Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 26, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Sanchez Energy Corp | ||
Entity Central Index Key | 1,528,837 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 284,800,499 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 95,866,121 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 197,613 | $ 184,434 |
Oil and natural gas receivables | 87,222 | 101,396 |
Joint interest billings receivables | 33,263 | 22,569 |
Accounts receivable - related entities | 6,099 | 4,491 |
Fair value of derivative instruments | 15,714 | 16,430 |
Other current assets | 33,070 | 21,478 |
Total current assets | 372,981 | 350,798 |
Oil and natural gas properties, on the basis of successful efforts accounting: | ||
Proved oil and natural gas properties | 3,792,431 | 3,130,407 |
Unproved oil and natural gas properties | 328,643 | 398,605 |
Total oil and natural gas properties | 4,121,074 | 3,529,012 |
Less: Accumulated depreciation, depletion, amortization and impairment | (1,761,949) | (1,501,553) |
Total oil and natural gas properties, net | 2,359,125 | 2,027,459 |
Other assets: | ||
Fair value of derivative instruments | 12,102 | 1,428 |
Investments (Investment in SNMP measured at fair value of $3.9 million and $25.2 million as of December 31, 2018 and 2017, respectively) | 16,664 | 38,462 |
Other assets | 59,088 | 52,488 |
Total assets | 2,819,960 | 2,470,635 |
Current liabilities: | ||
Accounts payable | 32,382 | 14,994 |
Other payables | 74,628 | 81,970 |
Accrued liabilities: | ||
Capital expenditures | 61,970 | 85,340 |
Other | 102,728 | 84,794 |
Fair value of derivative instruments | 706 | 56,190 |
Short term debt | 304 | 23,996 |
Other current liabilities | 75,581 | 115,244 |
Total current liabilities | 348,299 | 462,528 |
Long term debt, net of premium, discount and debt issuance costs | 2,395,408 | 1,930,683 |
Asset retirement obligations | 46,175 | 36,098 |
Fair value of derivative instruments | 366 | 17,474 |
Other liabilities | 21,407 | 65,480 |
Total liabilities | 2,811,655 | 2,512,263 |
Commitments and contingencies (Note 15) | ||
Mezzanine equity: | ||
Preferred units ($1,000 liquidation preference, 500,000 units authorized; 500,000 units issued and outstanding as of December 31, 2018 and 2017) | 452,828 | 427,512 |
Stockholders' equity (deficit): | ||
Preferred stock ($0.01 par value, 15,000,000 shares authorized; 1,838,985 shares issued and outstanding as of December 31, 2018 and 2017 of 4.875% Convertible Perpetual Preferred Stock, Series A; 3,527,830 shares issued and outstanding as of December 31, 2018 and 2017 of 6.500% Convertible Perpetual Preferred Stock, Series B) | 53 | 53 |
Common stock ($0.01 par value, 300,000,000 shares authorized; 87,328,424 and 83,984,827 shares issued and outstanding as of December 31, 2018 and 2017, respectively) | 881 | 845 |
Additional paid-in capital | 1,367,427 | 1,362,118 |
Accumulated deficit | (1,812,884) | (1,832,156) |
Total stockholders' equity (deficit) | (444,523) | (469,140) |
Total liabilities and stockholders' equity (deficit) | $ 2,819,960 | $ 2,470,635 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Liquidation preference | $ 1,000 | $ 1,000 |
Preferred units, par value | $ 0.01 | $ 0.01 |
Preferred units, shares authorized | 500,000 | 500,000 |
Preferred units, shares issued | 500,000 | 500,000 |
Preferred units, shares outstanding | 500,000 | 500,000 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 87,328,424 | 83,984,827 |
Common stock, shares outstanding | 87,328,424 | 83,984,827 |
Series A Preferred Stock | ||
Preferred stock, shares issued | 1,838,985 | 1,838,985 |
Preferred stock, shares outstanding | 1,838,985 | 1,838,985 |
Dividend rate (as a percent) | 4.875% | 4.875% |
Series B Preferred Stock | ||
Preferred stock, shares issued | 3,527,830 | 3,527,830 |
Preferred stock, shares outstanding | 3,527,830 | 3,527,830 |
Dividend rate (as a percent) | 6.50% | 6.50% |
Recurring basis | ||
Investment in SNMP measured at fair value | $ 3,900 | $ 25,200 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
REVENUES: | |||
Sales and marketing revenues | $ 25,713 | ||
Total revenues | 1,056,914 | $ 740,331 | $ 431,326 |
OPERATING COSTS AND EXPENSES: | |||
Oil and natural gas production expenses | 305,515 | 244,461 | 155,660 |
Exploration expenses | 3,295 | 5,755 | 403 |
Sales and marketing expenses | 23,832 | ||
Production and ad valorem taxes | 56,462 | 36,615 | 19,633 |
Depreciation, depletion, amortization and accretion | 262,481 | 177,078 | 147,485 |
Impairment of oil and natural gas properties | 14,386 | 39,574 | 47,381 |
General and administrative expense | 98,002 | 144,401 | 110,081 |
Total operating costs and expenses | 763,973 | 647,884 | 480,643 |
Operating income (loss) | 292,941 | 92,447 | (49,317) |
Other income (expense): | |||
Interest income | 4,351 | 836 | 856 |
Other income (expense) | (8,001) | 11,102 | 134 |
Gain on sale of oil and natural gas properties | 1,528 | 81,955 | 85,322 |
Interest expense | (177,858) | (140,163) | (126,973) |
Earnings from equity investments | 779 | 3,466 | |
Net losses on commodity derivatives | (27,756) | (6,100) | (53,149) |
Total other income (expense) | (207,736) | (51,591) | (90,344) |
Income (loss) before income taxes | 85,205 | 40,856 | (139,661) |
Income tax benefit (expense) | 2,336 | (1,825) | |
Net income (loss) | 85,205 | 43,192 | (141,486) |
Less: | |||
Preferred stock dividends | (15,948) | (15,948) | (15,948) |
Preferred unit dividends and distributions | (47,408) | (44,259) | |
Preferred unit amortization | (25,316) | (18,039) | |
Net loss attributable to common stockholders | $ (3,467) | $ (35,054) | $ (157,434) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.04) | $ (0.46) | $ (2.67) |
Weighted average number of shares used to calculate net loss attributable to common stockholders - basic and diluted (in shares) | 81,764 | 75,608 | 58,900 |
Oil sales | |||
REVENUES: | |||
Revenues | $ 623,999 | $ 400,045 | $ 241,766 |
Natural gas liquid sales | |||
REVENUES: | |||
Revenues | 232,085 | 171,139 | 81,744 |
Natural gas sales | |||
REVENUES: | |||
Revenues | $ 175,117 | $ 169,147 | $ 107,816 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands | Series A Preferred Stock | Series B Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 18 | $ 35 | $ 619 | $ 1,079,513 | $ (1,639,668) | $ (559,483) |
Balance (in shares) at Dec. 31, 2015 | 1,839 | 3,528 | 61,928 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Dividends on Series A and Series B Preferred stock | $ 10 | 7,964 | (15,948) | (7,974) | ||
Dividends on Series A and Series B Preferred stock (in shares) | 967 | |||||
Restricted stock awards, net of forfeitures | $ 41 | (41) | ||||
Restricted stock awards, net of forfeitures (in shares) | 3,728 | |||||
Stock-based compensation | 24,961 | 24,961 | ||||
Net income (loss) | (141,486) | (141,486) | ||||
Balance at Dec. 31, 2016 | $ 18 | $ 35 | $ 670 | 1,112,397 | (1,797,102) | (683,982) |
Balance (in shares) at Dec. 31, 2016 | 1,839 | 3,528 | 66,623 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Issuance of warrants | 58,958 | 58,958 | ||||
Issuance of common shares to holders of Preferred Units | $ 15 | 17,940 | 17,955 | |||
Issuance of common shares to holders of Preferred Units (in shares) | 1,500 | |||||
Issuance of common stock | $ 115 | 134,748 | 134,863 | |||
Issuance of common stock (in shares) | 11,500 | |||||
Dividends on Series A and Series B Preferred stock | $ 24 | 15,924 | (15,948) | |||
Dividends on Series A and Series B Preferred stock (in shares) | 2,437 | |||||
Dividends on SN UnSub Preferred Units | (41,667) | (41,667) | ||||
Distributions - SN UnSub Preferred Units | (2,592) | (2,592) | ||||
Accretion of discount on SN UnSub Preferred Units | (18,039) | (18,039) | ||||
Restricted stock awards, net of forfeitures | $ 21 | (21) | ||||
Restricted stock awards, net of forfeitures (in shares) | 1,925 | |||||
Stock-based compensation | 22,909 | 22,909 | ||||
Deferred tax benefit - current period retained earnings impact | (737) | (737) | ||||
Net income (loss) | 43,192 | 43,192 | ||||
Balance at Dec. 31, 2017 | $ 18 | $ 35 | $ 845 | 1,362,118 | (1,832,156) | (469,140) |
Balance (in shares) at Dec. 31, 2017 | 1,839 | 3,528 | 83,985 | |||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||
Adoption of accounting standards | 22,739 | 22,739 | ||||
Issuance of common stock | $ 1 | 566 | 567 | |||
Issuance of common stock (in shares) | 100 | |||||
Dividends on Series A and Series B Preferred stock | $ 8 | 3,979 | (15,948) | (11,961) | ||
Dividends on Series A and Series B Preferred stock (in shares) | 805 | |||||
Dividends on SN UnSub Preferred Units | (50,000) | (50,000) | ||||
Distributions - SN UnSub Preferred Units | 2,592 | 2,592 | ||||
Accretion of discount on SN UnSub Preferred Units | (25,316) | (25,316) | ||||
Restricted stock awards, net of forfeitures | $ 27 | (27) | ||||
Restricted stock awards, net of forfeitures (in shares) | 2,439 | |||||
Stock-based compensation | 791 | 791 | ||||
Net income (loss) | 85,205 | 85,205 | ||||
Balance at Dec. 31, 2018 | $ 18 | $ 35 | $ 881 | $ 1,367,427 | $ (1,812,884) | $ (444,523) |
Balance (in shares) at Dec. 31, 2018 | 1,839 | 3,528 | 87,329 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Common Stock | |
Offering costs | $ 7.8 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $ 85,205 | $ 43,192 | $ (141,486) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation, depletion, amortization and accretion | 262,481 | 177,078 | 147,485 |
Impairment of oil and natural gas properties | 14,386 | 39,574 | 47,381 |
Gain on sale of oil and natural gas properties | (1,528) | (81,955) | (85,322) |
Stock-based compensation (benefit) expense | (964) | 40,298 | 37,090 |
Net losses on commodity derivative contracts | 27,756 | 6,100 | 53,149 |
Net cash settlements (paid) received on commodity derivative contracts | (108,317) | 17,628 | 122,145 |
Losses incurred on premiums for derivative contracts | 24,548 | ||
(Gain) loss on other derivatives | (699) | 1,551 | |
Loss (gain) on investments | 21,798 | 871 | (1,818) |
Gain on sale of inventory | (564) | ||
Amortization of deferred gain on Western Catarina Midstream Divestiture | (23,720) | (23,720) | (23,720) |
Amortization of debt issuance costs | 16,322 | 12,647 | 7,840 |
Accretion of debt discount, net | 1,528 | 634 | 633 |
Deferred taxes | (737) | ||
(Gain) loss on inventory market adjustment | (9) | 649 | |
Distributions from equity investments | 1,191 | 930 | |
Earnings from equity investments | (779) | (3,466) | |
Accounts receivable | (1,172) | (86,604) | (9,626) |
Accounts receivable - related entities | (1,608) | 1,957 | (2,704) |
Other payables | (4,140) | 76,304 | 247 |
Other current liabilities | (41,921) | 66,683 | |
Other assets and liabilities, net | 21,131 | 185 | 8,799 |
Net cash provided by operating activities | 265,974 | 292,089 | 182,754 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Capital expenditures for oil and natural gas properties | (616,225) | (500,334) | (312,939) |
Proceeds from sale of oil and natural gas properties | 1,708 | 162,801 | 179,143 |
Acquisition of oil and natural gas properties | 2,834 | (1,039,127) | |
Investment in SNMP | (25,000) | ||
Payments for investments | (74) | (36,502) | |
Payments for purchases of other assets, net | (3,857) | (18,566) | (5,394) |
Sale of investments | 12,500 | 92,458 | |
Net cash used in investing activities | (615,540) | (1,382,800) | (108,234) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from borrowings | 542,365 | 373,250 | 60,000 |
Repayment of borrowings | (106,366) | (143,586) | (60,000) |
Issuance of common stock | 135,942 | ||
Issuance of preferred units | 500,000 | ||
Issuance costs related to preferred units | (20,894) | ||
Financing costs | (13,019) | (25,788) | (1,758) |
Preferred dividends paid | (11,961) | (3,987) | |
Cash paid to tax authority for employee stock-based compensation awards | (866) | (1,437) | (1,906) |
Preferred unit dividends and distributions paid | (47,408) | (44,259) | |
Net cash provided by (used in) financing activities | 362,745 | 773,228 | (7,651) |
Increase (decrease) in cash and cash equivalents | 13,179 | (317,483) | 66,869 |
Cash and cash equivalents, beginning of period | 184,434 | 501,917 | 435,048 |
Cash and cash equivalents, end of period | 197,613 | 184,434 | 501,917 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||
Change in asset retirement obligations | 6,885 | 8,376 | (2,895) |
Change in accrued capital expenditures | (23,370) | 50,613 | (16,829) |
Debt assumed in exchange for equity interest in SR | 23,996 | ||
SUPPLEMENTAL DISCLOSURE: | |||
Cash paid for taxes | 1,996 | ||
Cash paid for interest | $ 146,523 | $ 126,516 | $ 118,498 |
Organization and Business
Organization and Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Business | |
Organization and Business | Note 1. Organization and Busines Sanchez Energy, a Delaware corporation formed in August 2011, is an independent exploration and production company focused on the acquisition and development of oil and natural gas resources in the onshore United States. We are currently focused on the horizontal development of significant resource potential from the Eagle Ford Shale in South Texas, and we also hold other producing properties and undeveloped acreage, including in the Tuscaloosa Marine Shale (“TMS”) in Mississippi and Louisiana which offers potential future development opportunities. As of December 31, 2018, we have assembled approximately |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07 “Compensation - Stock Compensation (ASC 718) - Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01 “Business Combinations (ASC 805) - Clarifying the Definition of a Business,” which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is now effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. The Company adopted this ASU on January 1, 2018 using a prospective method; the clarified definition of a business will be applied by the Company to transactions executed subsequent to the effective date. In October 2016, the FASB issued ASU 2016-16 “Income Taxes (ASC 740): Intra-Entity Transfers of Assets Other Than Inventory,” which eliminates a current exception in U.S. GAAP to the recognition of the income tax effects of temporary differences that result from intra-entity transfers of non-inventory assets. The intra-entity exception is being eliminated under the ASU. The standard is required to be applied on a modified retrospective basis and is now effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. The adoption of ASU 2016-16 did not have an impact on the Company’s consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15 “Statement of Cash Flows (ASC 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU is intended to clarify the presentation of cash receipts and payments in specific situations. The amendments in this ASU are now effective for financial statements issued for annual periods beginning after December 15, 2017. The Company adopted this ASU on January 1, 2018 using a retrospective method. The adoption of ASU 2016-15 did not have an impact on the Company’s consolidated statement of cash flows. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses, if applicable. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019, and earlier adoption is permitted. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 “Leases (ASC 842),” effective for annual and interim periods for public companies beginning after December 15, 2018. The standards update the previous lease guidance by requiring the recognition of a right-to-use asset and lease liability on the statement of financial position for all leases with lease terms of more than 12 months. The lease liability represents the discounted obligation to make future minimum lease payments and corresponding right-of-use asset on the balance sheet for most leases. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. The Company has several operating leases as further discussed in “Item 8. Financial Statements and Supplementary Data - Note 15, Commitments and Contingencies,” which will be impacted by the new rules under this standard. The Company will apply the revised lease rules for our interim and annual reporting periods starting January 1, 2019. The Company has substantially completed its review of the impact of the new standard as well as the implementation of a lease accounting software. Adoption of the standard is expected to result in the recognition of assets and liabilities in our consolidated balance sheets for existing operating leases such as drilling rig contracts, office rental agreements, and potential other wellhead equipment still being evaluated. Concurrent with the software implementation, the Company is incorporating necessary updates to its business processes and controls. The quantitative impacts of the new standard are dependent on the active leases at the time of adoption. As a result, the evaluation of the effect of the new standards will extend over future periods. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (ASC 606).” In March, April, May and December of 2016, the FASB issued rules clarifying several aspects of the new revenue recognition standard. The new guidance is effective for fiscal years and interim periods beginning after December 15, 2017. This guidance outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods and services. The new standard also requires more detailed disclosures related to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. See “Item 8. Financial Statements and Supplementary Data — Note 3, Revenue Recognition” for discussion of the Company’s adoption of the new standard. Principles of Consolidation The Company’s consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates The accompanying consolidated financial statements are prepared in conformity with U.S. GAAP, which 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates pertain to proved oil and natural gas reserves and related cash flow estimates used in the depletion and impairment of oil and natural gas properties, the evaluation of unproved properties for impairment, the fair value of commodity derivative contracts, embedded derivatives, asset retirement obligations, accrued oil and natural gas revenues and expenses and the allocation of general and administrative expenses. Actual results could differ materially from those estimates. Oil and Natural Gas Properties The Company’s oil and natural gas properties are accounted for using the successful efforts method of accounting. All direct and certain indirect costs associated with the acquisition, successful exploration, and development of oil and natural gas properties are capitalized. Once evaluated, these costs, as well as the estimated costs to retire the assets, are included in the amortization base and amortized to depletion expense using the units‑of‑production method. Depletion is calculated based on estimated proved oil and natural gas reserves. Proceeds from the sale or disposition of oil and natural gas properties are applied to reduce net capitalized costs unless the sale or disposition causes a significant change in the relationship between costs and the estimated quantities of proved reserves, in which case the proceeds are applied to reduce net capital costs. Depreciation, depletion and amortization— Depreciation, depletion and amortization (“DD&A”) is provided using the units-of-production method based upon estimates of proved reserves of oil, natural gas and NGLs with production of the same converted to a common unit of measure based upon the relative energy content of the hydrocarbons. The Company groups its oil and natural gas properties with a common geological structure or stratigraphic condition (“common operating field”) in accordance with ASC 932 “Extractive Activities – Oil and Gas” for purposes of computing DD&A, assessing proved property impairments and accounting for asset dispositions. All capitalized costs of oil and natural gas properties are amortized using the units-of-production method based on proved reserves. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to proved oil and natural gas properties amortization begins. All other properties are stated at historical cost, net of impairments, and are depreciated using the straight-line method over their respective useful lives. In arriving at depletion rates under the units‑of‑production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by internal and third-party geologists and engineers, which require significant judgment as does the projection of future production volumes and levels of future costs. All of these judgments may have significant impact on the calculation of depletion expense. Impairment of Oil and Natural Gas Properties —Capitalized costs (net of accumulated depreciation, depletion and amortization and impairment) of proved oil and natural gas properties are subjected to an impairment test when facts and circumstances indicate that their carrying value may not be recoverable. Net capitalized costs of proved oil and natural gas properties are compared to estimated undiscounted future net cash flows using management’s expectations of future oil and natural gas prices. If net capitalized costs exceed estimated undiscounted future net cash flows, the measurement of impairment is based on estimated fair value, using estimated discounted future net cash flows. The estimated future cash flows used to determine whether an impairment is present and the related fair value calculations are typically based on judgmental assessments of future production, commodity prices, operating expenses, and capital expenditures, utilizing the available information. The underlying commodity prices embedded in the estimated cash flows are the product of a process that begins with NYMEX forward curve pricing, adjusted for estimated location and quality differentials, as well as other factors that are expected to impact the realizable price. During the years ended December 31, 2018 and 2016, we recorded proved property impairment of $6.6 million and $3.7 million, respectively, due to the decline of oil and natural gas prices during the periods. We did not record a proved property impairment during the year ended December 31, 2017. Unproved Properties —Costs associated with unproved properties and properties under development are excluded from the amortization base until the properties have been evaluated. Additionally, the costs associated with leasehold acreage and wells currently being drilled are also initially excluded from the amortization base. Unproved properties are identified on a project basis, with a project being an area in which significant leasehold interests are acquired within a contiguous area. Unproved properties are reviewed periodically by management and transferred into the amortization base when management determines that a core area has been evaluated through drilling operations or a thorough geologic evaluation. If the results of an assessment indicate that the properties are impaired, the carrying amount of the identified unproved properties are reduced to their fair value. We recorded impairment charges to our unproved oil and natural gas properties of $7.8 million for the year ended December 31, 2018 due to acreage expiration from changes in our development plan, $39.6 million for the year ended December 31, 2017 due to a write-down of our TMS acreage to fair value and $43.7 million due to acreage abandonment from changes in development plan for the year ended December 31, 2016. The costs of retaining unproved properties and the impairment of unsuccessful leases, are included in “Impairment expense” in the Company’s Consolidated Statements of Operations. Oil and Natural Gas Reserve Quantities The Company’s most significant estimates relate to its proved oil and natural gas reserves. The estimates of oil and natural gas reserves as of December 31, 2018, 2017 and 2016 are based on reports prepared by a third-party engineering firm, Ryder Scott Company, L.P. (“Ryder Scott”). Estimates of proved reserves are based on the quantities of oil and natural gas that engineering and geological analyses demonstrate, with reasonable certainty, to be recoverable from established reservoirs in the future under current operating and economic parameters. Ryder Scott has historically prepared a reserve and economic evaluation of the Company’s properties, utilizing information provided to it by management and other information available, including information from the operators of the property. The standards of the FASB and rules of the SEC permit the use of new technologies to determine proved reserve estimates if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volume estimates. These rules allow, but do not require, companies to disclose their probable and possible reserves to investors in documents filed with the SEC. In addition, the disclosure guidelines require companies to report oil and natural gas reserves using an average price based upon the prior 12-month first-day-of-the-month price rather than a period-end price. Reserves and their relation to estimated future net cash flows impact the depletion and impairment calculations. As a result, adjustments to depletion and impairment are made concurrently with changes to reserve estimates. The reserve estimates and the projected cash flows derived from these reserve estimates are prepared in accordance with SEC guidelines. The independent engineering firm noted above adheres to these guidelines when preparing their reserve reports. The accuracy of the reserve estimates is a function of many factors including the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions, and the judgments of the individuals preparing the estimates, all of which could deviate significantly from actual results. As such, reserve estimates may materially vary from the ultimate quantities of oil and natural gas eventually recovered. Asset Retirement Obligations Asset retirement obligations represent the present value of the estimated cash flows expected to be incurred to plug, abandon and remediate producing properties, excluding salvage values, at the end of their productive lives in accordance with applicable laws. The significant unobservable inputs to this fair value measurement include estimates of plugging, abandonment and remediation costs, well life, inflation and the credit-adjusted risk-free rate. The inputs are calculated based on historical data as well as current estimates. When the liability is initially recorded, the carrying amount of the related long-lived asset is increased. Over time, accretion of the liability is recognized each period, and the capitalized cost is amortized over the useful life of the related asset and is included in “Depreciation, depletion, amortization and accretion” in the Company’s Consolidated Statements of Operations. To estimate the fair value of an asset retirement obligation, the Company employs a present value technique, which reflects certain assumptions, including its credit‑adjusted risk‑free interest rate, inflation rate, the estimated settlement date of the liability and the estimated current cost to settle the liability. Changes in timing or to the original estimate of cash flows will result in change to the carrying amount of the liability. Stock‑Based Compensation The Company records stock-based compensation expense for awards granted to its directors (for their services as directors) in accordance with the provisions of Accounting Standards Codification (“ASC”) ASC 718, “Compensation—Stock Compensation.” Stock-based compensation expense for these awards is based on the grant-date fair value and recognized over the vesting period using the straight-line method. Stock-based compensation awards and phantom stock awards, including those awards with market performance acceleration conditions, granted to employees of the Sanchez Group (as defined in “Item 8. Financial Statements and Supplementary Data - Note 8, Stock-Based Compensation”) (including those employees of the Sanchez Group who also serve as the Company’s officers) and consultants in exchange for services are considered awards to non-employees and the Company records stock-based compensation expense for these awards at fair value in accordance with the provisions of ASC 505-50, “Equity-Based Payments to Non-Employees.” For awards granted to non-employees, the Company records compensation expenses equal to the fair value of the stock-based award at the measurement date, which is determined to be the earlier of the performance commitment date or the service completion date. Compensation expense for unvested awards to non-employees is revalued at each period end and is amortized over the vesting period of the stock-based award. Stock-based payments are measured based on the fair value of the equity instruments granted, as it is more determinable than the value of the services rendered. In accordance with the guidance, the inclusion of market performance acceleration conditions does not change the accounting classification as compared to those awards without market performance acceleration conditions. The phantom stock awards are required to be settled in cash by the Company and are classified as a liability. Compensation expense for the unvested awards is revalued at each period end and is amortized over the vesting period of the stock-based award. Revenue Recognition We recognize revenue from the sale of oil, natural gas and NGLs in the period that the performance obligations are satisfied in accordance with ASC 606. Our performance obligations are primarily comprised of the delivery of oil, gas or NGLs at a delivery point. Each barrel of oil, MMBtu of natural gas or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer through monthly delivery of oil, natural gas and NGLs. The Company’s oil, natural gas and NGLs were sold to certain customers representing 10% or more of its total revenues for the years ended December 31, 2018, 2017 and 2016 as listed below: 2018 2017 2016 Customer A Customer B Customer C Customer D Customer E Production is normally sold to relatively few customers. Substantially all of the Company’s customers are concentrated in the oil and natural gas industry and revenue can be materially affected by current economic conditions, the price of certain commodities such as oil and natural gas and the availability of alternate purchasers. Management believes the loss of any of the Company’s major customers would not have a long term material adverse effect on the Company’s operations. The majority of the Company’s receivables arise from sales of oil, natural gas liquids (“NGLs”) or natural gas. The Company does not have any off‑balance‑sheet credit exposure related to its customers. Receivables from the sale of oil and natural gas are generally unsecured. Allowances for doubtful accounts are determined based on management’s assessment of the creditworthiness of the customer. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are written off against the allowance for doubtful accounts only after all the collection attempts have been exhausted. At December 31, 2018 and 2017, management believed that all balances were fully collectible and no allowance for doubtful accounts was deemed necessary. Derivative Instruments The Company utilizes derivative instruments in order to manage price risk associated with future oil and natural gas production. We recognize all derivatives as either assets or liabilities, measured at fair value, and recognizes changes in the fair value of derivatives in current earnings because it does not designate its derivatives as cash flow hedges. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities arise from the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce the deferred tax asset to the amount more likely than not (a likelihood of more than 50%) to be recovered. Additionally, the Company is required to determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position in order to record any financial statement benefit. If that step is satisfied, then the Company must measure the tax position to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that has greater than a 50% likelihood of being realized upon ultimate settlement. Any interest or penalties would be recognized as a component of income tax expense. The Company applies significant judgment in evaluating its tax positions and estimating its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is estimated. The actual outcome of these future tax consequences could differ significantly from these estimates, which could impact the Company’s financial position, results of operations and cash flows. The Company does not have any material uncertain tax positions during the years ended December 31, 2018 or 2017. Earnings per Share Basic net income (loss) per common share are computed using the two-class method. The two-class method is required for those entities that have participating securities. The two-class method is an earnings allocation formula that determines net income (loss) per share for participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s restricted shares of common stock (see “Item 8. Financial Statements and Supplementary Data — Note 8, Stock‑Based Compensation”) are participating securities under ASC 260, “Earnings per Share,” because they may participate in undistributed earnings with common stock. Participating securities do not have a contractual obligation to share in the Company’s losses. Therefore, in periods of net loss, no portion of the loss is allocated to participating securities. Diluted net income (loss) per common share reflect the dilutive effects of the participating securities using the two-class method or the treasury stock method, whichever is more dilutive. They also reflect the effects of the potential conversion of the Company’s Series A Preferred Stock and Series B Preferred Stock using the if‑converted method, if the effect is dilutive. In addition, they also reflect the effects of the warrants issued in connection with the Comanche Acquisition using the treasury stock method, if the effect is dilutive. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition | |
Revenue Recognition | Note 3. Revenue Recognition Adoption of ASC 606 Effective January 1, 2018, we adopted the new accounting standard ASC 606, “Revenue from Contracts with Customers,” and all the related amendments (collectively referred to as “ASC 606”) to all open contracts using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. For contracts that were modified before the beginning of the earliest reporting period presented, we elected to use a practical expedient permitted under the rules of adoption whereby contracts do not need to be retrospectively restated for contract modifications. Instead, we have reflected the aggregate effect of all modifications that occur before the beginning of the earliest period presented. Adoption of this guidance resulted in the derecognition of $16.3 million in deferred gains recorded under the Carnero Gathering Disposition and Carnero Processing Disposition and the recognition of a $6.4 million derivative asset in the value of the earnout provision owed to us by SNMP with a $22.7 million decrease to accumulated deficit as of January 1, 2018. The earnout derivative asset was marked to market and incurred an approximate loss of $0.5 million during the year ended December 31, 2018. The cumulative effect of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of ASC 606 were as follows (in thousands): As of Adjustments Due As of Balance Sheet December 31, 2017 to ASC 606 January 1, 2018 Assets Fair value of derivative instruments $ 16,430 $ 150 $ 16,580 Total current assets 350,798 150 350,948 Fair value of derivative instruments 1,428 6,251 7,679 Total assets $ 2,470,635 $ 6,401 $ 2,477,036 Liabilities Other liabilities $ 65,480 $ (16,338) $ 49,142 Total liabilities 2,512,263 (16,338) 2,495,925 Stockholders' equity (deficit) Accumulated deficit (1,832,156) 22,739 (1,809,417) Total stockholders' equity (deficit) (469,140) 22,739 (446,401) Total liabilities and stockholders' equity (deficit) $ 2,470,635 $ 6,401 $ 2,477,036 Revenue from Contracts with Customers Beginning in 2018, we account for revenue from contracts with customers in accordance with ASC 606. The unit of account in ASC 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied. ASC 606 provides additional clarification related to principal versus agent considerations. We enter into marketing agreements with our non-operating partners to market and sell their share of production to third parties. We have determined that we act as an agent in such arrangements and account for such arrangements on a net basis. Certain of our contracts for the sale of commodities meet the definition of a derivative. We have elected the normal purchases and normal sales scope exception as provided by ASC 815, Derivatives and Hedging, and account for such contracts in accordance with ASC 606. Disaggregation of Revenue We recognized revenue of $1,056.9 million, $740.3 million and $431.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. We disaggregate revenue in our income statement based on product type, and we further disaggregate our revenue related to sales and marketing revenue. In selecting the disaggregation categories, we considered a number of factors, including disclosures presented outside the financial statements, such as in our earnings release and investor presentations, information reviewed internally for evaluating performance, and other factors used by the Company or the users of its financial statements to evaluate performance or allocate resources. As such, we have concluded that disaggregating revenue by product type appropriately depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Oil, Natural Gas, and NGL Revenues We recognize revenue from the sale of oil, natural gas and NGLs in the period that the performance obligations are satisfied. Our performance obligations are primarily comprised of the delivery of oil, natural gas, or NGLs at a delivery point. Each barrel of oil, MMBtu of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer through monthly delivery of oil, natural gas and NGLs. We sell oil at market based prices with adjustments for location and quality. Under our oil sales contracts, we transfer control of the product to the purchaser at the delivery point and recognize revenue based on the contract price. Under our natural gas sales contracts, we deliver natural gas to the purchaser at an agreed upon delivery point. Natural gas is transported from our wellheads to delivery points specified under sales contracts. To deliver natural gas to these points, third parties gather, process and transport our natural gas. We maintain control of the natural gas during gathering, processing and transportation. We transfer control of the product at the delivery point and recognize revenue based on the contract price. The costs to gather, process and transport the natural gas are recorded as oil and natural gas production expenses. NGLs, which are extracted from natural gas through processing, are either sold by us directly to the customer or are sold by the processor under our processing contracts. For NGLs sold by us directly, we transfer control of the product to the purchaser at the delivery point and recognize revenue based on the contract price. The costs to further process and transport NGLs are recorded as oil and natural gas production expenses. For NGLs sold by the processor, our processing contracts provide that we transfer control to the processor at the tailgate of the processing plant and we recognize revenue based on the price received from the processor. Our contracts with customers typically require payment for oil and condensate, natural gas and NGL sales within 30 days following the calendar month of delivery. The sales of oil and condensate, gas and NGLs typically include variable consideration that is based on pricing tied to local indices adjusted for differentials and volumes delivered in the current month. Revenues include estimates for the two most recent months using published commodity price indices and volumes supplied by field operators. Sales and Marketing Revenue During 2018, we entered into commodity purchase transactions with certain third parties and then subsequently sold the purchased commodity as separate revenue streams. We believe an opportunity exists, from time to time, to participate in additional economic benefits and operational efficiencies in support of our upstream activities by purchasing and reselling production from others, to a limited extent, in order to utilize existing firm transportation arrangements. We retain control of the purchased hydrocarbons prior to delivery to the purchaser. The Company has concluded that we are the principal in these arrangements and therefore we recognize revenue on a gross basis as Sales and Marketing Revenues within our consolidated statement of operations, with costs to purchase and transport the commodity presented as Sales and Marketing Expenses in our consolidated statement of operations. Contracts to sell the third-party hydrocarbons are the same contracts as those for which we sell our produced hydrocarbons, and as such, we do not recognize this revenue any differently than our oil, natural gas and NGL revenue discussed previously. Remaining Performance Obligations Several of our sales contracts contain multiple performance obligations as each barrel of oil, MMBtu of natural gas or other unit of measure is separately identifiable. For these contracts, we have taken the optional exception under ASC 606-10-50-14A(b) which is available only for wholly unsatisfied performance obligations for which the criteria in ASC 606-10-32-40 have been met. Under this exception, neither estimation of variable consideration nor disclosure of the transaction price allocated to the remaining performance obligations is required. Revenue is alternatively recognized in the period that control of the commodity is transferred to the customer and the respective variable component of the total transaction price is resolved. For forms of variable consideration that are not associated with a specific volume and thus do not meet the allocation exception, estimation is required. Examples of such variable consideration consist of deficiency payments, late payment fees, truck rejection charges, inflation adjustments and imbalance penalties; however, these items are immaterial to our consolidated financial statements and/or have a low probability of occurrence. As significant reversals of revenue due to this variability are not probable, no estimation is required. Contract Balances Under our sales contracts, we invoice customers after our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. At December 31, 2018 and 2017, respectively, our receivables from contracts with customers were $87.2 million and $101.4 million, respectively. Reconciliation of Consolidated Balance Sheet In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet as of December 31, 2018 is as follows (in thousands): As of December 31, 2018 Balances without Effect of change Adoption of ASC 606 higher/(lower) As Reported Assets Fair value of derivative instruments $ 15,587 $ 127 $ 15,714 Total current assets 372,854 127 372,981 Fair value of derivative instruments 6,371 5,731 12,102 Total assets $ 2,814,102 $ 5,858 $ 2,819,960 Liabilities Other liabilities $ 37,745 $ (16,338) $ 21,407 Total liabilities 2,827,993 (16,338) 2,811,655 Stockholders' equity (deficit) Accumulated deficit (1,835,080) 22,196 (1,812,884) Total stockholders' equity (deficit) (466,719) 22,196 (444,523) Total liabilities and stockholders' equity (deficit) $ 2,814,102 $ 5,858 $ 2,819,960 Reconciliation of Consolidated Statement of Operations In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of operations for the year ended December 31, 2018 is as follows (in thousands): Year ended December 31, 2018 Balances without Effect of change Adoption of ASC 606 higher/(lower) As Reported Other income (expense) $ (7,458) $ (543) $ (8,001) Total other income (expense) (207,193) (543) (207,736) Income (loss) before income taxes 85,748 (543) 85,205 Net income (loss) $ 85,748 $ (543) $ 85,205 We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | Note 4. Acquisitions and Divestitures Our acquisitions are accounted for under the acquisition method of accounting in accordance with ASC 805, “Business Combinations” (“ASC 805”). A business combination may result in the recognition of a gain or goodwill based on the measurement of the fair value of the assets acquired at the acquisition date as compared to the fair value of consideration transferred, adjusted for purchase price adjustments. The initial accounting for acquisitions may not be complete and adjustments to provisional amounts, or recognition of additional assets acquired or liabilities assumed, may occur as more detailed analyses are completed and additional information is obtained about the facts and circumstances that existed as of the acquisition dates. The results of operations of the properties acquired in our acquisitions have been included in the consolidated financial statements since the closing dates of the acquisitions. Typically, the sale or disposition of oil and natural gas properties results in a gain or loss being recorded as the difference between the proceeds received and the net capitalized costs of the oil and natural gas properties, unless the sale or disposition does not cause a significant change in the relationship between costs and the estimated quantities of proved reserves. In circumstances where treating a sale like a normal retirement does not result in a significant change in the relationship between costs and the estimated quantities of proved reserves, the proceeds are applied to reduce net capitalized costs. Javelina Disposition On September 19, 2017, the Company, through its wholly owned subsidiary, SN Cotulla Assets, LLC (“SN Cotulla”), sold approximately 68,000 net undeveloped acres in the Eagle Ford Shale located in La Salle and Webb counties, Texas to Vitruvian Exploration IV, LLC for an adjusted purchase price of $105 million in cash (“the Javelina Disposition”). Consideration received from the Javelina Disposition was based on an August 1, 2017 effective date. The Company recorded a gain of approximately $73.7 million on the Javelina Disposition. Marquis Disposition On June 15, 2017, the Company, through its wholly owned subsidiary, SN Marquis LLC, sold approximately 21,000 net acres in the Eagle Ford Shale located in Fayette and Lavaca counties, Texas to Lonestar Resources US, Inc. (“Lonestar”) for an adjusted purchase price of approximately $44.0 million in cash and approximately $6.0 million Lonestar’s Series B Convertible Preferred Stock which subsequently converted into 1.5 million shares of Lonestar’s Class A Common Stock (the “Marquis Disposition”). Consideration received from the Marquis Disposition was based on a January 1, 2017 effective date. Assets conveyed pursuant to the Marquis Disposition consist of net proved reserves of approximately 2.7 MMBoe (100% developed) and net production of approximately 1,750 Boe per day from 104 gross (65 net) wells. The Company did not record any gains or losses as a result of the Marquis Disposition. Comanche Acquisition On March 1, 2017, the Company, through two of its subsidiaries, SN UnSub and SN Maverick, along with Gavilan, an entity controlled by The Blackstone Group, L.P., completed the acquisition of approximately 318,000 gross (155,000 net) acres comprised of 252,000 gross (122,000 net) Eagle Ford Shale acres and 66,000 gross (33,000 net) acres of deep rights only, which includes the Pearsall Shale, representing an approximate 49% average working interest therein from Anadarko for an adjusted purchase price of approximately $2.1 billion in cash. Pursuant to the purchase and sale agreement entered into in connection with the Comanche Acquisition, (i) SN UnSub paid approximately 37% of the purchase price (including with a $100 million cash contribution from other Company entities) (ii) SN Maverick paid approximately 13% of the purchase price; and (iii) Gavilan paid 50% of the purchase price. In the aggregate, SN UnSub and SN Maverick acquired half of the Comanche Assets (50% and 0%, respectively, of the estimated total PDPs, 20% and 30%, respectively, of the estimated total PDNPs, and 20% and 30%, respectively, of the estimated total PUDs). Gavilan acquired the remaining half of the Comanche Assets (and the remaining 50% of the estimated total PDPs, PDNPs and PUDs). The Comanche Assets are primarily located in the Western Eagle Ford, contiguous with our existing acreage, and significantly expanded our asset base and production. The effective date of the Comanche Acquisition was July 1, 2016. The total purchase price was allocated to the assets purchased and liabilities assumed based upon their fair values on the date of acquisition as follows (in thousands): Proved oil and natural gas properties $ 781,789 Unproved properties 263,471 Other assets acquired 6,702 Fair value of assets acquired 1,051,962 Asset retirement obligations (8,289) Fair value of net assets acquired $ 1,043,673 Cotulla Disposition On December 14, 2016, SN Cotulla completed the initial closing of the sale of certain oil and natural gas interests and associated assets located in Dimmit, Frio, La Salle, Zavala and McMullen, Texas (the “Cotulla Assets”) to Carrizo (Eagle Ford) LLC (“Carrizo Eagle Ford”), pursuant to a purchase and sale agreement dated October 24, 2016 by and among SN Cotulla, the Company for the limited purposes set forth therein, Carrizo Eagle Ford and Carrizo Oil and Gas for the limited purposes set forth therein, for an adjusted purchase price of approximately $153.5 million, subject to normal and customary post-closing adjustments. The assets sold