarterly in arrears. The Exit Facility is guaranteed by substantially all of the wholly-owned subsidiaries of the Company, subject to customary exceptions, and is secured by first priority security interests on substantially all assets of each Reorganized Debtor guarantor. Under the Exit Facility, the borrower will not declare or make a restricted payment, or make any deposit for any restricted payment. Restricted payments include declaration or payment of dividends. The Company on March 3, 2017, entered into an amendment to the Exit Facility (the “Amendment”). The Amendment, among other things, included updates necessary to reflect the Company changing its fiscal year end from June 30 to December 31. As a result, the Company must now deliver a December 31 reserve report prepared by a third-party engineer by March 1 of each year (or by May 31 with respect to 2017 only) and a reserve report prepared by the Company’s engineers by September 1 of each year. Further, a second amendment and waiver to the Exit Facility (the “Second Amendment”) was entered into by the Company on April 24, 2017. The Second Amendment amended the requirement of the “as of” date from January 1, 2017 to April 1, 2017, only with respect to the first reserve report prepared by a third-party reservoir engineer. Additionally, the Amendment also revised the calculation of: (i) the net present value of the future net revenues expected to accrue to the proved reserves of the Company and its subsidiaries and (ii) the asset coverage ratio, which are calculated by removing the effects of derivative agreements with any counterparties that are not lenders under the Exit Facility. Furthermore, the requirement for the Company and its subsidiaries to have mortgages covering at least 90% of the total value of their proved reserves was amended to require the mortgages to cover at least 90% of the revised net present value of the proved reserves. As of September 30, 2017, we had approximately $74 million in borrowings and $202. 8 million in letters of credit issued under the Exit Facility. 4.14% Promissory Note In September 2012, the Predecessor entered into a promissory note of $5.5 million to acquire other property and equipment. In accordance with the Plan, on the Emergence Date, all outstanding obligations under the promissory note were reinstated. Under this note, which is secured by such other property and equipment, we were required to make monthly payments of approximately $52,000 and were to pay one lump-sum payment of $3.3 million at maturity in October 2017. This note carried an interest rate of 4.14% per annum. This note was repaid in full on September 29, 2017. Interest Expense For the three and nine months ended September 30, 2017, we incurred interest expense of $3.7 million and $11.1 million, respectively, on our Exit Facility. For the three months ended September 30, 2016, the Predecessor incurred interest expense of $4.8 million primarily on its Prepetition Revolving Credit Facility and for the nine months ended September 30, 2016, the Predecessor incurred total interest expense of $217 million, of which, $16.7 million relates to Prepetition Revolving Credit Facility, $130.4 million relates to 11% second lien notes, $25.1 million relates to senior notes having interest rates in the range of 7.5% to 9.25%, $44.3 million relates to 3% senior convertible notes and $0.5 million relates to derivative instruments financing and other. |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Sep. 30, 2017 | |
Asset Retirement Obligations [Abstract] | |
Asset Retirement Obligations | Note 5 – Asset Retirement Obligations The following table describes the changes to our asset retirement obligations ( in thousands ): Balance as of December 31, 2016 (Successor) $ 753,364 Liabilities acquired - Liabilities incurred 2,041 Liabilities settled (39,784) Revisions* (127,593) Accretion expense 32,339 Total balance as of September 30, 2017 (Successor) 620,367 Less: current portion 64,066 Long-term portion as of September 30, 2017 (Successor) $ 556,301 * , resulting from updated estimates as to when the associated wells would cease to be economic. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Financial Instruments [Abstract] | |
Derivative Financial Instruments | Note 6 – Derivative Financial Instruments We enter into derivative transactions to reduce exposure to fluctuations in the price of crude oil and natural gas with multiple investment-grade rated counterparties, primarily financial institutions, to reduce the concentration of exposure to any individual counterparty. We have historically used various instruments, including financially settled crude oil and natural gas puts, put spreads, swaps, costless collars and three-way collars in our derivative portfolio. With a costless collar, the counterparty is required to make a payment to us if the settlement price for any settlement period is below the floor price of the collar, and we are required to make a payment to the counterparty if the settlement price for any settlement period is above the cap price for the collar. In a fixed price swap contract, the counterparty is required to make a payment to us if the settlement price for any settlement period is below the swap fixed price, and we are required to make a payment to the counterparty if the settlement price for any settlement period is above the swap fixed price. Derivative financial instruments are recorded at fair value and included as either assets or liabilities in the accompanying consolidated balance sheets. Any gains or losses resulting from changes in fair value of our outstanding derivative financial instruments and from the settlement of derivative financial instruments are recognized in earnings and included in (loss) gain on derivative financial instruments as a component of revenues in the accompanying consolidated statements of operations. Most of our crude oil production is sold at Heavy Louisiana Sweet. We have historically included contracts indexed to NYMEX-WTI, ICE Brent futures and Argus-LLS futures in our derivative portfolio to closely align and manage our exposure to the associated price risk. On March 14, 2016, the fourteenth amendment to the Prepetition Revolving Credit Facility became effective and required us to unwind certain derivative transactions and use the proceeds therefrom to repay amounts of outstanding loans to EPL under the Prepetition Revolving Credit Facility, and for such repayments to then result in an automatic and permanent reduction in EXXI Ltd’s borrowing base. Accordingly, on March 15, 2016, EXXI Ltd unwound and monetized all of its outstanding crude oil and natural gas contracts and $50.6 million was applied to reduce amounts outstanding under the Prepetition Revolving Credit Facility. The energy markets have historically been very volatile, and there can be no assurances that crude oil and natural gas prices will not be subject to wide fluctuations in the future. While the use of derivative arrangements helps to limit the downside risk of adverse price movements, they may also limit future gains from favorable price movements. As of September 30, 2017, we had the following open crude oil derivative positions: Weighted Average Contract Price Type of Volumes Collars Remaining Contract Term Contract Index (MBbls) Swaps Floor Ceiling October 2017 - December 2017 Collars Argus-LLS - $ 52.30 $ 57.43 October 2017 - December 2017 Swaps NYMEX-WTI $ 51.78 January 2018 - December 2018 Swaps NYMEX-WTI $ 50.68 January 2018 - June 2018 Swaps Argus-LLS $ 55.45 - - The fair values of derivative instruments in our consolidated balance sheets were as follows ( in thousands ): Successor Asset Derivative Instruments Liability Derivative Instruments September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016 Balance Fair Value Balance Fair Value Balance Fair Value Balance Fair Value Derivative financial instruments Current $ 988 Current $ - Current $ 4,290 Current $ - Non- 99 Non- - Non- 673 Non- - Total gross derivative financial instruments subject to enforceable master netting agreement 1,087 - 4,963 - Derivative financial instruments Current (988) Current - Current (988) Current - Non- (99) Non- - Non- (99) Non- - Gross amounts offset in Balance Sheets (1,087) - (1,087) - Net amounts presented in Balance Sheets Current - Current - Current 3,302 Current - Non- - Non- - Non- 574 Non- - $ - $ - $ 3,876 $ - The following table presents information about the components of the (loss) gain on derivative financial instruments ( in thousands ). Successor Predecessor Successor Predecessor Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Gain on derivative financial instruments 2017 2016 2017 2016 Cash settlements, net of purchased put premium amortization $ 1,880 $ - $ 4,520 $ 17,511 Proceeds from monetizations - - - 50,588 Non-cash (loss) gain in fair value (14,346) - (3,876) (61,325) Total (loss) gain on derivative financial instruments $ (12,466) $ - $ 644 $ 6,774 We monitor the creditworthiness of our counterparties who are also a part of our bank lending group. However, we are not able to predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in counterparty credit risk. Possible actions would be to transfer our position to another counterparty or request a voluntary termination of the derivative contracts resulting in a cash settlement. Should one of our financial counterparties not perform, we may not realize the benefit of some of our derivative instruments under lower commodity prices and could incur a loss. As of September 30, 2017, we had no collateral deposits with our counterparties. