Supplemental Information on Oil and Gas Producing Activities | 12 Months Ended |
Dec. 31, 2013 |
Supplemental Information on Oil and Gas Producing Activities [Abstract] | ' |
Supplemental Information on Oil and Gas Producing Activities | ' |
Note 20—Supplemental Information on Oil and Gas Producing Activities (Unaudited) |
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The supplementary oil and gas data that follows is presented in accordance with FASB ASC 932 Extractive Activities—Oil and Gas (“FASB ASC 932”), and includes (1) capitalized costs, costs incurred and results of operations related to oil and gas producing activities, (2) net proved oil and gas reserves, and (3) a standardized measure of discounted future net cash flows relating to proved oil and gas reserves. |
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Equity investment—At December 31, 2013, the Company owns 21.3% voting interest in CEP, a publicly traded oil and gas exploration and production company. The Company’s equity interest in CEP was 26.4% and 26.5% at December 31, 2011 and 2012, respectively. CEP utilizes the successful efforts method of accounting for its oil and gas activities. Where applicable, the disclosures required under FASB ASC 932 are made below based on the Company’s proportionate share of CEP’s oil and gas activities according to the percentages described above. Information utilized to prepare disclosures on the Company’s proportionate share of CEP is based on publicly available data. The Company has updated previously filed amounts for December 31, 2012 related to CEP as discontinued operations have now been presented in their current public filing. Since December 31, 2011 amounts were not publicly available these amounts do not reflect the changes from discontinued operations. |
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Net Capitalized Costs |
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Aggregate capitalized costs related to oil and gas producing activities of the Company at December 31, 2012 and 2013, are summarized as follows: |
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| 2012 | | 2013 | | | | | | | | | | | | |
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| (in thousands) | | | | | | | | | | | | |
Oil and gas properties and related leasehold costs | | | | | | | | | | | | | | | | | |
Proved | $ | 353,093 | | $ | 405,895 | | | | | | | | | | | | |
Unproved | | 31 | | | 4,862 | | | | | | | | | | | | |
| | 353,124 | | | 410,757 | | | | | | | | | | | | |
Accumulated depreciation, depletion and amortization | | -245,593 | | | -268,846 | | | | | | | | | | | | |
Net capitalized costs | $ | 107,531 | | $ | 141,911 | | | | | | | | | | | | |
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Unproved properties not subject to amortization consisted mainly of leaseholds acquired through acquisitions. The Company will continue to evaluate its unproved properties; however, the timing of the ultimate evaluation and disposition of the properties has not been determined. |
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Aggregate capitalized costs related to oil and gas producing activities of the Company’s proportionate investment in CEP at December 31, 2012 and 2013, are summarized as follows: |
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| 2012 | | 2013 | | | | | | | | | | | | |
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| (in thousands) | | | | | | | | | | | | |
Oil and gas properties and related equipment (successful efforts method) | | | | | | | | | | | | | | | | | |
Proved | $ | 156,851 | | $ | 135,642 | | | | | | | | | | | | |
Unproved | | 366 | | | 338 | | | | | | | | | | | | |
Materials, supplies and land | | 402 | | | 385 | | | | | | | | | | | | |
| | 157,619 | | | 136,365 | | | | | | | | | | | | |
Accumulated depreciation, depletion and amortization | | -125,787 | | | -105,481 | | | | | | | | | | | | |
Net capitalized costs | $ | 31,832 | | $ | 30,884 | | | | | | | | | | | | |
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Costs Incurred |
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Costs incurred for oil and gas property acquisition, exploration and development activities that have been capitalized for the years ended December 31, 2011, 2012, and 2013 are summarized as follows: |
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| Consolidated Entities | | CEP (1) |
| 2011 | | 2012 | | 2013 | | 2011 | | 2012 | | 2013 |
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| (in thousands) |
Proved property acquisition costs (2) | $ | 223 | | $ | 151 | | $ | 8,023 | | $ | -74 | | $ | 20 | | $ | 4,262 |
Unproved property acquisition costs | | 630 | | | 52 | | | 8,567 | | | 167 | | | 47 | | | 45 |