included estimated net proved reserves as of the effective date of June 1, 2016 of approximately 6.9 MMBoe. Proved developed reserves are estimated to account for approximately 90% of the total net proved reserves. As of the effective date, the Cotulla Assets consisted of approximately 15,000 net acres with 112 gross (93 net) wells producing approximately 3,000 Boe/d. During 2017, two additional closings occurred and final settlement adjustments were recorded resulting in total aggregate consideration of approximately $167.4 million in cash. Typically, proceeds from the sale or disposition of oil and natural gas properties are applied to reduce net capitalized costs with no gain or loss recognized, unless the sale or disposition causes a significant change in the relationship between costs and the estimated quantities of proved reserves. However, in circumstances where treating a sale like a normal retirement would result in a significant change in the relationship between costs and the estimated quantities of proved reserves, judgment should be applied. The Company determined that adjustments to capitalized costs for the Cotulla Disposition would cause a significant change in the relationship between costs and the estimated quantities of proved reserves. Upon the initial closing of the Cotulla Disposition, the Company recorded a gain of approximately $85.3 million. As a result of subsequent closings of the Cotulla Disposition, the Company recorded additional gains totaling $10.4 million during the year ended December 31, 2017. Production Asset Transaction On November 22, 2016, the Company completed the sale of certain non-core producing oil and natural gas assets, located in South Texas, to SNMP for an adjusted purchase price of approximately $24.2 million in cash (the “Production Asset Transaction”). The Production Asset Transaction included working interests in 23 producing Eagle Ford wellbores in Dimmit, La Salle and Zavala counties, together with escalating working interests in an additional 11 producing wellbores in the Palmetto Field in Gonzales County, Texas. The effective date of the Production Asset Transaction was July 1, 2016. For the escalating working interests conveyed in the 11 producing wellbores, the aggregate average working interest percentage initially conveyed was 17.92% per wellbore and, upon January 1 of each subsequent year after the closing, the purchaser’s working interest has automatically increased in incremental amounts according to the purchase agreement through January 1, 2018, at which point the purchaser owned a 47.5% working interest and we will own a 2.5% working interest in each of the wellbores. The Company did not record any gains or losses related to the Production Asset Transaction. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Dec. 31, 2018 | |
Cash and Cash Equivalents | |
Cash and Cash Equivalents | Note 5. Cash and Cash Equivalents As of December 31, 2018 and 2017, cash and cash equivalents consisted of the following (in thousands): As of December 31, 2018 2017 Cash at banks $ 66,426 $ 135,363 Money market funds 131,187 49,071 Total cash and cash equivalents $ 197,613 $ 184,434 Our cash includes funds held in deposit accounts with highly rated banks, and our cash equivalents include funds held in stable and highly liquid money market accounts with major financial institutions. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt | |
Debt | Note 6. Debt Debt as of December 31, 2018 consisted of (i) $167.5 million under the SN UnSub Credit Agreement (as defined below), which is non-recourse to the other obligors under the 6.125% Notes (defined below), 7.75% Notes (defined below), 7.25% Senior Secured Notes (defined below) and the Credit Agreement (defined below) (“Non-Recourse to the Company”), as well as to the obligors under the SR Credit Agreement (defined below) and the Non-Recourse Subsidiary Term Loan (defined below); (ii) $600.0 million principal amount of 7.75% Notes maturing on June 15, 2021; (iii) approximately $3.8 million related to a 4.59% non-recourse subsidiary term loan due 2022 (the “Non-Recourse Subsidiary Term Loan”), which is Non-Recourse to the obligors under the SN UnSub Credit Agreement and the SR Credit Agreement; (iv) $1,150.0 million principal amount of 6.125% Notes maturing on January 15, 2023; (v) $500.0 million principal amount of 7.25% Senior Secured Notes maturing on February 15, 2023, subject to satisfaction of certain conditions; and (vi) approximately $23.5 million under the SR Credit Agreement, which is Non-Recourse to the obligors under the SN UnSub Credit Agreement and the Non-Recourse Subsidiary Term Loan. As of December 31, 2018 and 2017 the Company’s debt consisted of the following: Amount Outstanding as of December 31, Interest Rate Maturity Date 2018 2017 (in thousands) Short Term Debt SR Credit Agreement (1)(2) Variable - $ 304 $ 23,996 Total short term debt $ 304 $ 23,996 Long Term Debt 7.75% Notes 7.75% June 15, 2021 $ 600,000 $ 600,000 SN UnSub Credit Agreement (1) Variable March 1, 2022 167,500 175,500 4.59% Non-Recourse Subsidiary Term Loan (1) 4.59% August 31, 2022 3,803 4,164 SR Credit Agreement (1) Variable October 31, 2022 23,187 — 6.125% Notes 6.125% January 15, 2023 1,150,000 1,150,000 Credit Agreement Variable February 14, 2023 — 50,000 7.25% Senior Secured Notes 7.25% February 15, 2023 500,000 — 2,444,490 1,979,664 Unamortized discount on Additional 7.75% Notes (2,222) (3,126) Unamortized premium on Additional 6.125% Notes 1,090 1,360 Unamortized discount on 7.25% Senior Secured Notes (4,241) — Unamortized debt issuance costs (43,709) (47,215) Total long term debt $ 2,395,408 $ 1,930,683 (1) These debt instruments are Non-Recourse to the Company. (2) Incurred interest at a weighted-average rate of 6.849% and 5.122% for the year ended December 31, 2018 and for the month ended December 31, 2017. The components of interest expense are (in thousands): Year Ended December 31, 2018 2017 2016 Interest on SR Credit Agreement $ (1,775) $ (105) $ — Interest on Senior Notes (148,455) (116,938) (116,938) Interest and commitment fees on SN UnSub Credit Agreement (8,835) (7,639) — Interest on Non-Recourse Subsidiary Term Loan (185) (65) — Interest and commitment fees on Credit Agreement (758) (2,135) (1,561) Amortization of debt issuance costs (16,322) (12,647) (7,840) Amortization of discounts and premium on Senior Notes (1,528) (634) (634) Total interest expense $ (177,858) $ (140,163) $ (126,973) Credit Facilities Third Amended and Restated Credit Agreement On February 14, 2018, the Company, as borrower, and its existing restricted subsidiaries, as loan parties (the “Loan Parties”), entered into a revolving credit facility represented by the Third Amended and Restated Credit Agreement dated as of February 14, 2018 with Royal Bank of Canada, providing for a $25 million first-out senior secured working capital and letter of credit facility (the “Credit Agreement”), which amended and restated the Company’s previous credit facility in its entirety. Although pari passu in right of payment with the 7.25% Senior Secured Notes, the obligations under the Credit Agreement and specified hedging and cash management obligations have, pursuant to the terms of a collateral trust agreement, “first-out” status as to proceeds of the shared collateral and thus the 7.25% Senior Secured Notes are, to the extent of the value of the collateral, effectively junior to the obligations under the Credit Agreement and such specified hedging and cash management obligations. Availability under the Credit Agreement is at all times subject to customary conditions but, except in limited circumstances, not to satisfaction of any collateral coverage ratio or other maintenance covenants. The Credit Agreement will mature on the earlier of (i) February 14, 2023 or (ii) the 91st day prior to the scheduled maturity of any “material indebtedness,” which is defined to include, without limitation, any indebtedness arising in connection with the Company’s 7.75% Notes, 6.125% Notes or the 7.25% Senior Secured Notes. The 7.75% Notes mature on June 15, 2021 The Company’s obligations under the Credit Agreement are guaranteed by all of the Company’s restricted subsidiaries that guarantee the 7.25% Senior Secured Notes and, pursuant to the CTA (as defined below), are secured by priority liens on a first-out collateral proceeds payment priority basis in the Shared Collateral (as defined below), subject only to permitted collateral liens. At the Company’s election, interest on borrowings under the Credit Agreement may be calculated based on an ABR or an adjusted Eurodollar (LIBOR) rate, plus an applicable margin. The applicable margin is either 1.50% or 2.25% for ABR borrowings and either 2.50% or 3.25% for Eurodollar borrowings and letters of credit, if any, depending on the Company’s utilization of the availability under the Credit Agreement. The Company is also required to pay a commitment fee of 0.50% per annum on any unused commitment amount. Interest on ABR borrowings, the commitment fee and letter of credit fees, if any, are generally payable quarterly. Interest on Eurodollar borrowings is generally payable at the end of the applicable interest period. The Credit Agreement contains various affirmative and negative covenants and events of default that limit the Company’s ability to, among other things, incur indebtedness, make restricted payments, grant liens and consolidate or merge. The Credit Agreement also provides for cross default between the Credit Agreement and the other material indebtedness of the Company and its restricted subsidiaries, in an aggregate principal amount exceeding $40 million. As of December 31, 2018, the Company was in compliance with the covenants of the Credit Agreement. In addition, without the restructuring of our current obligations under our existing outstanding debt and preferred stock instruments, we may have difficulties maintaining compliance with certain operational covenants under the Credit Agreement if commodity prices remain low. We could request a waiver of these covenant violations; however, there is no assurance a waiver will be granted. If a waiver is not granted, we would be in default under the Credit Agreement and the lender under the Credit Agreement will be able to terminate the commitment thereunder, accelerate the repayment of debt and require cash collateralization of any letters of credit. Any acceleration of our debt obligations could result in a foreclosure on the collateral securing the debt. From time to time, the agents, arrangers, book runners and lenders under the Credit Agreement and their affiliates have provided, and may provide in the future, investment banking, commercial lending, hedging and financial advisory services to the Company and its affiliates in the ordinary course of business, for which they have received, or may in the future receive, customary fees and commissions for these transactions. SN UnSub Credit Agreement On March 1, 2017, SN UnSub, as borrower, entered into a credit agreement for a $500 million revolving credit facility with JP Morgan Chase Bank, N.A. as the administrative agent and the lenders party thereto with a maturity date of March 1, 2022 (the “SN UnSub Credit Agreement”). The initial borrowing base amount under the SN UnSub Credit Agreement was $330 million. Additionally, the SN UnSub Credit Agreement provides for the issuance of letters of credit, generally limited in the aggregate to the lesser of $50 million and the total availability under the borrowing base. Availability under the SN UnSub Credit Agreement is at all times subject to customary conditions and the then-applicable borrowing base, which is subject to periodic redetermination. As of December 31, 2018, there were approximately $167.5 million of borrowings and no letters of credit outstanding under the SN UnSub Credit Agreement. Semi-annual redeterminations of the borrowing base are generally scheduled to occur in April and October of each year. On May 11, 2018, the SN UnSub Credit Agreement was amended in connection with the Spring 2018 redetermination to, among other things, (i) increase the borrowing base from $330 million to $380 million; (ii) reduce the applicable margins on borrowings outstanding; (iii) reduce the proved reserves minimum collateral requirement; (iv) reduce the restrictions on SN UnSub’s ability to make certain investments, restricted payments and debt repayments; and (v) provide increased hedging flexibility. On December 10, 2018, the borrowing base under the SN UnSub Credit Agreement was decreased from $380 million to $315 million as part of the most recent scheduled semi-annual redetermination and may be further reduced in the future. All other terms of the Credit Agreement remain unchanged. The next regularly scheduled borrowing base redetermination expected in the second quarter 2019. In addition, the borrowing base is subject to interim redetermination at the request of SN UnSub or the lenders based on, among other things, the lenders’ evaluation of SN UnSub’s and its subsidiaries’ oil and natural gas reserves. The borrowing base is also subject to reduction by 25% of the amount of certain junior debt issuances other than the first $200 million of such debt and by reductions as a result of hedge terminations and asset dispositions that exceed 5% of the then-effective borrowing base, in addition to other customary adjustments. The obligations under the SN UnSub Credit Agreement are guaranteed by all of SN UnSub’s existing and future subsidiaries and secured by a first priority lien on substantially all of SN UnSub’s assets and the assets of SN UnSub’s existing and future subsidiaries, including a first priority lien on all ownership interests in existing and future subsidiaries as well as a pledge of equity interests in SN UnSub held by SN EF UnSub Holdings, LLC (“SN UnSub Holdings”) and SN EF UnSub GP, LLC, the general partner of SN UnSub (the “SN UnSub General Partner”), in each case, subject to customary exceptions; provided, however, that the guarantee and first priority lien requirements do not extend to existing and future subsidiaries of SN UnSub designated as “unrestricted subsidiaries.” As of December 31, 2018, SN UnSub had no subsidiaries. At SN UnSub’s election, borrowings under the SN UnSub Credit Agreement may be made on an ABR or a Eurodollar (LIBOR) rate basis, plus an applicable margin. The applicable margin varies from 1.00% to 2.00% for ABR borrowings and from 2.00% to 3.00% for Eurodollar borrowings, depending on the utilization of the borrowing base. In addition, SN UnSub is also required to pay a commitment fee on the amount of any unused commitments at a rate of 0.50% per annum. Interest on ABR borrowings, the commitment fee and letter of credit fees, if any, are generally payable quarterly. Interest on the Eurodollar borrowings is generally payable at the applicable maturity date. The SN UnSub Credit Agreement contains various affirmative and negative covenants and events of default that limit SN UnSub’s ability to, among other things, incur indebtedness, make restricted payments, grant liens, consolidate or merge, dispose of certain assets, make certain investments, engage in transactions with affiliates, enter into and maintain hedge transactions and make certain acquisitions. The SN UnSub Credit Agreement also provides for an event of default upon a change of control and cross default between the SN UnSub Credit Agreement and other indebtedness of SN UnSub in an aggregate principal amount exceeding $25 million. Additionally, the SN UnSub Credit Agreement contains “separateness” covenants that require SN UnSub to comply with certain corporate formalities and transact with affiliates on an arm’s length basis and to indicate in the consolidated financial statements that SN UnSub and SN UnSub General Partner are separate entities apart from their respective security holders and affiliates and the assets and credit of SN UnSub and SN UnSub General Partner are not available to satisfy the debts and other obligations of such security holders and affiliates or any other person or entity. Furthermore, the SN UnSub Credit Agreement contains financial covenants that require SN UnSub to satisfy certain specified financial ratios, including (i) a current assets to current liabilities ratio of at least 1.0 to 1.0 as of the last day of each fiscal quarter and (ii) a net debt to consolidated EBITDAX ratio of not greater than 4.0 to 1.0 for each test period, in each case commencing with the fiscal quarter ending June 30, 2017. As of December 31, 2018, SN UnSub was in compliance with the covenants of the SN UnSub Credit Agreement. From time to