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Income Taxes | Note 7 – Income Taxes On the Emergence Date, the Predecessor Company engaged in several internal restructuring transactions that: (i) assigned all of Predecessor’s assets (directly or indirectly) to EGC, and (ii) separated EXXI Ltd, Energy XXI (US Holdings) Limited (Bermuda), Energy XXI, Inc., and Energy XXI USA from EGC. This had the effect, among other things, of isolating the original parent-level equity ownership and certain intercompany loans (the “Intercompany Loans”) from EGC. Then, pursuant to the Plan, the prepetition notes other than the 4.14% promissory note of $5.5 million, the Prepetition Revolving Credit Facility and 100% of the EGC stock owned by Energy XXI USA, Inc., were cancelled. Additionally, new EGC shares and warrants were issued to former creditors as set out in the Plan. Absent an exception, a debtor recognizes Cancellation of Indebtedness Income (“CODI”) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code of 1986, as amended (the “Tax Code”) provides that a debtor in a bankruptcy case (such as the Chapter 11 Cases) may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the Plan (the “Tax Attribute Reduction Rules”). The amount of CODI realized by a taxpayer is the adjusted issue price of any indebtedness discharged less the sum of (i) the amount of cash paid, (ii) the issue price of any new indebtedness issued and (iii) the fair market value of any other consideration, including equity, issued. As a result of the market value of equity upon emergence from the Chapter 11 Cases, the amount of CODI realized was approximately $2,600 million, which reduced the Company’s U.S. net operating loss (“NOL”) carryovers of $403 million to zero, and further reduced the Company’s tax basis in producing properties (subject to future recovery through tax DD&A deductions) and its investment in the stock of EPL by $2,197 million. This reduction in tax attributes occurred on the Convenience Date, the first day of the Company’s first tax year subsequent to the Emergence Date, as one effect of the Plan was to terminate the Predecessor’s fiscal income tax reporting period on the Emergence Date. As a result of the fresh start accounting, virtually all historic deferred tax assets and liabilities were eliminated, including the accrued outbound 30% withholding tax on the Intercompany Loans from the Predecessor’s Bermuda parent, as these obligations were extinguished in the Plan and are not obligations of the Successor entities. With the NOL carryover being reduced by the Tax Attribute Reduction Rules, the principal deferred tax assets and liabilities of the Successor after fresh-start accounting relate to our oil and gas properties. The remaining tax bases of our oil and natural gas properties are less than their respective book carrying values as determined in fresh-start accounting such that we have recorded a deferred tax liability for those properties. We have recorded a deferred tax asset for the asset retirement obligation (which has no tax basis and will be tax deductible or result in additional tax basis in assets when settled) and other items that exceed the deferred tax liability for oil and natural gas properties. As such, we recorded a valuation allowance of $174.5 million at December 31, 2016, which results in no net deferred tax asset or liability appearing on our statement of financial position. We recorded this valuation allowance at this date after an evaluation of all available evidence (including our recent history of Predecessor losses) that led to a conclusion that based upon the more-likely-than-not standard of the accounting literature, these deferred tax assets were unrecoverable. Tax Code Sections 382 and 383 provide an annual limitation with respect to the ability of a corporation to utilize its tax attributes, including as the tax basis in certain assets (net unrealized built-in-losses), against future U.S. taxable income in the event of a change in ownership. The Company’s emergence from the Chapter 11 Cases was considered a change in ownership for purposes of Tax Code Section 382. The limitation under the Tax Code is based on the value of the loss corporation as of the Convenience Date, which reflects value after giving effect to the Plan’s steps. However, this and prior ownership changes and resulting annual limitation will have limited, if any, effect on the Company’s NOLs since all of the NOLs were extinguished by the Tax Attribute Reduction Rules. There is the possibility of deferral of recognition of certain portions of tax DD&A by the Tax Attribute Reduction Rules that would affect the timing of offsetting future taxable income, but would not affect income tax expense. No cash income taxes were paid during the period ended September 30, 2017, and, based upon current commodity pricing and planned development activity, no cash income taxes have been paid or are expected to be paid or owed for the year ending December 31, 2017. We have estimated our effective income tax rate (benefit) for the year to be zero, as we are forecasting a pre-tax loss at this time. We do not believe that our net deferred tax assets are realizable in the future on a more-likely-than-not basis at this time; as such, we have increased our valuation allowance by $ 10 million in the quarter ended September 30, 2017 to reflect the tax effect of this loss. This $ 10 million third quarter valuation allowance increase, when coupled with the $2 8 million first and second quarter valuation allowance increase, results in a valuation allowance of $ 213 million at September 30, 2017, after adjustments of $3 million for changes in estimate to the Fresh Start valuation allowance based on subsequent tax filings for pre-Effective Date periods with the Internal Revenue Service. A post-Emergence Date pre-tax NOL of approximately $ 50 million resulting from our post-Emergence Date losses represents our only NOL carryforwards. This post-Emergence Date NOL is not subject to limitation in future usage by the ownership changes rules of Tax Code section 382 or the Tax Attribute Reduction Rules resulting from the Plan, but this NOL cannot be carried back to pre-Emergence Date years to create a cash income tax refund. If, however, the Company were to experience post-Emergence changes in stock ownership of greater than 50% within any three-year look back period, this post-Emergence NOL would be subject to Tax Code section 382 limitations based upon stock value and other factors at such time. Our 2016 tax return reflecting the required reduction in tax attribute carryforwards due to CODI from the discharge (eliminating all pre-discharge NOLs and reducing the tax basis in remaining assets of the Successor) will be filed in the fourth quarter of 2017 as the Company used additional time to file these returns granted by the Internal Revenue Service as a result of Hurricane Harvey. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | Note 8 – Stockholders’ Equity On the Emergence Date, the Company’s certificate of incorporation and bylaws were amended and restated in their entirety. Under our certificate of incorporation, the total number of all shares of capital stock that we are authorized to issue is 110 million shares, consisting of 100 million shares of the Company’s common stock, par value $0.01 per share, and 10 million shares of preferred stock, par value $0.01 per share. On the Emergence Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain holders representing 10% or more of the Company’s common stock outstanding on that date or who acquire 10% or more of the Company’s common stock outstanding within six months of the Emergence Date (the “Holders”). The Registration Rights Agreement provided resale registration rights for the Holders’ Registerable Securities (as defined in the Registration Rights Agreement). On February 28, 2017, in accordance with the requirements of the Registration Rights Agreement, the Company filed a registration statement on Form S‑3 relating to the resale of an aggregate of 9,272,285 shares of our common stock, which may be offered for sale from time to time by the selling stockholders named in Form S‑3 prospectus. The number of shares the selling stockholders may sell consists of 9,049,929 shares of common stock that are currently issued and outstanding and 222,356 shares of common stock that they may receive if they exercise their warrants. The selling stockholders acquired all of the shares of common stock and warrants covered by the Form S‑3 prospectus in a distribution pursuant to Section 1145 under the United States Bankruptcy Code in connection with our plan of reorganization that became effective on the Emergence Date. We are not selling any shares of common stock under the Form S‑3 prospectus and will not receive any proceeds from the sale of common stock by the selling stockholders. The registration statement on Form S‑3 was declared effective as of March 23, 2017. On February 28, 2017, pursuant to our satisfaction of all the listing requirements, our common stock began trading on NASDAQ under the symbol “EXXI” at the opening of business. As of September 30, 2017, we had issued 9,833 shares of our common stock upon accelerated vesting of restricted stock units granted to a former board member and 33,221,427 shares of common stock and 2,119,889 warrants were outstanding. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Note 9 – Supplemental Cash Flow Information The following table presents our supplemental cash flow information ( in thousands ): Successor Predecessor Nine Months Ended Nine Months Ended September 30, September 30, 2017 2016 Cash paid for interest $ 11,149 $ 37,606 Cash paid for income taxes - - The following table presents our non-cash investing and financing activities ( in thousands ): Successor Predecessor Nine Months Ended Nine Months Ended September 30, September 30, 2017 2016 Changes in capital expenditures and accrued liabilities in accounts payable $ 6,629 $ (63,435) Inventory transferred to oil and natural gas properties - 7,081 Changes in asset retirement obligations (125,552) (2,297) Changes in other property and equipment (455) - Proceeds from monetization of derivative instruments applied to Prepetition Revolving Credit Facility - 50,588 |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2017 | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | Note 10 – Employee Benefit Plans As of the Emergence Date, the Company entered into the Energy XXI Gulf Coast, Inc. 2016 Long Term Incentive Plan (the “2016 LTIP”), which is a comprehensive equity-based award plan as part of the compensation for the Company’s officers, directors, employees and consultants (the “Service Providers”). The total number of shares of our common stock reserved and available for delivery with respect to awards under the 2016 LTIP is 1,859,552 shares (or 5% of the total new equity). The compensation committee (the “Committee”) of the board of directors of the Company (the “Board”) generally administers the 2016 LTIP and will determine the types of equity based awards (which may include stock option, stock appreciation rights, restricted stock, restricted stock units, bonus stock awards, performance awards, other stock based awards or cash awards) and the terms and conditions (including vesting and forfeiture restrictions) of such awards. Awards under the 2016 LTIP will be awarded to the Service Providers selected in the discretion of the Committee; provided, however, that 3% of the 5% total new equity on a fully diluted basis reserved under the 2016 LTIP must be allocated no later than 120 days after the Emergence Date. As of April 29, 2017, the 3% of total new equity had been allocated by the Board. Under the 2016 LTIP, stock options are issued with an exercise price that is not less than the fair market value of our common stock on the date of grant and expire 10 years from the grant date. Stock options that have been granted to date generally vest ratably over a three-year period. The fair value of each stock option granted is estimated on the date of grant using a Black-Scholes-Merton option valuation model that uses assumptions related to expected term, expected volatility, risk free rate and dividend yield. During the nine months ended September 30, 2017, we granted 372,597 stock options at a weighted average exercise price of $28.92 per stock option. As of September 30, 2017, 48,487 stock options were forfeited and we had 3 24,110 unvested stock options and $2.4 million in unrecognized compensation cost related to unvested stock options. Under the 2016 LTIP, restricted stock units may be granted from time to time as approved by the Committee. To date, the restricted stock units granted by the Committee have a vesting date up to three years from the date of grant and each restricted stock unit represents a right to receive one share of our common stock. During the three and nine months ended September 30, 2017, we granted 101,500 and 762,010 restricted stock units at a weighted average price of $ 10.43 and $24.56 per restricted stock unit, respectively, including 118,408 restricted stock units granted to members of the Board pursuant to the terms of the 2016 LTIP and the non-employee director compensation policy. As of September 30, 2017, 4 3,702 restricted stock units were forfeited and we had 6 88,705 unvested restricted stock units and $11. 9 million in unrecognized compensation cost related to unvested restricted stock units. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11 — Related Party Transactions On February 2, 2017, John D. Schiller, Jr., Bruce W. Busmire and Antonio de Pinho resigned as President and CEO, Chief Financial Officer and Chief Operating Officer, respectively. In connection with Mr. Schiller’s termination of employment, the employment-related provisions of Mr. Schiller’s Executive Employment Agreement, dated as of December 30, 2016 (the “Schiller Employment Agreement”) were terminated as of February 2, 2017. Under the Schiller Employment Agreement, Mr. Schiller was entitled to receive the following benefits, subject to his entry into a waiver and release agreement (i) a lump-sum cash severance payment in the amount of $2 million, and (ii) reimbursement for the monthly cost of maintaining health benefits for Mr. Schiller and his spouse and eligible dependents as of the date of his termination for a period of 18 months to the extent Mr. Schiller elects Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) continuation coverage, less applicable taxes and withholding. The $2 million cash severance payment was made on April 3, 2017, the 60th day after the termination date. Payments and benefits are subject to Mr. Schiller’s continued compliance with certain confidentiality, non-competition, non-solicitation and non-disparagement provisions of the waiver and release agreement. In addition on February 2, 2017, we entered into a consulting agreement (the “Schiller Consulting Agreement”) with Mr. Schiller, pursuant to which Mr. Schiller has agreed to serve as a special advisor to the Board during a transition period of up to six months. In consideration for those services, we have agreed to pay Mr. Schiller a consulting fee of $50,000 per month for up to six months. All amounts due under Schiller Consulting Agreement have been paid as of August 9, 2017. Prior to their departure from the Company, Mr. Busmire and Mr. de Pinho were not party to employment agreements with us, nor did they participate in a severance plan. We paid Mr. Busmire and Mr. de Pinho severance payments on February 15, 2017 in the amount of $750,000 each, less applicable taxes and withholdings, in consideration for the performance of the terms and conditions set forth in their Resignation Agreement and General Release, including, without limitation, a general release and non-disparagement provision. We have also agreed to reimburse Mr. Busmire and Mr. de Pinho for the monthly cost of maintaining health benefits for Mr. Busmire and Mr. de Pinho and their respective spouses and eligible dependents as of the date of their termination for a period of 18 months to the extent Mr. Busmire and Mr. de Pinho elect COBRA continuation coverage. During the years ended June 30, 2015 and 2014, Mr. Schiller borrowed funds from personal acquaintances or their affiliates, certain of whom provide services to us. During the three and nine months ended September 30, 2017 certain of those lenders provided services to the Company totaling $ 3.7 million and $ 6 million, respectively, and during the three and nine months ended September 30, 2016 certain of those lenders provided services to the Company totaling $ 1.2 million and $ 4.9 million, respectively. During 2014, one of the directors on the Predecessor Board made a personal loan to Mr. Schiller at a time prior to becoming a member of the Predecessor Board but while a managing director at Mount Kellett Capital Management LP, which at the time owned a majority interest in Energy XXI M21K, LLC and 6.3% of EXXI Ltd’s common stock. On August 24, 2017, Hugh A. Menown resigned as Executive Vice President, Chief Accounting Officer and Interim Chief Financial Officer. In connection with his separation from the Company, Mr. Menown was entitled to receive the following severance benefits under the Company’s employee severance plan subject to his entry into a waiver and release of claims agreement: (i) a lump-sum cash severance payment in the amount of $580,000, and (ii) to the extent Mr. Menown elects COBRA continuation coverage, medical and dental benefits for him and his spouse for a period of 12 months after termination, subject to the payment of the same monthly premium he was paying at termination, in each case, less any applicable taxes and withholding. The $580,000 cash severance payment was made on September 1, 2017. In addition on August 24, 2017, we entered into a consulting agreement with Mr. Menown, pursuant to which Mr. Menown has agreed to serve as a special advisor to the Company during a transition period of up to six months. In consideration for those services, we have agreed to pay Mr. Menown a consulting fee of $28,333.33 per month for up to six months. |
Loss Per Share
Loss Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Loss Per Share [Abstract] | |
Loss Per Share | Note 12 — Loss per Share Basic loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Except when the effect would be anti-dilutive, the diluted earnings per share calculation includes the impact of restricted stock, stock options and other common stock equivalents. The following table sets forth the calculation of basic and diluted loss per share (“EPS”) ( in thousands, except per share data ): Successor Predecessor Successor Predecessor Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Net loss $ (31,580) $ (131,146) $ (120,538) $ (165,922) Preferred stock dividends - - - 2,730 Net loss attributable to common stockholders $ (31,580) $ (131,146) $ (120,538) $ (168,652) Weighted average shares outstanding for basic EPS 33,241 97,824 33,236 97,096 Add dilutive securities - - - - Weighted average shares outstanding for diluted EPS 33,241 97,824 33,236 97,096 Loss per share Basic and Diluted $ (0.95) $ (1.34) $ (3.63) $ (1.74) The Company’s restricted stock units granted to the members of the Board during the three and nine months ended September 30, 2017 are treated as outstanding for basic loss per share calculations since these shares are entitled to participate in dividends declared on common shares, if any, and undistributed earnings. As participating securities, the shares of restricted stock are included in the calculation of basic EPS using the two-class method. For the three and nine months ended September 30, 2017, no net loss was allocated to the participating securities. For the three and nine months ended September 30, 2017, 4,802,150 and 2,177,832 common stock equivalents, respectively, and for the three and nine months ended September 30, 2016, 7, 113,391 and 7, 572,702 common stock equivalents, respectively, were excluded from the diluted average shares calculation. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 13 — Commitments and Contingencies Litigation. We are involved in various legal proceedings and claims, which arise in the ordinary course of our business. We do not believe the ultimate resolution of any such actions will have a material effect on our consolidated financial position, results of operations or cash flows. On June 17, 2016, the SEC filed a proof of claim against EXXI Ltd asserting a general unsecured claim in the amount of $3.9 million based on alleged violations of the federal securities laws by EXXI Ltd pertaining to the failure to disclose: (i) certain funds borrowed by our former President and CEO John D. Schiller, Jr. from personal acquaintances or their affiliates, certain of which provided EXXI Ltd and certain of its subsidiaries with services, (ii) a personal loan made to Mr. Schiller by one of the directors on the Predecessor Board at a time prior to becoming a member of the Predecessor Board, (iii) Mr. Schiller’s pledge of EXXI Ltd stock to a certain financial institution and (iv) certain perquisites and compensation to Mr. Schiller, including in connection with certain expense reimbursements. The SEC’s claim against EXXI Ltd has been classified as a general unsecured claim to be paid, if at all, its pro rata share of the approximately $1.5 million General Unsecured Claim Distribution defined in the Plan, and, as such, is subject to the Settlement, Release, Injunction, and Related Provisions contained in Article VIII of the Plan, and also is subject to the Confirmation Order. The Debtors anticipate that they will object to the SEC’s claim. Letters of Credit and Performance Bonds. As of September 30, 2017, we had approximately $336 million of performance bonds outstanding and $200 million in letters of credit issued to ExxonMobil relating to assets in the Gulf of Mexico. In April 2015, the Predecessor received letters from the BOEM stating that certain of its subsidiaries no longer qualified for waiver of certain supplemental bonding requirements for potential offshore decommissioning, plugging and abandonment liabilities. Accordingly, as of September 30, 2017, approximately $18 3.9 million of our performance bonds are lease and/or area bonds issued to the BOEM, to which the BOEM has access to ensure our commitment to comply with the terms and conditions of those leases. As of September 30, 2017, we also maintain approximately $15 2.1 million in performance bonds issued to predecessor third party assignors including certain state regulatory bodies for wells and facilities pursuant to a contractual commitment made by us to those third parties at the time of assignment with respect to the eventual decommissioning of those wells and facilities. As of September 30, 2017, we had $49. 8 million in cash collateral provided to surety companies associated with the bonding requirements of the BOEM and third party assignors. To address the supplemental bonding and other financial assurance concerns expressed to us by the BOEM in April 2015 and thereafter, the Predecessor submitted a long-term financial assurance plan (the “Long-Term Plan”) to the agency. Further, the Predecessor submitted a proposed plan amendment on June 28, 2016 that would revise the executed Long-Term Plan (the “Proposed Plan Amendment”). We continue to work with the BOEM in finalizing a process under the Long-Term Plan and the Proposed Plan Amendment for providing adequate levels of financial assurance to satisfy the BOEM with respect to its April 2015 supplemental bonding letter and any subsequent concerns and guidance. Drilling Rig Commitments. As of September 30, 2017, we have approximately $ 5.4 million committed under three rig contracts for recompletions and plugging and abandonment activities. The contracts’ terms range from October 1, 2017 through December 31, 2017. Other. We maintain restricted escrow funds as required by certain contractual arrangements. As of September 30, 2017, our restricted cash primarily related to $25. 7 million in cash collateral associated with our bonding requirements and approximately $6.1 million in a trust for future plugging, abandonment and other decommissioning costs related to the East Bay field that was sold to Whitney Oil & Gas, LLC and Trimont Energy (NOW), LLC on June 30, 2015 and those funds held in trust will be transferred to the buyers of our interests in that field. We and our oil and natural gas joint interest owners are subject to periodic audits of the joint interest accounts for leases in which we participate and/or operate. As a result of these joint interest audits, amounts payable or receivable by us for costs incurred or revenue distributed by the operator or by us on a lease may be adjusted, resulting in adjustments to our net costs or revenues and related cash flows. When they occur, these adjustments are recorded in the current period, which generally is one or more years after the related cost or revenue was incurred or recognized by the joint account. We do not believe any such adjustments will be material. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Note 14 — Fair Value of Financial Instruments Certain assets and liabilities are measured at fair value on a recurring basis in our consolidated balance sheets. Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of these techniques requires significant judgment and is primarily dependent upon the characteristics of the asset or liability, the principal (or most advantageous) market in which participants would transact for the asset or liability and the quality and availability of inputs. Inputs to valuation techniques are classified as either observable or unobservable within the following hierarchy: · Level 1 – quoted prices in active markets for identical assets or liabilities. · Level 2 – inputs other than quoted prices that are observable for an asset or liability. These include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). · Level 3 – unobservable inputs that reflect our own expectations about the assumptions that market participants would use in measuring the fair value of an asset or liability. For cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities and certain notes payable, the carrying amounts approximate fair value due to the short-term nature or maturity of the instruments. The carrying value of the Exit Facility approximates its fair value because the interest rate is variable and reflective of market rates, which are Level 2 inputs within the fair value hierarchy. Our commodity derivative instruments historically consisted of financially settled crude oil and natural gas puts, swaps, put spreads, costless collars and three way collars. We estimated the fair values of these instruments based on published forward commodity price curves, market volatility and contract terms as of the date of the estimate. The discount rate used in the discounted cash flow projections is based on published London Interbank offered rates. 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 our own nonperformance risk, each based on the current published issuer-weighted corporate default rates. See Note 6 – “Derivative Financial Instruments.” The fair values of our restricted stock units are based on the period-end stock price. For our stock options, we utilize the Black-Scholes-Merton model to determine fair value, which incorporates various assumptions listed here to value the stock option awards. The dividend yield on our common stock was zero. The expected volatility is based on comparable companies’ asset volatilities. The risk-free interest rate is the related United States Treasury yield curve for periods within the expected term of the option at the time of grant. During the nine months ended September 30, 2017 we did not have any transfers from or to any level within the fair value hierarchy. The following table presents the fair value of our Level 2 financial instruments ( in thousands ): Successor Level 2 As of September 30, As of December 31, 2017 2016 Assets: Oil and Natural Gas Derivatives $ 1,087 $ - Liabilities: Oil and Natural Gas Derivatives $ 4,963 $ - The following table sets forth the outstanding and estimated fair values of our long-term debt instruments which are classified as Level 2 financial instruments ( in thousands ): Successor September 30, 2017 December 31, 2016 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Exit Facility $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 |
Prepayments and Accrued Liabili
Prepayments and Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Prepayments and Accrued Liabilities [Abstract] | |
Prepayments and Accrued Liabilities | Note 15 — Prepayments and Accrued Liabilities Prepayments and other current assets and accrued liabilities consist of the following ( in thousands ): Successor September 30, December 31, 2017 2016 Prepaid expenses and other current assets Advances to joint interest partners $ 1,756 $ 650 Insurance 8,862 9,600 Inventory 648 470 Royalty deposit 1,401 1,273 Prepaid professional fees - 4,584 Prepaid software license fees 1,297 - Other 2,132 9,380 Total prepaid expenses and other current assets $ 16,096 $ 25,957 Accrued liabilities Advances from joint interest partners 376 374 Employee benefits and payroll 6,054 4,491 Interest payable 201 233 Undistributed oil and gas proceeds 17,871 22,715 Severance taxes payable 725 628 Restructuring expenses - 25,712 East Bay field restricted cash payable 6,063 6,036 General and administrative and legal expenses payable 5,718 3,456 Other 1,644 15 Total accrued liabilities $ 38,652 $ 63,660 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 — Subsequent Events In October 2017, we entered into fixed price swap contracts benchmarked to ICE Brent, to hedge 2,500 BPD of our crude oil production for the period from January 2018 to June 2018 with an average fixed price of $56.59. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policy) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements [Abstract] | |