Exploration costs | | — | | | — | | | — | | | — | | | — | | | — |
Development Costs | | 23,825 | | | 12,506 | | | 40,004 | | | 2,895 | | | 4,064 | | | 3,343 |
| $ | 24,678 | | $ | 12,709 | | $ | 56,594 | | $ | 2,988 | | $ | 4,131 | | $ | 7,650 |
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(1)Based on the Company’s pro-rata interest in CEP (disclosed above) assuming that the Company’s investment was made at the beginning of the period. |
(2)The amount is negative for CEP in 2011 as it represents a post-closing receipt from an acquisition made by CEP in December 2010. |
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Results of Operations |
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The revenues and expenses associated directly with the Company’s oil and natural gas producing activities are reflected in the consolidated statement of operations. All of our ongoing operations are oil and natural gas producing activities located in the United States. |
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The table below presents the pro-rata results of oil and gas producing activities of the Company’s investment in CEP for the years ended December 31, 2011, 2012, and 2013 assuming that the Company’s investment was made at the beginning of the period presented. |
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| 2011 | | 2012 | | 2013 | | | | | | | | | |
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| (in thousands) | | | | | | | | | |
Revenues | $ | 27,778 | | $ | 12,330 | | $ | 9,388 | | | | | | | | | |
Lease operating expense | | 7,379 | | | 5,144 | | | 4,017 | | | | | | | | | |
Cost of sales and production taxes | | 1,343 | | | 780 | | | 864 | | | | | | | | | |
Exploration costs | | 35 | | | — | | | — | | | | | | | | | |
Impairment of oil and gas properties | | 775 | | | 29 | | | 502 | | | | | | | | | |
Depreciation, depletion and amortization | | 5,845 | | | 3,109 | | | 4,041 | | | | | | | | | |
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Oil and Gas Reserve Quantities |
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The following reserve schedule was developed by the Company’s reserve engineers and sets forth the changes in estimated quantities for its proved reserves, all of which are located in the United States. Cawley, Gillespie & Associates, Inc., independent reserve engineering firm, was retained to perform the annual year-end independent evaluation of the Company’s proved reserves. |
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Users of this information should be aware that the process of estimating quantities of “proved,” “proved developed” and “proved undeveloped” oil and gas reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history, and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions (upwards or downward) to existing reserve estimates may occur from time to time. Although every reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. |
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The table below presents changes in proved developed and undeveloped reserves of our consolidated entities. |
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| Gas - Mcf | | Oil - Bbls | | | | | | | | | | | | | | |
Proved reserves | | | | | | | | | | | | | | | | | |
Balance, December 31, 2010 | 130,462,031 | | 744,266 | | | | | | | | | | | | | | |
Purchase of reserves in place | — | | — | | | | | | | | | | | | | | |
Extensions, discoveries, and other additions | 1,752,746 | | 54,761 | | | | | | | | | | | | | | |
Sale of reserves | -754,479 | | — | | | | | | | | | | | | | | |
Revisions of previous estimates | 5,068,946 | | 352,981 | | | | | | | | | | | | | | |
Production | -18,309,056 | | -78,087 | | | | | | | | | | | | | | |
Balance, December 31, 2011 | 118,220,188 | | 1,073,921 | | | | | | | | | | | | | | |
Purchase of reserves in place | — | | — | | | | | | | | | | | | | | |
Extensions, discoveries, and other additions | 1,867,365 | | 617,854 | | | | | | | | | | | | | | |
Sale of reserves | — | | — | | | | | | | | | | | | | | |
Revisions of previous estimates | -34,037,402 | | 1,095,656 | | | | | | | | | | | | | | |
Production | -16,388,878 | | -95,863 | | | | | | | | | | | | | | |
Balance, December 31, 2012 | 69,661,273 | | 2,691,568 | | | | | | | | | | | | | | |
Purchase of reserves in place | 98,822 | | 554,892 | | | | | | | | | | | | | | |
Extensions, discoveries, and other additions | 1,122,511 | | 1,911,959 | | | | | | | | | | | | | | |
Sale of reserves | — | | — | | | | | | | | | | | | | | |
Revisions of previous estimates | 30,246,006 | | -585,342 | | | | | | | | | | | | | | |
Production | -14,521,385 | | -192,474 | | | | | | | | | | | | | | |