time, the agents, arrangers, book runners and lenders under the SN UnSub Credit Agreement and their affiliates have provided, and may provide in the future, investment banking, commercial lending, hedging and financial advisory services to SN UnSub and its affiliates in the ordinary course of business, for which they have received, or may in the future receive, customary fees and commissions for these transactions. SR Credit Agreement In 2017, we acquired SR Acquisition I, LLC (“SRAI”) (the “SR Acquisition”) as part of the Stipulation (as defined in “Item 8. Financial Statements and Supplementary Data —Note 10, Related Party Transactions”). At the time of acquisition, SRAI owed approximately $24 million in borrowings under an existing revolving credit facility. On November 16, 2018, SRAI’s credit facility was amended and restated to convert the outstanding revolving loan to a term loan and extend the maturity date to October 31, 2022 (the “SR Credit Agreement”). As of December 31, 2018, there was approximately $23.5 million outstanding under the SR Credit Agreement. SRAI does not have the right to borrow additional funds under the SR Credit Agreement. Interest on borrowings under the SR Credit Agreement is payable monthly and shall accrue at an annual rate equal to the lesser of (i) the publicly-reported prime rate plus 0.50% and (ii) the highest rate permitted by applicable law. SRAI is required to make quarterly principal payments equal to the aggregate amount of its available cash balance, less $1.0 million. SRAI is also required to make mandatory prepayments in an amount equal to 100% of the net cash proceeds of certain asset dispositions. The SR Credit Agreement contains customary affirmative and negative covenants and events of default. The SR Credit Agreement also contains financial covenants that require SRAI to satisfy (i) an interest coverage ratio of at least 2.5 to 1.0 as of the end of each fiscal quarter; (ii) liquidity of at least $500,000 as of the end of each fiscal quarter; and (iii) an asset coverage percentage (net loan balance divided by PV-9 of total proved reserves) not to exceed 58.5% as of the time each semi-annual reserve report is delivered. As of December 31, 2018, SRAI was in compliance with the financial covenants of the SR Credit Agreement. SRAI is an unrestricted subsidiary of the Company for purposes of the Company’s Senior Notes indentures and Credit Agreement. SRAI’s debt under the SR Credit Agreement is non-recourse to the Company and the restricted subsidiaries under the Company’s indentures and credit facility, and to the obligors on the SN UnSub Credit Agreement and the Non-Recourse Subsidiary Term Loan. See “Item 8. Financial Statements and Supplementary Data – Note 10, Related Party Transactions.” Senior Notes 7.75% Senior Notes Due 2021 On June 13, 2013, we completed a private offering of $400 million in aggregate principal amount of the 7.75% senior notes that will mature on June 15, 2021 (the “Original 7.75% Notes”). Interest on the notes is payable on June 15 and December 15 of each year. We received net proceeds from this offering of approximately $388 million, after deducting initial purchasers’ discounts and offering expenses, which we used to repay then-outstanding indebtedness under our previous credit facility. The Original 7.75% Notes are senior unsecured obligations and are guaranteed on a joint and several senior unsecured basis by certain of our subsidiaries. On September 18, 2013, we issued an additional $200 million in aggregate principal amount of our 7.75% senior notes due 2021 (the “Additional 7.75% Notes” and, together with the Original 7.75% Notes, the “7.75% Notes”) in a private offering at an issue price of 96.5% of the principal amount of the Additional 7.75% Notes. We received net proceeds of $188.8 million (after deducting the initial purchasers’ discounts and offering expenses of $4.2 million) from the sale of the Additional 7.75% Notes. The Company also received cash for accrued interest from June 13, 2013 through the date of issuance of $4.1 million, for total net proceeds of $192.9 million from the sale of the Additional 7.75% Notes. The Additional 7.75% Notes were issued under the same indenture as the Original 7.75% Notes, and are, therefore, treated as a single class of securities under the indenture. We used net proceeds from the offering to partially fund our acquisition of acreage and producing properties in McMullen County, Texas which closed in October 2013, a portion of the 2013 and 2014 capital budgets and for general corporate purposes. The 7.75% Notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured indebtedness. The 7.75% Notes rank senior in right of payment to our future subordinated indebtedness. The 7.75% Notes are effectively junior in right of payment to all of our existing and future secured debt (including under the Credit Agreement and the 7.25% Senior Secured Notes (defined below)) to the extent of the value of the assets securing such debt. The 7.75% Notes are fully and unconditionally guaranteed (except for customary release provisions) on a joint and several senior unsecured basis by the subsidiary guarantors party to the indenture governing the 7.75% Notes. To the extent set forth in the indenture governing the 7.75% Notes, certain of our subsidiaries will be required to fully and unconditionally guarantee the 7.75% Notes on a joint and several senior unsecured basis in the future. The indenture governing the 7.75% Notes, among other things, restricts our ability and our restricted subsidiaries’ ability to: (i) incur, assume or guarantee additional indebtedness or issue certain types of equity securities; (ii) pay distributions on, purchase or redeem shares or purchase or redeem subordinated debt; (iii) make certain investments; (iv) enter into certain transactions with affiliates; (v) create or incur liens on their assets; (vi) sell assets; (vii) consolidate, merge or transfer all or substantially all of their assets; (viii) restrict distributions or other payments from the Company’s restricted subsidiaries; and (ix) designate subsidiaries as unrestricted subsidiaries. We have the option to redeem all or a portion of the 7.75% Notes at any time at the applicable redemption prices specified in the indenture plus accrued and unpaid interest. In addition, we may be required to make an offer to repurchase the 7.75% Notes upon a change of control or if we sell certain of our assets. On July 18, 2014, we completed an exchange offer of $600 million aggregate principal amount of the 7.75% Notes that had been registered under the Securities Act of 1933, as amended (the “Securities Act”), for an equal amount of the 7.75% Notes that had not been registered under the Securities Act. 6.125% Senior Notes Due 2023 On June 27, 2014, the Company completed a private offering of $850 million in aggregate principal amount of the 6.125% senior notes due 2023 (the “Original 6.125% Notes”). Interest on the notes is payable on July 15 and January 15 of each year. The Company received net proceeds from this offering of approximately $829 million, after deducting initial purchasers’ discounts and estimated offering expenses, which the Company used to repay all of the $100 million in borrowings outstanding under its previous credit facility and to finance a portion of the purchase price of the Catarina Acquisition. We used the remaining proceeds from the offering to fund a portion of the remaining 2014 capital budget and for general corporate purposes. The Original 6.125% Notes are senior unsecured obligations of the Company and are guaranteed on a joint and several senior unsecured basis by certain of our subsidiaries. On September 12, 2014, we issued an additional $300 million in aggregate principal amount of our 6.125% senior notes due 2023 (the “Additional 6.125% Notes” and, together with the Original 6.125% Notes, the “6.125% Notes”) in a private offering at an issue price of 100.75% of the principal amount of the Additional 6.125% Notes. We received net proceeds of $295.9 million, after deducting the initial purchasers’ discounts, adding premiums to face value of $2.3 million and deducting estimated offering expenses of $6.4 million. The Company also received cash for accrued interest from June 27, 2014 through the date of the issuance of $3.8 million, for total net proceeds of $299.7 million from the sale of the Additional 6.125% Notes. The Additional 6.125% Notes were issued under the same indenture as the Original 6.125% Notes, and are therefore treated as a single class of securities under the indenture. We used net proceeds from the offering to fund a portion of the 2014 and 2015 capital budgets and for general corporate purposes. The 6.125% Notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured indebtedness. The 6.125% Notes rank senior in right of payment to the Company’s future subordinated indebtedness. The 6.125% Notes are effectively junior in right of payment to all of the Company’s existing and future secured debt (including under the Credit Agreement and the 7.25% Senior Secured Notes) to the extent of the value of the assets securing such debt. The 6.125% Notes are fully and unconditionally guaranteed (except for customary release provisions) on a joint and several senior unsecured basis by the subsidiary guarantors party to the indenture governing the 6.125% Notes. To the extent set forth in the indenture governing the 6.125% Notes, certain of our subsidiaries will be required to fully and unconditionally guarantee the 6.125% Notes on a joint and several senior unsecured basis in the future. The indenture governing the 6.125% Notes, among other things, restricts our ability and our restricted subsidiaries’ ability to: (i) incur, assume or guarantee additional indebtedness or issue certain types of equity securities; (ii) pay distributions on, purchase or redeem shares or purchase or redeem subordinated debt; (iii) make certain investments; (iv) enter into certain transactions with affiliates; (v) create or incur liens on their assets; (vi) sell assets; (vii) consolidate, merge or transfer all or substantially all of their assets; (viii) restrict distributions or other payments from the Company’s restricted subsidiaries; and (ix) designate subsidiaries as unrestricted subsidiaries. The Company has the option to redeem all or a portion of the 6.125% Notes, at any time at the applicable redemption prices specified in the indenture plus accrued and unpaid interest. The Company may also be required to make an offer to repurchase the 6.125% Notes upon a change of control or if we sell certain Company assets. On February 27, 2015, we completed an exchange offer of $1.15 billion aggregate principal amount of the 6.125% Notes that had been registered under the Securities Act, for an equal amount of the 6.125% Notes that had not been registered under the Securities Act. Pursuant to tripartite agreements by and among the Company, U.S. Bank National Association (“U.S. Bank”) and Delaware Trust Company (“Delaware Trust”), effective May 20, 2016, U.S. Bank resigned as the Trustee, Notes Custodian, Registrar and Paying Agent (“Trustee”) under the indentures governing the 6.125% Notes and the 7.75% Notes and Delaware Trust was appointed as successor Trustee. No other changes to the indentures for the 6.125% Notes or the 7.75% Notes were made at the time of the change in Trustee. 7.25% Senior Secured First Lien Notes due 2023 On February 14, 2018, the Company closed its private offering to eligible purchasers of $500 million in aggregate principal amount of 7.25% senior secured first lien notes due 2023 (the “7.25% Senior Secured Notes” and, together with the 7.75% Notes and the 6.125% Notes, the “Senior Notes”). The 7.25% Senior Secured Notes were issued pursuant to an indenture, dated as of February 14, 2018 (the “Indenture”), among the Company, the guarantors party thereto, Delaware Trust Company, as trustee, and Royal Bank of Canada, as collateral trustee. The 7.25% Senior Secured Notes are guaranteed on a full, joint and several and senior secured basis by each of the Company’s existing domestic restricted subsidiaries and will be guaranteed by any future domestic restricted subsidiary, in each case, if and so long as such entity guarantees (or is an obligor The 7.25% Senior Secured Notes will mature on February 15, 2023, unless on October 10, 2022 either (i) some or all of the Company’s 6.125% Notes are still outstanding and have not been defeased or (ii) there is outstanding indebtedness of the Company or any of its restricted subsidiaries that was used to purchase, repurchase, redeem, defease or otherwise acquire or retire for value the Company’s 6.125% Notes, and such indebtedness under this clause (ii) has a final maturity date that is earlier than May 17, 2023, in which case of either clause (i) or clause (ii), the 7.25% Senior Secured Notes will mature on October 14, 2022. The 7.25% Senior Secured Notes are redeemable, in whole or in part, on or after February 15, 2020 at the redemption prices described in the indenture, together with accrued and unpaid interest. At any time prior to February 15, 2020, the Company may redeem the 7.25% Senior Secured Notes, in whole or in part, at a redemption price equal to 100% of their principal amount plus a make whole premium, together with accrued and unpaid interest to the redemption date. In addition, the Company may redeem up to 35% of the 7.25% Senior Secured Notes prior to February 15, 2020 in an amount not greater than the net cash proceeds from one or more equity offerings at a redemption price equal to 107.25% of their principal amount, together with accrued and unpaid interest to the redemption date. If the Company sells certain of its assets or experiences specific kinds of changes of control, the Company may also be required to offer to repurchase the 7.25% Senior Secured Notes. The indenture restricts the Company’s ability, and the ability of the Company’s restricted subsidiaries, to: (i) incur additional indebtedness or issue preferred stock; (ii) pay dividends or make other distributions; (iii) make other restricted payments and investments; (iv) create liens; (v) incur restrictions on the ability of restricted subsidiaries to pay dividends or make certain other payments; (vi) sell assets, including capital stock of restricted subsidiaries; (vii) merge or consolidate with other entities; and (viii) enter into transactions with affiliates. The 7.25% Senior Secured Notes and the guarantees are secured on a first-priority basis, subject in priority only to permitted collateral liens and to the prior rights of the Credit Agreement and other “first-out” obligations under the CTA, in the following assets of the Company and the subsidiary guarantors (the “Shared Collateral”): (i) substantially all of the Company’s and its restricted subsidiaries’ oil and natural gas properties with proved reserves; (ii) 100% of the equity interest of the Company’s restricted subsidiaries and any of their future direct material restricted subsidiaries; and (iii) substantially all of the Company’s and any guarantor’s other material personal property, but in each case excluding, among other things, deposit accounts, oil and natural gas properties with no proved reserves, equity interests in SN UnSub and other existing and future subsidiaries designated as “unrestricted subsidiaries.” |
Stockholders' and Mezzanine Equ
Stockholders' and Mezzanine Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' and Mezzanine Equity | |