Principles of Consolidation and Reporting | Principles of Consolidation and Reporting. The accompanying consolidated financial statements on September 30, 2017 include the accounts of Reorganized EGC and its wholly-owned subsidiaries and for the prior periods, the accompanying consolidated financial statements include the accounts of EXXI Ltd and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). All intercompany accounts and transactions are eliminated in consolidation. Our interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated. The Predecessor’s consolidated financial statements for the prior periods include certain reclassifications, including a $3.6 million and $12.3 million reclassification from lease operating expenses to gathering and transportation expenses and a $10.2 million and $30.5 million reclassification from gathering and transportation expenses to pipeline facility fee expense for the three and nine months ended September 30, 2016, respectively, to conform to the current presentation. Those reclassifications did not have any impact on the Predecessor’s previously reported consolidated result of operations or cash flows. For periods subsequent to filing the Bankruptcy Petitions, we have prepared the Predecessor’s consolidated financial statements in accordance with ASC 852. ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. |
Fresh Start Accounting | Fresh-start Accounting. Upon emergence from bankruptcy, in accordance with ASC 852 related to fresh-start accounting, Reorganized EGC became a new entity for financial reporting purposes. Upon adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values as of the Convenience Date. The effects of the Plan and the application of fresh-start accounting were reflected in our consolidated balance sheet as of December 31, 2016 and the related adjustments thereto were recorded in the consolidated statement of operations of the Predecessor as reorganization items in the 2016 Transition Report. Accordingly, Reorganized EGC’s consolidated financial statements as of and subsequent to December 31, 2016 are not and will not be comparable to the Predecessor consolidated financial statements prior to the Convenience Date. Our consolidated financial statements and related footnotes are presented with a black line division which delineates the lack of comparability between amounts presented for the three and nine months ended September 30, 2017 and comparable prior periods. Although our accounting policies are the same as that of our Predecessor’s, our financial results for future periods following the application of fresh-start accounting will be different from historical trends, and the differences may be material. |
Use of Estimates | Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates of proved reserves are key components of our depletion rate for our proved oil and natural gas properties and the full cost ceiling test limitation. The Predecessor’s proved reserves quantities of 86.6 MMBOE as of June 30, 2016 were estimated and compiled by its internal reservoir engineers and audited by Netherland, Sewell & Associates, Inc., independent oil and gas consultants (“NSAI”). As of December 31, 2016, proved reserves quantities of 121.9 MMBOE were independently estimated and compiled by our internal reservoir engineers. Pursuant to the terms of our Exit Facility, a third party engineer report is required annually, with the first report due by May 31, 2017 and we engaged NSAI to provide that report. The first NSAI report was delivered by us on May 23, 2017, and NSAI estimated our proved reserves quantities of 109.4 MMBOE as of March 31, 2017 in accordance with the guidelines established by the SEC. Other items subject to estimates and assumptions include fair value estimates used in fresh start accounting; accounting for acquisitions and dispositions; carrying amounts of property, plant and equipment; asset retirement obligations; deferred income taxes; valuation of derivative financial instruments; reorganization items and liabilities subject to compromise, among others. Accordingly, our accounting estimates require the exercise of judgment by management in preparing such estimates. While we believe that the estimates and assumptions used in preparation of our consolidated financial statements are appropriate, actual results could differ from those estimates, and any such differences may be material. |
Interim Financial Statements | Interim Financial Statements. The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2016 Transition Report. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014‑09, Revenue from Contracts with Customers (“ASU 2014‑09”), as a new Accounting Standards Codification (ASC) Topic, ASC 606. ASU 2014‑09 is effective for us beginning in the first quarter of 2018. In May 2016, the FASB issued ASU 2016-11, which rescinds certain SEC guidance in the related ASC, including guidance related to the use of the "entitlements" method of revenue recognition used by EGC. We have developed a project plan for the implementation of ASC 606 in the first quarter of 2018. Based on our assessment to date of revenue contracts with customers against the requirements of the standard, we have not identified any changes to the timing of revenue recognition based on the requirements of ASC 606 that would have a material impact on our consolidated financial statements. We plan to adopt ASC 606 using the modified retrospective method that requires application of the new standard prospectively from the date of adoption with a cumulative effect adjustment, if any, recorded to retained earnings as of January 1, 2018. In February 2016, the FASB issued ASU No. 2016‑02, Leases ( “ ASU 2016‑02”), 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. To meet that objective, the FASB amended the FASB Accounting Standards Codification and created Topic 842, Leases . The guidance in this ASU supersedes Topic 840, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In the normal course of business, we enter into capital and operating lease agreements to support our operations. We are in the initial stages of evaluating the provisions of ASU 2016‑02 to determine the quantitative effects it will have on our consolidated financial statements and related disclosures. We believe the adoption and implementation of this ASU could have a material impact on our balance sheet resulting from an increase in both assets and liabilities relating to our leasing activities. In March 2016, the FASB issued ASU No. 2016‑09 (“ASU 2016‑09”), Compensation - Stock Compensation , to reduce complexity and enhance several aspects of accounting and disclosure for share-based payment transactions, including the accounting for income taxes, award forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016‑09 was effective for annual and interim periods beginning after December 15, 2016, with earlier application permitted. Our adoption of ASU 2016‑09 on January 1, 2017 had no effect on our consolidated financial position, results of operations or cash flows. In June 2016, the FASB issued ASU No. 2016‑13, Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016‑13”). ASU 2016‑13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s incurred loss approach with an expected loss model for instruments measured at amortized cost. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. We have not yet determined the effect of this standard on our consolidated financial position, results of operations or cash flows. In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”). The new guidance in ASU 2016‑15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new standard is effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. We do not expect the adoption of ASU 2016‑15 will have a material impact on our statement of cash flows and related disclosures. In November 2016, the FASB issued ASU No. 2016‑18 , Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016‑18). ASU 2016‑18 requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. This ASU will be effective for annual and interim periods beginning after December 15, 2017, with earlier application permitted. We do not expect the adoption of ASU 2016‑18 will have a material impact on our statement of cash flows and related disclosures. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment | |
Schedule of Property and Equipment | Property and equipment consists of the following ( in thousands ): Successor As of September 30, As of December 31, 2017 2016 Oil and natural gas properties - full cost method of accounting Proved properties $ 1,207,737 $ 1,127,616 Less: accumulated depreciation, depletion, amortization and impairment (557,033) (406,275) Proved properties, net 650,704 721,341 Unevaluated properties 219,106 376,138 Oil and natural gas properties, net 869,810 1,097,479 Other property and equipment 17,998 18,807 Less: accumulated depreciation and impairment (4,138) - Other property and equipment, net 13,860 18,807 Total property and equipment, net of accumulated depreciation, depletion, amortization and impairment $ 883,670 $ 1,116,286 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt | |
Schedule of long-term debt | As of September 30, 2017 and December 31, 2016 our outstanding debt consisted of the following ( in thousands ): Successor September 30, 2017 December 31, 2016 Exit Facility $ 73,996 $ 73,996 4.14% Promissory Note due October 2017 - 4,001 Capital lease obligations 23 500 Total debt 74,019 78,497 Less: debt issue costs 50 - Less: current maturities 23 4,268 Total long-term debt $ 73,946 $ 74,229 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Asset Retirement Obligations [Abstract] | |
Changes in Asset Retirement Obligations | The following table describes the changes to our asset retirement obligations ( in thousands ): Balance as of December 31, 2016 (Successor) $ 753,364 Liabilities acquired - Liabilities incurred 2,041 Liabilities settled (39,784) Revisions* (127,593) Accretion expense 32,339 Total balance as of September 30, 2017 (Successor) 620,367 Less: current portion 64,066 Long-term portion as of September 30, 2017 (Successor) $ 556,301 * , resulting from updated estimates as to when the associated wells would cease to be economic. |
Derivative Financial Instrume26
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Financial Instruments [Abstract] | |
Schedule of Derivative Positions | As of September 30, 2017, we had the following open crude oil derivative positions: Weighted Average Contract Price Type of Volumes Collars Remaining Contract Term Contract Index (MBbls) Swaps Floor Ceiling October 2017 - December 2017 Collars Argus-LLS - $ 52.30 $ 57.43 October 2017 - December 2017 Swaps NYMEX-WTI $ 51.78 January 2018 - December 2018 Swaps NYMEX-WTI $ 50.68 January 2018 - June 2018 Swaps Argus-LLS $ 55.45 - - |