Balance, December 31, 2013 | 86,607,227 | | 4,380,603 | | | | | | | | | | | | | | |
Proved developed reserves | | | | | | | | | | | | | | | | | |
Balance, December 31, 2011 | 117,406,577 | | 1,040,309 | | | | | | | | | | | | | | |
Balance, December 31, 2012 | 69,661,273 | | 1,804,057 | | | | | | | | | | | | | | |
Balance, December 31, 2013 | 85,006,592 | | 2,705,664 | | | | | | | | | | | | | | |
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The table below presents the Company’s pro-rata share of changes in reserves and the amounts of proved developed reserves of CEP assuming that the Company’s investment was made as of January 1, 2011. |
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| Mcfe | | | | | | | | | | | | | | | | |
Proved reserves | | | | | | | | | | | | | | | | | |
Balance, January 1, 2011 | 44,618,000 | | | | | | | | | | | | | | | | |
Purchase of reserves in place | — | | | | | | | | | | | | | | | | |
Extensions, discoveries, and other additions | 455,000 | | | | | | | | | | | | | | | | |
Sale of reserves | — | | | | | | | | | | | | | | | | |
Revisions of previous estimates | 11,216,000 | | | | | | | | | | | | | | | | |
Production | -3,138,000 | | | | | | | | | | | | | | | | |
Balance, December 31, 2011 | 53,151,000 | | | | | | | | | | | | | | | | |
Purchase of reserves in place | — | | | | | | | | | | | | | | | | |
Extensions, discoveries, and other additions | 543,000 | | | | | | | | | | | | | | | | |
Sale of reserves | -68,000 | | | | | | | | | | | | | | | | |
Revisions of previous estimates | -25,551,000 | | | | | | | | | | | | | | | | |
Production | -3,435,000 | | | | | | | | | | | | | | | | |
Balance, December 31, 2012 | 24,640,000 | | | | | | | | | | | | | | | | |
Decrease in pro rata ownership | -4,835,000 | | | | | | | | | | | | | | | | |
Purchase of reserves in place | 1,523,000 | | | | | | | | | | | | | | | | |
Extensions, discoveries, and other additions | 1,028,000 | | | | | | | | | | | | | | | | |
Sale of reserves | -10,519,000 | | | | | | | | | | | | | | | | |
Revisions of previous estimates | 9,527,000 | | | | | | | | | | | | | | | | |
Production | -1,927,000 | | | | | | | | | | | | | | | | |
Balance, December 31, 2013 | 19,437,000 | | | | | | | | | | | | | | | | |
Proved developed reserves | | | | | | | | | | | | | | | | | |
Balance, December 31, 2011 | 40,295,000 | | | | | | | | | | | | | | | | |
Balance, December 31, 2012 | 23,850,000 | | | | | | | | | | | | | | | | |
Balance, December 31, 2013 | 16,748,000 | | | | | | | | | | | | | | | | |
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Standardized Measure of Discounted Future Net Cash Flows |
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The following information is based on the Company’s best estimate of the required data for the Standardized Measure of Discounted Future Net Cash Flows at December 31, 2011, 2012 and 2013 in accordance with FASB ASC 932 which requires the use of a 10% discount rate. Future income taxes are based on year-end statutory rates. This information is not the fair market value, nor does it represent the expected present value of future cash flows of Company’s proved oil and gas reserves. |
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| Consolidated Entities | | CEP (1) |
| 2011 | | 2012 | | 2013 | | 2011 | | 2012 | | 2013 |
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| (in thousands) |
Future cash inflows | $ | 592,796 | | $ | 438,356 | | $ | 720,924 | | $ | 241,173 | | $ | 95,619 | | $ | 107,103 |
Future production costs | | 312,410 | | | 218,707 | | | 315,079 | | | 132,081 | | | 51,462 | | | 48,418 |
Future development costs | | 10,524 | | | 31,051 | | | 49,590 | | | 25,705 | | | 2,948 | | | 8,668 |
Future income tax expense | | — | | | — | | | 30,149 | | | — | | | — | | | — |
Future net cash flows | | 269,862 | | | 188,598 | | | 326,106 | | | 83,387 | | | 41,209 | | | 50,017 |
10% annual discount for estimated timing of cash flows | | 94,342 | | | 86,516 | | | 156,977 | | | 40,964 | | | 17,446 | | | 19,406 |
Standardized measure of discounted future net cash flows related to proved reserves | $ | 175,520 | | $ | 102,082 | | $ | 169,129 | | $ | 42,423 | | $ | 23,763 | | $ | 30,611 |
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Standardized measure from continuing operations | $ | 175,520 | | $ | 102,082 | | $ | 169,129 | | $ | 42,423 | | $ | 16,021 | | $ | 30,611 |
Standardized measure from discontinued operations | | — | | | — | | | — | | | — | | | 7,742 | | | — |
Standardized measure of discounted future net cash flows related to proved gas reserves | $ | 175,520 | | $ | 102,082 | | $ | 169,129 | | $ | 42,423 | | $ | 23,763 | | $ | 30,611 |