Stockholders' and Mezzanine Equity | Note 7. Stockholders’ and Mezzanine Equity Common Stock Offerings — On May 25, 2017, the Company entered into an equity distribution agreement with Citigroup Global Markets, Inc., BMO Capital Markets Corp., Capital One Securities, Inc., RBC Capital Markets, LLC and SunTrust Robinson Humphrey, Inc. and filed with the SEC a prospectus supplement to our shelf registration statement that allowed us to issue from time to time shares of our common stock up to an aggregate gross amount of $75 million (the “2017 ATM”). Sales of our common stock, if any, under the 2017 ATM would have been made by any method permitted by law deemed to be an “at the market” offering as defined under the Securities Act, including, without limitation, sales made directly on the New York Stock Exchange, on any other existing trading market for our shares of common stock or to or through a market maker or as otherwise agreed by the Company and the sales agent. As of December 31, 2018, we had not issued any shares of our common stock under the 2017 ATM. On February 6, 2017, the Company completed an underwritten public offering of 10,000,000 shares of the Company’s common stock at a price to the public of $12.50 per share ($11.7902 per share, net of underwriting discounts). The Company granted the underwriters a 30-day option to purchase up to an additional 1,500,000 shares of the Company’s common stock on the same terms, which was exercised in full and closed on February 6, 2017. The Company received net proceeds of approximately $135.9 million (after deducting underwriting discounts and fees of approximately $7.8 million) from the sale of the shares of common stock. Series A Preferred Stock Offering On September 17, 2012, the Company completed a private placement of 3,000,000 shares of Series A Preferred Stock, which were sold to a group of qualified institutional buyers pursuant to the Rule 144A exemption from registration under the Securities Act. The issue price of each share of the Series A Preferred Stock was $50.00. The Company received net proceeds from the private placement of $144.5 million, after deducting initial purchasers’ discounts and commissions and offering costs of $5.5 million. Each share of Series A Preferred Stock is convertible at any time at the option of the holder thereof at an initial conversion rate of 2.325 shares of common stock per share of Series A Preferred Stock (which is equal to an initial conversion price of $21.51 per share of common stock) and is subject to specified adjustments. As of December 31, 2018, based on the initial conversion price, approximately 4,275,640 shares of common stock would be issuable upon conversion of all of the outstanding shares of the Series A Preferred Stock. The annual dividend on each share of Series A Preferred Stock is 4.875% on the liquidation preference of $50.00 per share and is payable quarterly, in arrears, on each January 1, April 1, July 1 and October 1, when, as and if declared by our board of directors (the “Board”). The Company may pay dividends in cash and common stock or any combination thereof at its option and subject to certain conditions. Dividends are cumulative, and all dividends accumulated through December 31, 2018, have been paid. The dividends accrued for the period from October 1 to December 31, 2018, were declared by the Board and paid in shares of our common stock on January 2, 2019. Except as required by law or the Company’s Amended and Restated Certificate of Incorporation (the “Charter”), holders of the Series A Preferred Stock will have no voting rights unless dividends fall into arrears for six or more quarterly periods (whether or not consecutive). In that event and until such arrearage is paid in full, the holders of the Series A Preferred Stock and the holders of the Series B Preferred Stock, voting as a single class, will be entitled to elect two directors and the number of directors on the Board will increase by that same number. At any time on or after October 5, 2017, the Company may at its option cause all outstanding shares of the Series A Preferred Stock to be automatically converted into common stock at the conversion price, if, among other conditions, the closing sale price (as defined) of the Company’s common stock equals or exceeds 130% of the conversion price for a specified period prior to the conversion. If a holder elects to convert shares of Series A Preferred Stock upon the occurrence of certain specified fundamental changes, the Company will be obligated to deliver an additional number of shares above the applicable conversion rate to compensate the holder for lost option time value of the shares of Series A Preferred Stock as a result of the fundamental change. Series B Preferred Stock Offering On March 26, 2013, the Company completed a private placement of 4,500,000 shares of Series B Preferred Stock. The issue price of each share of the Series B Preferred Stock was $50.00. The Company received net proceeds from the private placement of $216.6 million, after deducting placement agent’s fees and offering costs of $8.4 million. Each share of Series B Preferred Stock is convertible at any time at the option of the holder thereof at an initial conversion rate of 2.337 shares of common stock per share of Series B Preferred Stock (which is equal to an initial conversion price of $21.40 per share of common stock) and is subject to specified adjustments. As of December 31, 2018, based on the initial conversion price, approximately 8,244,539 shares of common stock would be issuable upon conversion of all of the outstanding shares of the Series B Preferred Stock. The annual dividend on each share of Series B Preferred Stock is 6.500% on the liquidation preference of $50.00 per share and is payable quarterly, in arrears, on each January 1, April 1, July 1 and October 1, when, as and if declared by the Board. The Company may pay dividends in cash and common stock or any combination thereof at its option and subject to certain conditions. Dividends are cumulative, and all dividends accumulated through December 31, 2018 have been paid. The dividends accrued for the period from October 1 to December 31, 2018, were declared by the Board and paid in shares of our common stock on January 2, 2019. Except as required by law or the Charter, holders of the Series B Preferred Stock will have no voting rights unless dividends fall into arrears for six or more quarterly periods (whether or not consecutive). In that event and until such arrearage is paid in full, the holders of the Series B Preferred Stock and the holders of the Series A Preferred Stock, voting as a single class, will be entitled to elect two directors and the number of directors on the Board will increase by that same number. At any time on or after April 6, 2018, the Company may at its option cause all outstanding shares of the Series B Preferred Stock to be automatically converted into common stock at the conversion price, if, among other conditions, the closing sale price (as defined) of the Company’s common stock equals or exceeds 130% of the conversion price for a specified period prior to the conversion. If a holder elects to convert shares of Series B Preferred Stock upon the occurrence of certain specified fundamental changes, the Company will be obligated to deliver an additional number of shares above the applicable conversion rate to compensate the holder for lost option time value of the shares of Series B Preferred Stock as a result of the fundamental change. NOL Rights Plan On July 28, 2015, the Company entered into a net operating loss carryforward rights plan (as amended, the “Rights Plan”) with Continental Stock Transfer & Trust Company, as rights agent. In connection therewith, the Board declared a dividend of one preferred share purchase right (“Right”) for each outstanding share of the Company’s common stock. The dividend was paid on August 10, 2015 to stockholders of record as of the close of business on August 7, 2015 (the “NOL Record Date”). In addition, one Right automatically attaches to each share of common stock issued between the NOL Record Date and such date as when the Rights become exercisable. On March 1, 2017, the Company amended the Rights Plan to, among other things, amend certain defined terms to account for the issuance of warrants and grant of shares of common stock to the GSO Funds (as defined below) and the issuance of warrants to the Blackstone Warrantholders in connection with the closing of the Comanche Acquisition. On July 27, 2018, the Company amended the Rights Plan to extend the final expiration date of the rights pursuant to the Rights Plan from July 27, 2018 to July 26, 2021. Common Stock and Stock Warrants Issuance At the closing of the Comanche Acquisition pursuant to the Amended and Restated Securities Purchase Agreement (the “SPA”), and subject to the other terms and conditions provided therein, (i) certain funds managed or advised by GSO (the “GSO Funds”) received 1,455,000 shares of the Company’s common stock and warrants to purchase 1,940,000 shares of the Company’s common stock at an exercise price of $10 per share, subject to customary anti-dilution adjustments; and (ii) Intrepid Private Equity V-A LLC (“Intrepid”) received 45,000 shares of the Company’s common stock and warrants to purchase 60,000 shares of the Company’s common stock at an exercise price of $10 per share, subject to customary anti-dilution adjustments. The warrants issued to the GSO Funds and Intrepid expire on March 1, 2032, in each case in accordance with the terms and conditions of the applicable warrant agreement. Also, at the closing of the Comanche Acquisition, the Company entered into three separate warrant agreements to purchase an aggregate of 6,500,000 shares of the Company’s common stock with each of Gavilan Resources Holdings-A, LLC, Gavilan Resources Holdings-B, LLC, and Gavilan Resources Holdings-C, LLC (collectively, the “Blackstone Warrantholders”), that provide for an exercise price of $10 per share to purchase the Company’s common stock, subject to customary anti-dilution adjustments. The warrants issued to the Blackstone Warrantholders expire on March 1, 2022 in accordance with the terms and conditions of the applicable warrant agreements. The exercise price and the number of shares of the Company’s common stock for which a warrant is exercisable are subject to adjustment from time to time upon the occurrence of certain events including: (i) payment of a dividend or distribution to holders of shares of the Company’s common stock in shares of the Company’s common stock; (ii) a subdivision, combination or reclassification of the Company’s common stock; (iii) the distribution of any rights, options or warrants (excluding rights issued under the Rights Plan) to all holders of the Company’s common stock entitling them for a certain period of time to purchase shares of the Company’s common stock at a price per share less than the fair market value per share; and (iv) payment of a cash distribution to all holders of the Company’s common stock or a distribution to all holders of the Company’s common stock of any shares of the Company’s capital stock, evidences of indebtedness, or any of assets or any rights, warrants or other securities of the Company. The warrant agreements also provide that, if the Company proposes a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, the holders of the warrants will receive the kind and number of other securities or assets which the holder would have been entitled to receive if the holder had exercised the warrant in full immediately prior to the time of such dissolution, liquidation or winding up and the right to exercise the warrant will terminate on the date on which the holders of record of the shares of common stock are entitled to exchange their shares for securities or assets deliverable upon such dissolution, liquidation or winding up. In addition, the Company entered into separate registration rights agreements with the Blackstone Warrantholders, the GSO Funds and Intrepid (collectively, the “Registration Rights Agreements”). The Registration Rights Agreements grant the parties certain registration rights for the shares of our common stock acquired by the parties, including the shares issuable upon the exercise of the warrants to purchase the Company’s common stock. The Registration Rights Agreements with the Blackstone Warrantholders and the GSO Funds provide that the Company will use its reasonable best efforts to prepare and file a shelf registration statement with the SEC to permit the public resale of all registrable securities covered by the applicable Registration Rights Agreement within 18 months of the date of the agreement and to cause such shelf registration statement to be declared effective no later than two years after the date of the agreement. On August 31, 2018, the Company filed the required registration statement on Form S-3 with the SEC (the “GSO/Blackstone Registration Statement”). The GSO/Blackstone Registration Statement has not yet been declared effective by the SEC. The Registration Rights Agreements include piggyback rights for the applicable holders, which provide that, if the Company proposes to file certain registration statements or supplements to certain effective registration statements for the sale of shares of the Company’s common stock in an underwritten offering for its own account or that of another person or both, then the Company is required to offer the holders the opportunity to include in such underwritten offering such number of registrable securities as each such holder may request, subject to certain cutback rights if the Company has been advised by the managing underwriter that the inclusion of registrable securities for sale for the benefit of the holders will have an adverse effect on the price, timing or distribution of the shares of common stock in the underwritten offering. SN Comanche Manager, LLC Class A Preferred Unit Member On March 1, 2017 (the “Effective Date”), pursuant to the Amended and Restated LLC Agreement (the “LLC Agreement”) of Gavilan Resources Holdco, LLC (“GRHL” or “Gavilan Holdco”), GRHL authorized and issued a total of 100 Class A Units (“Class A Units”) to SN Comanche Manager, LLC (“SN Comanche Manager” or the “Manager”) a wholly owned unrestricted subsidiary of the Company. GRHL is the parent of Gavilan. SN Comanche Manager, as holder of the Class A Units, does not have voting rights under the LLC Agreement except with respect to amendments to the LLC Agreement that adversely affect the holders of Class A Units, approval of affiliate transactions, or as required by law. Twenty percent of the Class A Units vest on each of the first five anniversaries of the Effective Date. The holders of Class A Units are entitled to distributions from Available Cash (as defined in the LLC Agreement) subject to the provisions of the LLC Agreement. SN UnSub Preferred Unit Issuance At the closing of the Comanche Acquisition, pursuant to the SPA and subject to the other terms and conditions provided therein, the GSO Funds purchased 485,000 preferred units of SN UnSub for $485.0 million and Intrepid purchased 15,000 SN UnSub Preferred Units for $15.0 million (in aggregate, the “SN UnSub Preferred Units”). The applicable parties entered into an amended and restated partnership agreement of SN UnSub (the “Partnership Agreement”) and an amended and restated limited liability company agreement of SN UnSub General Partner (the “GP LLC Agreement”). Under the terms of the Partnership Agreement, holders of the SN UnSub Preferred Units are entitled to receive distributions of 10.0% per annum, payable quarterly in cash, unless a cash payment is then prohibited by certain of SN UnSub’s debt agreements, in which case such distribution will be deemed to have been paid in kind. SN UnSub may not make distributions on the SN UnSub common units until the preferred units are redeemed in full. The SN UnSub Preferred Units have priority over the common units, to the extent of the Base Return (as defined below), upon a liquidation, sale of all or substantially all assets, certain change of control and exit transactions. SN UnSub may, from time to time and subject to the conditions set forth in the Partnership Agreement and the SN UnSub Credit Agreement, redeem SN UnSub Preferred Units at a purchase price per unit sufficient to achieve the greater of (i) the amount required to cause the return on investment with respect to each such SN UnSub Preferred Unit to be equal to the product of (x) 1.5 multiplied by (y) the purchase price per unit and (ii) the amount required to cause the internal rate of return with respect to each SN UnSub Preferred Unit to be equal to 14.0%, in each case inclusive of previous distributions made in cash (the “Base Return”). Partners holding a majority of the SN UnSub Preferred Units will have the option to request SN UnSub to redeem all of the preferred units for the Base Return at any time following the seventh anniversary of issuance or upon the occurrence of certain change of control transactions, as further described in the Partnership Agreement. If (i) the SN UnSub Preferred Units are not timely redeemed by SN UnSub when required; (ii) SN UnSub fails, after March 1, 2018, to pay the holders of the SN UnSub Preferred Units a cash distribution in any two quarters, regardless of whether consecutive, and such failure is continuing; (iii) SN UnSub takes certain material actions without the consent of the holders of the SN UnSub Preferred Units, when required; (iv) certain events of default under SN UnSub and the Company’s debt agreements have occurred; or (v) SN Maverick is removed as operator under the JDA under certain circumstances, then a controlled affiliate of GSO will be entitled to appoint a majority of the members