Fair Values of Derivative Instruments in Consolidated Balance Sheets | The fair values of derivative instruments in our consolidated balance sheets were as follows ( in thousands ): Successor Asset Derivative Instruments Liability Derivative Instruments September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016 Balance Fair Value Balance Fair Value Balance Fair Value Balance Fair Value Derivative financial instruments Current $ 988 Current $ - Current $ 4,290 Current $ - Non- 99 Non- - Non- 673 Non- - Total gross derivative financial instruments subject to enforceable master netting agreement 1,087 - 4,963 - Derivative financial instruments Current (988) Current - Current (988) Current - Non- (99) Non- - Non- (99) Non- - Gross amounts offset in Balance Sheets (1,087) - (1,087) - Net amounts presented in Balance Sheets Current - Current - Current 3,302 Current - Non- - Non- - Non- 574 Non- - $ - $ - $ 3,876 $ - |
Schedule of Derivative Instruments (Loss) Gain in Statement of Financial Performance | The following table presents information about the components of the (loss) gain on derivative financial instruments ( in thousands ). Successor Predecessor Successor Predecessor Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Gain on derivative financial instruments 2017 2016 2017 2016 Cash settlements, net of purchased put premium amortization $ 1,880 $ - $ 4,520 $ 17,511 Proceeds from monetizations - - - 50,588 Non-cash (loss) gain in fair value (14,346) - (3,876) (61,325) Total (loss) gain on derivative financial instruments $ (12,466) $ - $ 644 $ 6,774 |
Supplemental Cash Flow Inform27
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | The following table presents our supplemental cash flow information ( in thousands ): Successor Predecessor Nine Months Ended Nine Months Ended September 30, September 30, 2017 2016 Cash paid for interest $ 11,149 $ 37,606 Cash paid for income taxes - - |
Non-Cash Investing and Financing Activities | The following table presents our non-cash investing and financing activities ( in thousands ): Successor Predecessor Nine Months Ended Nine Months Ended September 30, September 30, 2017 2016 Changes in capital expenditures and accrued liabilities in accounts payable $ 6,629 $ (63,435) Inventory transferred to oil and natural gas properties - 7,081 Changes in asset retirement obligations (125,552) (2,297) Changes in other property and equipment (455) - Proceeds from monetization of derivative instruments applied to Prepetition Revolving Credit Facility - 50,588 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loss Per Share [Abstract] | |
Calculation of Basic and Diluted Earnings (Loss) per Share | The following table sets forth the calculation of basic and diluted loss per share (“EPS”) ( in thousands, except per share data ): Successor Predecessor Successor Predecessor Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Net loss $ (31,580) $ (131,146) $ (120,538) $ (165,922) Preferred stock dividends - - - 2,730 Net loss attributable to common stockholders $ (31,580) $ (131,146) $ (120,538) $ (168,652) Weighted average shares outstanding for basic EPS 33,241 97,824 33,236 97,096 Add dilutive securities - - - - Weighted average shares outstanding for diluted EPS 33,241 97,824 33,236 97,096 Loss per share Basic and Diluted $ (0.95) $ (1.34) $ (3.63) $ (1.74) |
Fair Value of Financial Instr29
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Level 2 Financial Instruments | The following table presents the fair value of our Level 2 financial instruments ( in thousands ): Successor Level 2 As of September 30, As of December 31, 2017 2016 Assets: Oil and Natural Gas Derivatives $ 1,087 $ - Liabilities: Oil and Natural Gas Derivatives $ 4,963 $ - |
Schedule of Carrying Values and Estimated Fair Values of Long-Term Indebtedness | The following table sets forth the outstanding and estimated fair values of our long-term debt instruments which are classified as Level 2 financial instruments ( in thousands ): Successor September 30, 2017 December 31, 2016 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Exit Facility $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 $ 73,996 |
Prepayments and Accrued Liabi30
Prepayments and Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Prepayments and Accrued Liabilities [Abstract] | |
Components of Prepayments and Accrued Liabilities | Prepayments and other current assets and accrued liabilities consist of the following ( in thousands ): Successor September 30, December 31, 2017 2016 Prepaid expenses and other current assets Advances to joint interest partners $ 1,756 $ 650 Insurance 8,862 9,600 Inventory 648 470 Royalty deposit 1,401 1,273 Prepaid professional fees - 4,584 Prepaid software license fees 1,297 - Other 2,132 9,380 Total prepaid expenses and other current assets $ 16,096 $ 25,957 Accrued liabilities Advances from joint interest partners 376 374 Employee benefits and payroll 6,054 4,491 Interest payable 201 233 Undistributed oil and gas proceeds 17,871 22,715 Severance taxes payable 725 628 Restructuring expenses - 25,712 East Bay field restricted cash payable 6,063 6,036 General and administrative and legal expenses payable 5,718 3,456 Other 1,644 15 Total accrued liabilities $ 38,652 $ 63,660 |
Organization (Details)
Organization (Details) | 9 Months Ended |
Sep. 30, 2017ft | |
Maximum | |
Oil and natural gas properties | |
Off shore oil and gas properties, Depth of water (in feet) | 1,000 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Principles of Consolidation and Reporting (Details) - Predecessor - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Reclassifications | ||
Reclassification from lease operating expense | $ (3.6) | $ (12.3) |
Reclassification into gathering and transportation expenses | 3.6 | 12.3 |
Reclassification from gathering and transportation expenses | (10.2) | (30.5) |
Reclassification into pipeline facility fee expense | $ 10.2 | $ 30.5 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Correction of Immaterial Errors (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | |
Correction of Immaterial Errors | |||
Impairment of oil and natural gas properties | $ (2,357) | $ 44,100 | $ 40,849 |
Oil sales | 114,991 | 366,792 | |
Reorganization items | (1,529) | ||
Lease operating | 77,822 | 238,315 | |
Adjustment | Full cost ceiling test computation | |||
Correction of Immaterial Errors | |||
Impairment of oil and natural gas properties | (2,400) | ||
Adjustment | Oil sales in prior periods | |||
Correction of Immaterial Errors | |||
Oil sales | $ 2,000 | 1,600 | |
Lease operating | 700 | ||
Adjustment | Adjustments to fresh start accounting | |||
Correction of Immaterial Errors | |||
Reorganization items | $ (3,800) |
Summary of Significant Accoun34
Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Use of Estimates (Details) - MMBoe | Mar. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Use of Estimates | |||
Quantities of proved reserves | 109.4 | 121.9 | |
Predecessor | |||
Use of Estimates | |||
Quantities of proved reserves | 86.6 |
Property and Equipment - Schedu
Property and Equipment - Schedule (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Oil and natural gas properties | ||
Proved properties | $ 1,207,737 | $ 1,127,616 |
Less: accumulated depreciation, depletion, amortization and impairment | (557,033) | (406,275) |
Proved properties, net | 650,704 | 721,341 |
Unevaluated properties | 219,106 | 376,138 |
Oil and natural gas properties, net | 869,810 | 1,097,479 |
Other property and equipment | 17,998 | 18,807 |
Less: accumulated depreciation and impairment | (4,138) | |
Other property and equipment, net | 13,860 | 18,807 |
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment | $ 883,670 | $ 1,116,286 |
Property and Equipment - Impair
Property and Equipment - Impairment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | |
impairment | |||
Impairment of oil and natural gas properties | $ (2,357) | $ 44,100 | $ 40,849 |
Property and Equipment - Uneval
Property and Equipment - Unevaluated properties (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Property and Equipment | |
Reduction in unevaluated properties | $ 157 |
Unevaluated properties costs transferred to evaluated properties | 105.2 |
Amortization to evaluated properties | $ 51.8 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2016 |
Long-Term Debt | |||
Total debt | $ 74,019 | $ 78,497 | |
Less: debt issue costs | 50 | ||
Less: current maturities | 23 | 4,268 | |
Total long-term debt | 73,946 | 74,229 | |
Exit Facility | |||
Long-Term Debt | |||
Total debt | 73,996 | 73,996 | $ 74,000 |
4.14% Promissory Note Due October 2017 | |||
Long-Term Debt | |||
Total debt | $ 4,001 | ||
Debt instrument, stated interest rate | 4.14% | ||
Capital lease obligations | |||
Long-Term Debt | |||
Total debt | $ 23 | $ 500 |
Long-Term Debt - Exit Facility
Long-Term Debt - Exit Facility (Details) $ in Thousands | Mar. 13, 2017USD ($) | Mar. 03, 2017 | Dec. 30, 2016USD ($)item | Jun. 30, 2018USD ($) | Mar. 31, 2018 | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
Long-Term Debt | |||||||
Total debt | $ 74,019 | $ 78,497 | |||||
Exit Facility | |||||||
Long-Term Debt | |||||||
Minimum percentage of value of entity's and subsidiary guarantors' proved developed producing reserves and total proved reserves covered by mortgages | 90.00% | ||||||
Number of facilities | item | 2 | ||||||
Total debt | $ 74,000 | 73,996 | $ 73,996 | ||||
Letters of credit | 202,800 | ||||||
Minimum percentage of total value of the entity's and subsidiary guarantors' proved reserves required to be covered by mortgages | 90.00% | ||||||
Minimum percentage of revised net present value of the entity's and subsidiary guarantors' proved reserves required to be covered by mortgages | 90.00% | ||||||
Exit Facility | Plan | |||||||
Long-Term Debt | |||||||