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(1)Represents the Company’s pro-rata share of its investment in CEP. |
Future cash inflows are computed by applying a first-day-of-month, twelve-month average price, adjusted for location and quality differentials on a property-by-property basis, to year-end quantities of proved reserves, except in those instances where fixed and determinable price changes are provided by contractual arrangements at year-end. The discounted future cash flow estimates do not include the effects of our derivative instruments. See the following table for average oil and gas prices as of the periods indicated. |
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| 2011 | | 2012 | | 2013 | | | | | | | | | |
Crude oil price per Bbl | $ | 96.19 | | $ | 95.05 | | $ | 96.94 | | | | | | | | | |
Natural gas price per MMBtu | $ | 4.12 | | $ | 2.76 | | $ | 3.67 | | | | | | | | | |
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The principal changes in the standardized measure of discounted future net cash flows relating to proven oil and gas properties were as follows: |
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| Consolidated Entities | | CEP (1) |
| 2011 | | 2012 | | 2013 | | 2011 | | 2012 | | 2013 |
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| (in thousands) |
Present value, beginning of period | $ | 159,261 | | $ | 175,520 | | $ | 102,082 | | $ | 34,765 | | $ | 42,423 | | $ | 23,763 |
Net changes in prices and production costs | | 11,876 | | | 18,071 | | | 37,826 | | | 38 | | | -5,095 | | | 10,741 |
Decrease in pro rata ownership | | — | | | — | | | — | | | — | | | — | | | -4,664 |
Net changes in future development costs | | -1,154 | | | -18,008 | | | -30,462 | | | — | | | — | | | — |
Previously estimated development costs incurred | | 18,192 | | | 12,743 | | | 40,196 | | | 1,892 | | | 4,987 | | | 1,196 |
Sales of oil and gas produced, net | | -32,751 | | | -10,338 | | | -29,604 | | | -7,810 | | | -10,520 | | | -4,525 |
Extensions and discoveries | | 3,045 | | | 7,724 | | | 23,514 | | | 2,157 | | | 3,336 | | | 6,069 |
Purchases of reserves in-place | | — | | | — | | | 6,401 | | | — | | | — | | | — |
Sales of reserves in-place | | -1,104 | | | — | | | — | | | — | | | -391 | | | -489 |
Revisions of previous quantity estimates | | 10,513 | | | -38,064 | | | 49,926 | | | 11,243 | | | -22,034 | | | 4,570 |
Net change in income taxes | | 12,037 | | | — | | | -7,769 | | | — | | | — | | | — |
Accretion of discount | | 16,448 | | | 16,730 | | | 8,975 | | | 3,477 | | | 4,258 | | | 1,910 |
Timing differences and other (2) | | -20,843 | | | -62,296 | | | -31,956 | | | -3,339 | | | 6,799 | | | -7,960 |
Present value, end of period | $ | 175,520 | | $ | 102,082 | | $ | 169,129 | | $ | 42,423 | | $ | 23,763 | | $ | 30,611 |
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Standardized measure from continuing operations | $ | 175,520 | | $ | 102,082 | | $ | 169,129 | | $ | 42,423 | | $ | 16,021 | | $ | 30,611 |
Standardized measure from discontinued operations | | — | | | — | | | — | | | — | | | 7,742 | | | — |
Standardized measure of discounted future net cash flows related to proved gas reserves | $ | 175,520 | | $ | 102,082 | | $ | 169,129 | | $ | 42,423 | | $ | 23,763 | | $ | 30,611 |
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(1)Represents the Company’s pro-rata share of its investment in CEP assuming that the Company’s investment was made at the beginning of each period presented. |
(2)The change in timing differences and other are related to revisions in the Company’s estimated time of production and development and the impact of changes in the relative proportion of oil versus natural gas in the Company’s total reserves. |
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During 2013, the Company focused its development activities on oil related projects. As a result, the proportion of oil reserves to total reserves increased from 5% at December 31, 2011, to 19% at December 31, 2012 and 23% as of December 31, 2013. Since the Company calculates the price variance on an energy equivalent basis, the change in the Company’s reserve mix coupled with the 26:1 ratio of oil price to natural gas price used in the calculation, resulted in a positive net price variance. The positive price variance is reflected under “net changes in prices and production costs” in the table above. As a positive net price variance is disclosed, existing natural gas reserves, which comprised 77% of total reserves at December 31, 2013, decreased in value due to a decrease in the average natural gas price. This decline in value of natural gas reserves is included in “timing differences and other” in the table above. |
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