of the board of directors of SN UnSub General Partner and may cause a sale of the assets or equity of SN UnSub in order to redeem the SN UnSub Preferred Units. The SN UnSub Preferred Units issued in March 2017 are accounted for as mezzanine equity in the consolidated balance sheets and consisted of the following as of December 31, 2018 and 2017, respectively (in thousands): Year Ended December 31, 2018 2017 Mezzanine equity, beginning balance $ 427,512 $ — Private placement of SN UnSub Preferred Units — 500,000 Discount — (90,527) Accretion of discount 25,316 18,039 Dividends accrued (1) 50,000 41,667 Dividends prepaid (2) (2,592) — Dividends/distributions paid (3) (47,408) (41,667) Mezzanine equity, ending balance $ 452,828 $ 427,512 (1) In accordance with the Partnership Agreement and SN UnSub Credit Agreement, cash distributions for the 10% dividend on the SN UnSub Preferred Units were prohibited through February 28, 2018, and thus, the dividends for the year ended December 31, 2017 were deemed to have been accrued and offset by the tax distributions paid. The dividends for the first, second, third and fourth quarters of 2018 were accrued and paid in cash on March 30, 2018, July 2, 2018, October 1, 2018 and December 31, 2018 respectively. (2) In 2017, tax distributions of approximately $2.6 million were paid in excess of the accrued dividend. The excess distribution was offset against a portion of the dividend accrued and paid during the three months ended March 31, 2018. (3) Distributions paid in 2017 represent tax distributions from available cash to holders of the SN UnSub Preferred Units. The Partnership Agreement provides that tax distributions shall be treated as advances of and shall be offset against any amounts holders of the SN UnSub Preferred Units are entitled to receive. Earnings (Loss) Per Share —The following table shows the computation of basic and diluted net earnings (loss) per share for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share amounts): Year Ended December 31, 2018 2017 2016 Net income (loss) $ 85,205 $ 43,192 $ (141,486) Less: Preferred stock dividends (15,948) (15,948) (15,948) Preferred unit dividends and distributions (47,408) (44,259) — Preferred unit amortization (25,316) (18,039) — Net income allocable to participating securities (1)(2) — — — Net loss attributable to common stockholders $ (3,467) $ (35,054) $ (157,434) Weighted average number of unrestricted outstanding common shares used to calculate basic net loss per share 81,764 75,608 58,900 Dilutive shares (3)(4)(5) — — — Denominator for diluted loss per common share 81,764 75,608 58,900 Net loss per common share - basic and diluted $ (0.04) $ (0.46) $ (2.67) (1) The Company's restricted shares of common stock are participating securities. (2) For the years ended December 31, 2018, 2017 and 2016, no losses were allocated to participating restricted stock because such securities do not have a contractual obligation to share in the Company's losses. (3) The year ended December 31, 2018 excludes 2,540,922 shares of weighted average restricted stock and 12,520,179 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. (4) The year ended December 31, 2017 excludes 2,755,893 shares of weighted average restricted stock and 12,520,179 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock and 100,000 contingently issuable shares from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. (5) The year ended December 31, 2016 excludes 2,113,462 shares of weighted average restricted stock and 12,554,481 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted earnings (loss) per common share as these shares were anti-dilutive. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 8. Stock‑Based Compensation At the Annual Meeting of Stockholders of the Company held on May 24, 2016 (“2016 Annual Meeting”), the Company’s stockholders approved the Sanchez Energy Corporation Third Amended and Restated 2011 Long Term Incentive Plan (the “LTIP”), which increased the number of shares of our common stock available for incentive awards pursuant to the prior program, which was approved by our stockholders on May 21, 2015. The Company’s directors and consultants as well as employees of SOG and its affiliates (excluding the Company) (collectively, the “Sanchez Group”) who provide services to the Company are eligible to participate in the LTIP. Awards to participants may be made in the form of stock options, stock appreciation rights, restricted shares, phantom stock, other stock-based awards or stock awards, or any combination thereof. The maximum shares of common stock that may be delivered with respect to awards under the LTIP shall be (i) 17,239,790 shares plus (ii) upon the issuance of additional shares of common stock from time to time after April 1, 2016, an automatic increase equal to the lesser of (A) 15% of such issuance of additional shares of common stock and (B) such lesser number of shares of common stock as determined by the Board or Compensation Committee; provided, however, that shares withheld to satisfy tax withholding obligations are not considered to be delivered under the LTIP. If any award is forfeited, cancelled, exercised, paid or otherwise terminates or expires without the actual delivery of shares of common stock pursuant to such award (the grant of restricted stock is not a delivery of shares of common stock for this purpose), the shares subject to such award shall again be available for awards under the LTIP. There shall not be any limitation on the number of awards that may be paid in cash. Any shares delivered pursuant to an award shall consist, in whole or in part, of shares of common stock newly issued by the Company, shares of common stock acquired in the open market, from any affiliate of the Company, or any combination of the foregoing, as determined by our Board or Compensation Committee in its discretion. The LTIP is administered by the Compensation Committee of the Board as appointed by our Board. The Board may terminate or amend the LTIP at any time with respect to any shares for which a grant has not yet been made. Our Board has the right to alter or amend the LTIP or any part of the LTIP from time to time, including increasing the number of shares that may be granted, subject to stockholder approval as may be required by the exchange upon which the shares of common stock are listed at that time, if any. No change may be made in any outstanding grant that would materially reduce the benefits of the participant without the consent of the participant. The LTIP will expire upon its termination by the Board or, if earlier, when no shares remain available under the LTIP for awards. Upon termination of the LTIP, awards then outstanding will continue pursuant to the terms of their grants. The Company records stock-based compensation expense for awards granted to its directors (for their services as directors) in accordance with the provisions of ASC 718, “Compensation—Stock Compensation.” Stock-based compensation expense for these awards is based on the grant-date fair value and recognized over the vesting period using the straight-line method. Awards granted to employees of the Sanchez Group (including those employees of the Sanchez Group who also serve as the Company’s officers) in exchange for services are considered awards to non-employees and the Company records stock-based compensation expense for these awards at fair value in accordance with the provisions of ASC 505-50, “Equity-Based Payments to Non-Employees.” For awards granted to non-employees, the Company records compensation expense equal to the fair value of the stock-based award at the measurement date, which is determined to be the earlier of the performance commitment date or the service completion date. Compensation expense for unvested awards to non-employees is revalued at each period end and is amortized over the vesting period of the stock-based award. Stock-based payments are measured based on the fair value of the equity instruments granted. For the restricted stock awards granted to non-employees, stock-based compensation expense is based on fair value remeasured at each reporting period and recognized over the vesting period using the straight-line method. Compensation expense for these awards will be revalued at each period end until vested. Forfeitures of restricted stock awards granted to non-employees are accounted for as they are incurred. During the year ended December 31, 2018, the Company issued 371,509 shares of restricted common stock pursuant to the LTIP to seven directors of the Company that vest within one year from the date of grant. Pursuant to ASC 718, stock-based compensation expense for these awards was based on their grant date fair values of either $4.01 per share or $1.76 per share (the respective closing sales prices of the Company’s common stock on the grant dates) and is being amortized over the vesting period. The Company also issued approximately 3.4 million shares of restricted common stock pursuant to the LTIP to certain employees and consultants of SOG (including the Company’s officers), with whom the Company has a Services Agreement. The majority of these shares of restricted common stock vest in equal annual amounts over a three-year period. During the year ended December 31, 2017, the Company issued 200,334 shares of restricted common stock pursuant to the LTIP to six directors of the Company that vest within one year from the date of grant. Pursuant to ASC 718, stock-based compensation expense for these awards was based on their grant date fair value of $6.32 per share (the closing sales price of the Company’s common stock on the grant date) and is being amortized over the vesting period. The Company also issued approximately 2.1 million shares of restricted common stock pursuant to the LTIP to certain employees and consultants of SOG (including the Company’s officers), with whom the Company has a Services Agreement. The majority of these shares of restricted common stock vest in equal annual amounts over a three-year period. During the year ended December 31, 2016, the Company issued 156,126 shares of restricted common stock pursuant to the LTIP to five directors of the Company that vest within one year from the date of grant. Pursuant to ASC 718, stock-based compensation expense for these awards was based on their grant date fair values of either $8.00 or $5.81 per share (the closing sales prices of the Company’s common stock on the grant dates) and is being amortized over the vesting period. The Company also issued approximately 4.4 million shares of restricted common stock pursuant to the LTIP to certain employees and consultants of SOG (including the Company’s officers), with whom the Company has a Services Agreement. Approximately 3.3 million shares of restricted common stock vest in equal annual amounts over a three-year period and the remaining 1.1 million shares of restricted common stock (referred to below as PARS) cliff vest at the end of a five-year period or earlier if the common stock closing price equals or exceeds certain benchmarks. In February 2016 and April 2016, the Compensation Committee approved several new forms of agreement for use in equity awards pursuant to the LTIP. The new forms of agreements consist of two new forms of restricted stock award agreements, one of which provides for vesting in equal annual increments over a three-year period from the grant date (the “Grant Date”) and the other of which provides for cliff vesting five years after the Grant Date or earlier if the common stock closing price equals or exceeds certain benchmarks as set forth in the form of agreement (the “Performance Accelerated Restricted Stock” or “PARS”), and two new forms of phantom stock agreements payable only in cash, one of which provides for vesting in equal annual increments over a three-year period from the Grant Date (the “Phantom Stock”) and the other of which provides for cliff vesting five years after the Grant Date or earlier if the Company’s common stock closing price equals or exceeds certain benchmarks as set forth in the form of agreement (the “Performance Accelerated Phantom Stock” or “PAPS”). The PARS, PAPS and Phantom Stock awards granted to certain employees of the Sanchez Group (including those employees of the Sanchez Group who also serve as the Company’s officers) in exchange for services are considered awards to non-employees and the Company records stock-based compensation expense for these awards at fair value in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” In accordance with the guidance, the inclusion of market performance acceleration conditions on the PARS does not change the accounting classification as compared to the restricted stock without market performance acceleration conditions, as both are still classified as equity within the Company’s balance sheet. The Phantom Stock awards are required to be settled in cash by the Company and, per the guidance, should be classified as a liability. Compensation expense for the unvested awards is revalued at each period end and is amortized over the vesting period of the stock-based award using the straight-line method. During the years ended December 31, 2018 and 2017, no PARS were issued by the Company. During the year ended December 31, 2016, the Company issued approximately 1.1 million shares of PARS pursuant to the LTIP to certain employees of SOG (including the Company’s officers), with whom the Company has a Services Agreement. These PARS cliff vest at the end of a five-year period or earlier if the common stock closing price equals or exceeds certain benchmarks. During the years ended December 31, 2018 and 2017, the Company issued approximately 4.0 million and 2.2 million shares of Phantom Stock, respectively, pursuant to the LTIP to certain employees of SOG (including the Company’s officers), with whom the Company has a Services Agreement. The majority of these shares of Phantom Stock vest in equal annual amounts over a three-year period. No PAPS were issued during the years ended December 31, 2018 or 2017. During the year ended December 31, 2016, the Company issued approximately 4.0 million shares of Phantom Stock and PAPS pursuant to the LTIP to certain employees of SOG (including the Company’s officers), with whom the Company has a Services Agreement. Approximately 2.8 million shares of Phantom Stock vest in equal annual amounts over a three-year period and the remaining 1.2 million shares of PAPS have cliff vesting at the end of a five-year period or earlier if the common stock closing price equals or exceeds certain benchmarks as set forth in the forms of agreement. On March 1, 2017, the Company’s Chief Executive Officer, Executive Chairman of the Board, then President, and then Chief Operating Officer entered into a new form of agreement for use in equity awards pursuant to the LTIP, for 245,234 target shares of the Company’s common stock, 245,234 target shares of the Company’s common stock, 245,234 target shares of the Company’s common stock, and 81,745 target shares of the Company’s common stock, respectively. The new form of agreement is a performance phantom stock agreement payable in shares of common stock (the “Performance Phantom Stock Agreement”). The shares granted pursuant to the Performance Phantom Stock Agreement (the “Performance Awards”) will vest (if any) in equal annual increments over a five-year period ranging from 0% to 200% of the target shares granted based on the Company’s share price appreciation relative to the share price appreciation of the S&P Oil & Gas Exploration & Production Select Industry Index for each year in the five-year performance period beginning on January 1, 2017 and ending on December 31, 2021, subject to each officer’s continuous service with the Company through each vesting date. For the 2017 and 2018 performance periods applicable to these awards, 0% of the target shares were awarded. The Performance Awards are considered awards to non-employees and the Company records stock-based compensation expense for these awards at fair value in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” In accordance with the guidance, the Performance Awards are classified as equity within the Company’s balance sheet, as they are settled in shares of the Company’s common stock. The Performance Awards have graded-vesting features and as such, the compensation expense for the unvested awards is calculated using the graded-vesting method whereby the Company recognizes compensation expense over the requisite service period for each separately vesting tranche of the award as though they were, in substance, multiple awards. In addition, the