Minimum Current ratio | 1 | ||||||
Maximum Leverage ratio | 4 | ||||||
Leverage ratio, Number of trailing quarters | item | 4 | ||||||
Exit Term Loan | Forecast | |||||||
Long-Term Debt | |||||||
Contingent prepayment of debt during the fiscal quarter ending June 30, 2018 | $ 5,550 | ||||||
Exit Term Loan | Plan | |||||||
Long-Term Debt | |||||||
Asset coverage ratio threshold to make mandatory payment on exit term loan | 1.50 | ||||||
Percentage of aggregate outstanding principal amount to be prepaid if asset coverage ratio is less than threshold | 7.50% | ||||||
Exit Revolving Facility | |||||||
Long-Term Debt | |||||||
Maximum credit capacity | $ 227,800 | ||||||
Letters of credit | $ 200,000 | $ 225,000 | 200,000 | ||||
Reduction in borrowing capacity as a percentage of reduction in letters of credit | 50.00% | ||||||
Reduction in borrowing capacity | $ 12,500 | ||||||
Amount available for borrowing | 12,500 | ||||||
Maximum available for revolving loans | $ 25,000 | ||||||
Letter of credit, rate of fees accrual | 4.50% | ||||||
Letter of credit, rate of issuance fee per annum | 0.25% | ||||||
Commitment fee (as a percent) | 0.50% | ||||||
Letters of credit | Exit Revolving Facility | |||||||
Long-Term Debt | |||||||
Reduction in letter of credit | $ 25,000 | ||||||
Alternative Base Rate | Exit Term Loan | |||||||
Long-Term Debt | |||||||
Percentage points added to reference rate (as a percent) | 3.50% | ||||||
Alternative Base Rate | Exit Revolving Facility | |||||||
Long-Term Debt | |||||||
Percentage points added to reference rate (as a percent) | 3.50% | ||||||
LIBO Rate | Exit Term Loan | |||||||
Long-Term Debt | |||||||
Percentage points added to reference rate (as a percent) | 4.50% | ||||||
LIBO Rate | Exit Revolving Facility | |||||||
Long-Term Debt | |||||||
Percentage points added to reference rate (as a percent) | 4.50% |
Long-Term Debt - 4.14% Promisso
Long-Term Debt - 4.14% Promissory Note (Details) - 4.14% Promissory Note Due October 2017 - USD ($) | Sep. 30, 2012 | Dec. 31, 2016 |
Long-Term Debt | ||
Debt instrument, stated interest rate | 4.14% | |
Predecessor | ||
Long-Term Debt | ||
Face value of notes | $ 5,500,000 | |
Debt instrument, monthly payment | 52,000 | |
Lump sum payments | $ 3,300,000 | |
Debt maturity date | Oct. 30, 2017 | |
Debt instrument, stated interest rate | 4.14% |
Long-Term Debt - Interest Expen
Long-Term Debt - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Long-Term Debt | ||||
Interest expense | $ 3,653 | $ 11,129 | ||
Predecessor | ||||
Long-Term Debt | ||||
Interest expense | $ 4,838 | $ 217,044 | ||
Exit Facility | ||||
Long-Term Debt | ||||
Interest expense | $ 3,700 | $ 11,100 | ||
Primarily Prepetition Revolving Credit Facility | Predecessor | ||||
Long-Term Debt | ||||
Interest expense | $ 4,800 | |||
Prepetition Revolving Credit Facility | Predecessor | ||||
Long-Term Debt | ||||
Interest expense | 16,700 | |||
11.0% Second Lien Notes due 2020 | Predecessor | ||||
Long-Term Debt | ||||
Interest expense | $ 130,400 | |||
Debt instrument, stated interest rate | 11.00% | 11.00% | ||
7.5% to 9.25% Senior Notes | Predecessor | ||||
Long-Term Debt | ||||
Interest expense | $ 25,100 | |||
7.5% to 9.25% Senior Notes | Predecessor | Minimum | ||||
Long-Term Debt | ||||
Debt instrument, stated interest rate | 7.50% | 7.50% | ||
7.5% to 9.25% Senior Notes | Predecessor | Maximum | ||||
Long-Term Debt | ||||
Debt instrument, stated interest rate | 9.25% | 9.25% | ||
3.0% Senior Convertible Notes due 2018 | Predecessor | ||||
Long-Term Debt | ||||
Interest expense | $ 44,300 | |||
Debt instrument, stated interest rate | 3.00% | 3.00% | ||
Derivative instruments financing and other | Predecessor | ||||
Long-Term Debt | ||||
Interest expense | $ 500 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Asset Retirement Obligations [Abstract] | ||
Beginning of period total | $ 753,364 | |
Liabilities incurred | 2,041 | |
Liabilities settled | (39,784) | |
Revisions | (127,593) | |
Accretion expense | 32,339 | |
End of period total | 620,367 | |
Less: current portion | 64,066 | $ 56,601 |
End of period, noncurrent portion | $ 556,301 | $ 696,763 |
Derivative Financial Instrume43
Derivative Financial Instruments - Positions (Details) $ in Millions | Mar. 15, 2016USD ($) | Sep. 30, 2017$ / bblbbl |
Derivative Financial Instruments | ||
Proceeds from monetization of outstanding crude oil and natural gas | $ | $ 50.6 | |
Collar, Remaining contract term October 2017 to December 2017. Argus-LLS | ||
Net open crude oil derivative positions | ||
Volumes (MBbls) | bbl | 920 | |
Weighted average contract price, Floor | 52.30 | |
Weighted average contract price, Ceiling | 57.43 | |
Swap, Remaining contract term October 2017 to December 2017, NYMEX-WTI | ||
Net open crude oil derivative positions | ||
Volumes (MBbls) | bbl | 260 | |
Weighted average contract price, Swaps | 51.78 | |
Swap, Remaining contract term January 2018 to December 2018, NYMEX-WTI | ||
Net open crude oil derivative positions | ||
Volumes (MBbls) | bbl | 2,920 | |
Weighted average contract price, Swaps | 50.68 | |
Swap, Remaining contract term January 2018 to June 2018, Argus-LLS | ||
Net open crude oil derivative positions | ||
Volumes (MBbls) | bbl | 362 | |
Weighted average contract price, Swaps | 55.45 |
Derivative Financial Instrume44
Derivative Financial Instruments - Fair Values (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Asset Derivative Instruments | ||
Total gross derivative financial instruments subject to enforceable master netting agreement | $ 1,087 | |
Gross amounts offset in Balance Sheets | (1,087) | |
Net amounts presented in Balance Sheets | ||
Liability Derivative Instruments | ||
Total gross derivative financial instruments subject to enforceable master netting agreement | 4,963 | |
Gross amounts offset in Balance Sheets | (1,087) | |
Net amounts presented in Balance Sheets | 3,876 | |
Current Assets | ||
Asset Derivative Instruments | ||
Total gross derivative financial instruments subject to enforceable master netting agreement | 988 | |
Gross amounts offset in Balance Sheets | (988) | |
Net amounts presented in Balance Sheets | ||
Noncurrent Assets | ||
Asset Derivative Instruments | ||
Total gross derivative financial instruments subject to enforceable master netting agreement | 99 | |
Gross amounts offset in Balance Sheets | (99) | |
Net amounts presented in Balance Sheets | ||
Current liabilities | ||
Liability Derivative Instruments | ||
Total gross derivative financial instruments subject to enforceable master netting agreement | 4,290 | |
Gross amounts offset in Balance Sheets | (988) | |
Net amounts presented in Balance Sheets | 3,302 | |
Noncurrent Liabilities | ||
Liability Derivative Instruments | ||
Total gross derivative financial instruments subject to enforceable master netting agreement | 673 | |
Gross amounts offset in Balance Sheets | (99) | |
Net amounts presented in Balance Sheets | $ 574 |
Derivative Financial Instrume45
Derivative Financial Instruments - Gain (loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
(Loss) gain on derivative instruments | |||
Cash settlements, net of purchased put premium amortization | $ 1,880 | $ 4,520 | |
Non-cash (loss) gain in fair value | (14,346) | (3,876) | |
Total (loss) gain on derivative financial instruments | (12,466) | 644 | |
Deposits for collateral with counterparties | $ 0 | $ 0 | |
Predecessor | |||
(Loss) gain on derivative instruments | |||
Cash settlements, net of purchased put premium amortization | $ 17,511 | ||
Proceeds from monetization | 50,588 | ||
Non-cash (loss) gain in fair value | (61,325) | ||
Total (loss) gain on derivative financial instruments | $ 6,774 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2016 | Dec. 30, 2016 | Dec. 28, 2016 | Sep. 30, 2017 | Jun. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2012 |
Income Taxes | |||||||
Percentage of EGC stock owned by Energy XXI, USA Inc. cancelled | 100.00% | ||||||
Reduction in tax attributes | $ 2,600,000,000 | ||||||
Operating loss carryovers | $ 0 | $ 403,000,000 | $ 50,000,000 | $ 50,000,000 | |||
Decrease in tax basis of producing properties and stock of EPL equity investments | 2,197,000,000 | ||||||
Valuation allowance | 174,500,000 | 213,000,000 | $ 213,000,000 | ||||
Deferred tax assets, net | $ 0 | ||||||
Effective income tax rate (benefit) (as a percent) | 0.00% | ||||||
Increase in valuation allowance | 10,000,000 | $ 28,000,000 | |||||
Adjustments to Fresh start valuation allowance due to change in estimate | $ 3,000,000 | $ 3,000,000 | |||||
Post-emergence threshold for changes in stock ownership (as a percent) | 50.00% | ||||||
Predecessor | |||||||
Income Taxes | |||||||
U.S. withholding tax rate on any interest payments | 30.00% | ||||||
4.14% Promissory Note Due October 2017 | |||||||
Income Taxes | |||||||
Debt instrument, stated interest rate | 4.14% | ||||||
4.14% Promissory Note Due October 2017 | Predecessor | |||||||
Income Taxes | |||||||
Debt instrument, stated interest rate | 4.14% | ||||||
Face value of notes | $ 5,500,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Dec. 30, 2016 | Sep. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2016 |
Stockholders' Equity | ||||
Capital stock, shares authorized | 110,000,000 | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |
Common stock, shares outstanding | 33,221,427 | 33,211,594 | ||
Warrants outstanding (in shares) | 2,119,889 | |||
Former board member | ||||
Stockholders' Equity | ||||
Common stock issued upon accelerated vesting of restricted stock units (in shares) | 9,833 | |||
Registration Rights Agreement, February 28, 2017 | ||||
Stockholders' Equity | ||||
Ownership threshold (as a percent) | 10.00% | |||
Period from Emergence Date | 6 months | |||
Shares of common stock on exercise of warrants | 222,356 | |||
Energy XXI Gulf Coast, Inc. | Selling Stockholders | Registration Rights Agreement, February 28, 2017 | ||||
Stockholders' Equity | ||||
Shares offered for sale | 9,272,285 | |||
Number of shares owned that may be sold | 9,049,929 |
Supplemental Cash Flow Inform48
Supplemental Cash Flow Information - Supplemental (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash paid for interest | $ 11,149 | |
Predecessor | ||
Cash paid for interest | $ 37,606 |
Supplemental Cash Flow Inform49
Supplemental Cash Flow Information - Non-cash Investing and Financing Activities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Changes in capital expenditures accrued in accounts payable | $ 6,629 | |
Changes in asset retirement obligations | (125,552) | |
Changes in other property and equipment | $ (455) | |
Predecessor | ||
Changes in capital expenditures accrued in accounts payable | $ (63,435) | |
Inventory transferred to oil and natural gas properties | 7,081 | |
Changes in asset retirement obligations | (2,297) | |
Proceeds from monetization of derivative instruments applied to Prepetition Revolving Credit Facility | $ 50,588 |
Employee Benefit Plans - Genera
Employee Benefit Plans - General (Details) - 2016 Long Term Incentive Plan - shares | Apr. 29, 2017 | Dec. 30, 2016 |
Employee Benefit Plans | ||
Number of shares reserved under the Long Term Incentive Plan | 1,859,552 | |
Percentage of new entity's equity reserved for management incentive plan | 5.00% | |
Percentage of total new equity that must be allocated | 3.00% | |
Maximum period in which percentage of total new equity must be allocated | 120 days | |
Percentage of total new equity allocated | 3.00% |
Employee Benefit Plans - Stock
Employee Benefit Plans - Stock options (Details) - Stock Options - 2016 Long Term Incentive Plan $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Employee Benefit Plans | |
Share-based award, expiration period | 10 years |
Share-based award, vesting period | 3 years |
Number of options granted | 372,597 |
Options granted, exercise price (in dollars per share) | $ / shares | $ 28.92 |
Number of options forfeited | 48,487 |
Number of unvested stock options | 324,110 |
Unrecognized compensation expense | $ | $ 2.4 |
Employee Benefit Plans - Restri
Employee Benefit Plans - Restricted stock units (Details) - Restricted stock units - 2016 Long Term Incentive Plan $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | |
Employee Benefit Plans | ||
Share-based award, vesting period | 3 years | |
Number of shares for which each unit provides right to receive | 1 | 1 |
Number of stock units granted | 101,500 | 762,010 |
Weighted average share price (in dollars per share) | $ / shares | $ 10.43 | $ 24.56 |
Number of stock units forfeited | 43,702 | |
Number of unvested stock units | 688,705 | 688,705 |
Unrecognized compensation expense | $ | $ 11.9 | $ 11.9 |
Board of directors | ||
Employee Benefit Plans | ||
Number of stock units granted | 118,408 |
Related Party Transactions (Det
Related Party Transactions (Details) | Sep. 01, 2017USD ($) | Aug. 24, 2017USD ($) | Apr. 03, 2017USD ($) | Feb. 15, 2017USD ($) | Feb. 02, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2014director |
Former Chief Executive Officer, John D. Schiller, Jr. | ||||||||||
Related Party Transactions | ||||||||||
Amount of severance payment | $ 2,000,000 | |||||||||
Former Chief Executive Officer, John D. Schiller, Jr. | Maximum | ||||||||||
Related Party Transactions | ||||||||||
Period of payment for health benefits | 18 months | |||||||||
Former Chief Financial Officer, Bruce W. Busmire | ||||||||||
Related Party Transactions | ||||||||||
Amount of severance payment | $ 750,000 | |||||||||
Period of severance payments | 18 months | |||||||||
Former Chief Operating Officer, Andoni de Pinho | ||||||||||
Related Party Transactions | ||||||||||
Amount of severance payment | $ 750,000 | |||||||||
Period of severance payments | 18 months | |||||||||
Former Executive VP, CAO and Interim CFO, Hugh A. Menown | ||||||||||
Related Party Transactions | ||||||||||
Amount of severance payment | $ 580,000 | |||||||||
Period of payment for health benefits | 12 months | |||||||||
Amount of severance payment | $ 580,000 | |||||||||
Former Chief Executive Officer, John D. Schiller, Jr. | Consulting Agreement | ||||||||||
Related Party Transactions | ||||||||||
Monthly consulting fee | $ 50,000 | |||||||||
Former Chief Executive Officer, John D. Schiller, Jr. | Maximum | Consulting Agreement | ||||||||||
Related Party Transactions | ||||||||||
Term of agreement | 6 months | |||||||||
CEO's personal acquaintances or their affiliates | Services provided | ||||||||||
Related Party Transactions | ||||||||||
Related party transaction, amount of transaction | $ 3,700,000 | $ 1,200,000 | $ 6,000,000 | $ 4,900,000 | ||||||
Managing Director of LP with ownership interest in entity | ||||||||||
Related Party Transactions | ||||||||||
Number of directors making personal loan to CEO | director | 1 | |||||||||
Percentage of company stock owned by related party | 6.30% | |||||||||
Former Executive VP, CAO and Interim CFO, Hugh A. Menown | Consulting Agreement | ||||||||||
Related Party Transactions | ||||||||||
Monthly consulting fee | $ 28,333.33 | |||||||||
Former Executive VP, CAO and Interim CFO, Hugh A. Menown | Maximum | Consulting Agreement | ||||||||||
Related Party Transactions | ||||||||||
Term of agreement | 6 months |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Loss per Share | ||||
Net loss | $ (31,580) | $ (120,538) | ||
Net Loss Attributable to Common Stockholders | $ (31,580) | $ (120,538) | ||
Weighted average shares outstanding for basic EPS | 33,241,000 | 33,236,000 | ||
Weighted average shares outstanding for diluted EPS | 33,241,000 | 33,236,000 | ||
Basic and Diluted | $ (0.95) | $ (3.63) | ||
Loss allocated to participating securities | $ 0 | $ 0 | ||
Common stock, excluded from the diluted average shares due to an anti-dilutive effect | 4,802,150 | 2,177,832 | ||
Predecessor | ||||
Loss per Share | ||||
Net loss | $ (131,146) | $ (165,922) | ||
Preferred stock dividends | 2,730 | |||
Net Loss Attributable to Common Stockholders | $ (131,146) | $ (168,652) | ||
Weighted average shares outstanding for basic EPS | 97,824,000 | 97,096,000 | ||
Weighted average shares outstanding for diluted EPS | 97,824,000 | 97,096,000 | ||
Basic and Diluted | $ (1.34) | $ (1.74) | ||
Common stock, excluded from the diluted average shares due to an anti-dilutive effect | 7,113,391 | 7,572,702 |
Commitments and Contingencies -
Commitments and Contingencies - Litigation (Details) - SEC claim of violations of federal securities laws $ in Millions | Jun. 17, 2016USD ($) | Dec. 31, 2014director |
Litigation | ||
Amount of claim filed | $ 3.9 | |
Number of directors making personal loan to CEO | director | 1 | |
General unsecured claims, accrual | $ 1.5 |
Commitments and Contingencies56
Commitments and Contingencies - Letters of Credit and Performance Bonds (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Mar. 13, 2017 | Dec. 30, 2016 |
Litigation | |||
Performance bonds outstanding | $ 336 | ||
Cash collateral | 49.8 | ||
Exit Facility | |||
Litigation | |||
Letters of credit | 202.8 | ||
Exit Revolving Facility | |||
Litigation | |||
Letters of credit | 200 | $ 200 | $ 225 |
Performance Bond, Lease and area bonds | |||
Litigation | |||
Performance bonds outstanding | 183.9 | ||
Performance Bonds, Wells and facilities | |||
Litigation | |||
Performance bonds outstanding | $ 152.1 |
Commitments and Contingencies57
Commitments and Contingencies - Drilling Rig Commitments (Details) - Drilling Rig Contracts $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($)contract | |
Drilling Rig Commitments | |
Drilling rig commitments | $ | $ 5.4 |
Number of contracts | contract | 3 |
Commitments and Contingencies58
Commitments and Contingencies - Other (Details) $ in Millions | Sep. 30, 2017USD ($) |
Bonding requirements | |
Other | |
Restricted cash | $ 25.7 |
Future plugging, abandonment and other decommissioning costs | |
Other | |
Restricted cash | $ 6.1 |
Fair Value - Financial instrume
Fair Value - Financial instruments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Fair value of financial instruments | ||
Dividend yield (as a percent) | 0.00% | |
Assets: | ||
Oil and Natural Gas Derivatives, Assets | $ 1,087 | |
Liabilities: | ||
Oil and Natural Gas Derivatives, Liabilities | 4,963 | |
Level 2 | ||
Assets: | ||
Oil and Natural Gas Derivatives, Assets | 1,087 | |
Liabilities: | ||
Oil and Natural Gas Derivatives, Liabilities | $ 4,963 |
Fair Value - Long-term debt ins
Fair Value - Long-term debt instruments (Details) - Level 2 - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Carrying Value | ||
Long-Term Debt | ||
Long-term debt instruments | $ 73,996 | $ 73,996 |
Estimated of Fair Value | ||
Long-Term Debt | ||
Long-term debt instruments | 73,996 | 73,996 |
Exit Facility | Carrying Value | ||
Long-Term Debt | ||
Long-term debt instruments | 73,996 | 73,996 |
Exit Facility | Estimated of Fair Value | ||
Long-Term Debt | ||
Long-term debt instruments | $ 73,996 | $ 73,996 |
Prepayments and Accrued Liabi61
Prepayments and Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid expenses and other current assets | ||
Advances to joint interest partners | $ 1,756 | $ 650 |
Insurance | 8,862 | 9,600 |
Inventory | 648 | 470 |
Royalty deposit | 1,401 | 1,273 |
Prepaid professional fees | 4,584 | |
Prepaid software license fees | 1,297 | |
Other | 2,132 | 9,380 |
Total prepaid expenses and other current assets | 16,096 | 25,957 |
Accrued liabilities | ||
Advances from joint interest partners | 376 | 374 |
Employee benefits and payroll | 6,054 | 4,491 |
Interest payable | 201 | 233 |
Undistributed oil and gas proceeds | 17,871 | 22,715 |
Severance taxes payable | 725 | 628 |
Restructuring expenses | 25,712 | |
East Bay field restricted cash payable | 6,063 | 6,036 |
General and administrative and legal expenses payable | 5,718 | 3,456 |
Other | 1,644 | 15 |
Total accrued liabilities | $ 38,652 | $ 63,660 |
Subsequent Events (Details)
Subsequent Events (Details) - Swap, Remaining contract term June 2018, ICE Brent - Subsequent Event | 1 Months Ended |
Oct. 31, 2017bbl / d$ / bbl | |
Subsequent Events | |
BPD | bbl / d | 2,500 |
Weighted average contract price, Swaps | $ / bbl | 56.59 |