estimated value of each tranche will be revalued at each period end and amortized over the vesting period. On April 17, 2018, the Company and certain of its key executives entered into new equity award agreements pursuant to the LTIP, whereby certain key executives were granted a total of 2,113,904 stock-settled performance-based phantom stock awards and 2,113,905 cash-settled performance-based phantom stock awards. The awards were issued pursuant to (i) cash-settled performance phantom stock agreements payable only in cash (the “Cash-Settled Performance-Based Phantom Stock Agreement” or “Cash-Settled PBPS Awards”) and (ii) stock-settled performance phantom stock agreements payable in shares of common stock (the “Stock-Settled Performance-Based Phantom Stock Agreement” or “Stock-Settled PBPS Awards” and together with the Cash-Settled PBPS Awards, the “PBPS Awards”). Vesting of the shares granted pursuant to the PBPS awards will occur over a three-year performance period beginning January 1, 2018 and ending December 31, 2020, subject to each executive’s continuous service with the Company through each vesting date. Such shares will vest (if at all) in equal annual increments ranging from 0% to 200% of the target phantom shares based on four performance criteria: (1) leverage metrics (net debt to EBITDAX ratio); (2) reserves replacement (reserve replacement ratio); (3) LOE/Boe (production expense divided by production); and (4) safety (as measured based on the total recordable incident rate (“TRIR”)). Each performance measure for a calendar year within the performance period is weighted 30% (or 10% in the case of TRIR) to determine the number of phantom shares earned (if any) during that calendar year. The overall results of each performance measure during the three years of the performance period are weighted by approximately 33% to determine the number of phantom shares earned (if any) during the entire performance period. In connection with Christopher D. Heinson’s resignation as Senior Vice President and Chief Operating Officer, effective July 9, 2018, all of his unvested Performance Awards, PBPS Awards and other unvested awards under the LTIP were forfeited. In connection with Howard J. Thill’s resignation as Executive Vice President and Chief Financial Officer, effective October 26, 2018, certain awards under the LTIP were forfeited while other awards were accelerated or will vest pursuant to the terms of the applicable LTIP agreements. The applicable vesting date for each calendar year within the performance period will be no later than 60 days following the end of such calendar year. Vested PBPS awards will be settled (i) in the case of Stock-Settled PBPS Awards, by the delivery of one share of Common Stock for each Stock-Settled PBPS Award that vests on the applicable vesting date in a calendar year, and (ii) in the case of Cash-Settled PBPS Awards, by the payment in cash of an amount equal to the fair market value of the Common Stock on the vesting date times the number of Cash-Settled PBPS Awards that vests on the applicable vesting date in a calendar year. Settlement will occur as soon as reasonably practicable following the applicable vesting date, but in all events, no later than the end of the year in which the applicable vesting date occurs. For the 2018 performance period applicable to these awards, 71% of the target shares were awarded. The PBPS Awards are considered awards to non-employees and the Company records stock-based compensation expense for these awards at fair value in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” In accordance with the guidance, the Cash-Settled PBPS Awards are classified as liabilities within the Company’s balance sheet, as they are required to be settled in cash, while the Stock-Settled PBPS Awards are classified as equity within the Company’s consolidated balance sheets, as they are settled in shares of the Company’s common stock. The PBPS Awards have graded-vesting features and as such, the compensation expense for the unvested awards is calculated using the graded-vesting method whereby the Company recognizes compensation expense over the requisite service period for each separately vesting tranche of the award as though they were, in substance, multiple awards. In addition, the estimated value of each tranche will be revalued at each period end and amortized over the vesting period. The Company recognized the following stock-based compensation expense (benefit) (in thousands) which is included in general and administrative expense in the consolidated statements of operations. Year Ended December 31, 2018 2017 2016 Restricted stock awards, directors $ 1,260 $ 6,726 $ 1,000 Restricted stock awards, non-employees 92 15,455 23,961 Performance awards (560) 728 — Phantom stock awards (1,756) 17,389 12,129 Total stock-based compensation expense (benefit) $ (964) $ 40,298 $ 37,090 Based on the $0.27 per share closing price of the Company’s common stock on December 31, 2018, there was approximately $11.3 million of unrecognized compensation cost related to the non‑vested restricted shares outstanding. The cost is expected to be recognized over a weighted average period of approximately 1.80 years. Based on the $0.27 per share closing price of the Company’s common stock on December 31, 2018, there was less than $0.1 million of unrecognized compensation cost related to the non‑vested PARS restricted shares outstanding. The cost is expected to be recognized over a weighted average period of approximately 2.29 years. Based on the $0.27 per share closing price of the Company’s common stock on December 31, 2018, there was approximately $0.9 million of unrecognized compensation cost related to the non-vested PAPS and Phantom Stock award shares outstanding. The cost is expected to be recognized over an average period of approximately 1.80 years. Based on the estimated per share price of the Performance Awards on December 31, 2018, there was less than $0.1 million of unrecognized compensation cost related to the Performance Awards. The cost is estimated to be recognized over a weighted average period of approximately 2.97 years. Based on the estimated per share price of the common stock underlying the PBPS Awards on December 31, 2018, there was approximately $0.5 million of unrecognized compensation cost related to the PBPS Awards. The cost is estimated to be recognized over a weighted average period of approximately 1.58 years. A summary of the activity of the non‑vested restricted common shares and PARS as of December 31, 2018 is presented below (in thousands, except per share amounts): Aggregate Weighted Intrinsic Number of Average Value Shares Fair Value (in thousands) Non-vested shares at December 31, 2017 4,896,728 $ 10.42 $ 51,024 Granted 3,407,103 3.53 12,027 Vested (2,529,704) 3.96 (10,018) Forfeited (750,425) 6.43 (4,825) Non-vested shares at December 31, 2018 5,023,702 $ 9.60 $ 48,208 As of December 31, 2018, approximately 6.1 million shares remain available for future issuance to participants under the LTIP. A summary of the activity of the non‑vested Phantom Stock and PAPS for the year ended December 31, 2018 is presented below (in thousands, except per share amounts): Aggregate Weighted Intrinsic Number of Average Value Shares Fair Value (in thousands) Non-vested shares at December 31, 2017 3,588,644 $ 5.74 $ 20,599 Granted 4,046,345 3.43 13,879 Vested (1,534,779) 3.09 (4,742) Forfeited (974,262) 6.09 (5,933) Non-vested shares at December 31, 2018 5,125,948 $ 4.64 $ 23,803 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | Note 9. Income Taxes The components of the federal income tax provision for the years ended December 31, 2018, 2017 and 2016 are (in thousands): Year Ended December 31, 2018 2017 2016 Current expense (benefit) as a result of current operations $ — $ (1,599) $ 1,825 Deferred expense (benefit) as a result of current operations 23,707 257,358 (46,191) Increase (Decrease) in valuation allowance (23,707) (258,095) 46,191 Net income tax expense (benefit) $ — $ (2,336) $ 1,825 The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the federal statutory rates of 21% for 2018 and 35% for 2017 and 2016 to income before income taxes (in thousands): Year Ended December 31, 2018 2017 2016 Income tax expense (benefit) at the federal statutory rate $ 17,893 $ 14,300 $ (48,882) Officers’ compensation limitation 1,232 9,570 3,115 State taxes (net of federal benefit) 3,551 2,607 (232) Non-deductible general and administrative expenses 1,048 841 743 Percentage depletion carryforward (34) (86) (144) Other — (52) 39 Minimum Tax Credit Recoverability — (1,599) — US Tax Reform - Impact to Deferreds — 227,392 — Differences between actual income taxes and amounts estimated in prior years 17 2,786 995 Income tax expense (benefit) 23,707 255,759 (44,366) US Tax Reform - One-Time Valuation Allowance Change — (227,392) — Other Valuation Allowance Change (23,707) (30,703) 46,191 Net income tax expense (benefit) $ — $ (2,336) $ 1,825 The Company’s deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Significant components of the deferred tax assets and liabilities are as follows (in thousands): As of December 31, 2018 2017 Deferred tax assets (liabilities): Derivative assets (obligations) $ (2,281) $ 9,536 Depreciable, depletable property, plant and equipment (101,147) (22,351) Share-based compensation (1,017) 936 Revenue recognition 3,280 3,593 Investments in joint ventures (53,640) (22,561) Other 1,308 321 Interest carryforward 33,161 — Federal net operating loss carryforward 425,954 364,922 State net operating loss carryforward 4,387 4,246 Deferred tax assets: 310,005 338,642 Valuation allowance (310,005) (338,642) Total deferred tax assets $ — $ — As of December 31, 2018, the Company had NOLs of approximately $2,028.3 million ($1,729.1 million of which begin to expire in 2031). Additionally, the Company had net operating losses in the states of Montana, Mississippi and Louisiana which will begin to expire in 2019, 2033 and 2026, respectively. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2018. On the basis of this evaluation, as of December 31, 2018, a valuation allowance of approximately $310.0 million has been recorded for the portion of the deferred tax asset that is more likely than not to be realized. The Company will continue to assess the need for a valuation allowance against deferred tax assets considering all available information obtained in future reporting periods. The Company files income tax returns in the U.S. and various state jurisdictions. The Company is no longer subject to examination by federal income tax authorities prior to 2015. State statutes vary by jurisdiction. As of December 31, 2018, 2017 and 2016, the Company had no material uncertain tax positions. On December 22, 2017, the President signed into law Public Law No. 115-97, a comprehensive tax reform bill commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) that significantly reforms the Internal Revenue Code of 1986, as amended (the “Code”). Among the many provisions included in the Tax Act is a provision to reduce the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. We recognized the income tax effects of the Tax Act in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of ASC 740, “Income Taxes.” The guidance allows for a measurement period of up to one year after the enactment date to finalize the recording of the related tax impacts. As such, our 2017 financial results reflect the provisional income tax effects of the Tax Act for which the accounting under ASC 740 is incomplete, but a reasonable estimate could be determined. We did not identify any items for which the income tax effects of the Tax Act could not be reasonably estimated as of December 31, 2017. The Company has completed the accounting for the Tax Act in the fourth quarter of 2018 within the one-year measurement period from the enactment date. No adjustments to any amounts recorded in the prior year were necessary. As of December 31, 2017, we had deferred tax assets primarily related to our net operating loss carryforwards. Prior to the Tax Act, the value of these deferred tax assets was recorded at the previous income tax rate of 35%, which represented their expected future benefit to us. As a result of the Tax Act, the future benefit of these deferred tax assets was remeasured at the new income tax rate of 21% and we recorded a $227.4 million non-cash adjustment (exclusive of a valuation allowance) for the year ended December 31, 2017. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | Note 10. Related Party Transactions SOG SOG, headquartered in Houston, Texas, is a privately owned full service oil and natural gas operating company engaged in the exploration and development of oil and natural gas assets primarily in the South Texas, Louisiana and onshore Gulf Coast areas on behalf of certain of its affiliates, including the Company, pursuant to existing management services agreements. The Company refers to SOG and its affiliates (excluding Sanchez Energy), collectively, as the “Sanchez Group.” Eduardo A. Sanchez and Ana Lee Sanchez Jacobs, immediate family members of the Executive Chairman of the Board, the President and Chief Executive Officer and an Executive Vice President of the Company, collectively with such individuals, either directly or indirectly, own 100% of the equity interests in and are officers of SOG. In addition, Antonio R. Sanchez, Jr. is the sole member of the board of directors of SOG. SOG Services Agreement The Company does not have any employees. On December 19, 2011 the Company entered into a Services Agreement with SOG pursuant to which specified employees of SOG provide certain services with respect to the Company’s business under the direction, supervision and control of SOG. Pursuant to this arrangement, SOG performs centralized corporate functions for the Company, such as general and administrative services, geological, geophysical and reserve engineering, lease and land administration, marketing, accounting, operational services, information technology services, compliance, insurance maintenance and management of outside professionals. The Company compensates SOG for the services at a price equal to SOG’s cost of providing such services, including all direct costs and indirect administrative and overhead costs (including the allocable portion of salary, bonus, incentive compensation and other amounts paid to persons that provide the services on SOG’s behalf) allocated in accordance with SOG’s regular and consistent accounting practices, including for any such costs arising from amounts paid directly by other members of the Sanchez Group on SOG’s behalf or borrowed by SOG from other members of the Sanchez Group, in each case, in connection with the performance by SOG of services on the Company’s behalf. The Company also reimburses SOG for sales, use or other taxes, or other fees or assessments imposed by law in connection with the provision of services to the Company (other than income, franchise or margin taxes measured by SOG’s net income or margin and other than any gross receipts or other privilege taxes imposed on SOG) and for any costs and expenses arising from or related to the engagement or retention of third-party service providers. In addition, SOG may outsource some or all of these services to third parties, and a failure of all or part of SOG’s relationships with its outsourcing providers could lead to delays in or interruptions of these services Salaries and associated benefits of SOG employees are allocated to the Company based on a detailed analysis of actual time spent by the professional staff on Company projects and activities. The allocation is reviewed at least annually and is adjusted as necessary. General and administrative expenses such as office rent, utilities, supplies and other overhead costs, are allocated on the same basis as the SOG employee salaries. Expenses allocated to the Company for general and administrative expenses and oil and natural gas production expenses for the years ended December 31, 2018, 2017 and 2016 were $64.9 million, $73.3 million and $45.9 million, respectively. As of December 31, 2018 and 2017, the Company had a net receivable from SOG and other members of the Sanchez Group of $6.1 million and $4.5 million, respectively, which is reflected as “Accounts receivable—related entities” in the consolidated balance sheets. The net receivable as of December 31, 2018 and 2017 consists primarily of advances paid related to leasehold and other costs paid to SOG. SNMP SNMP, headquartered in Houston, Texas, is a publicly traded l imited partnership focused on the acquisition, development, ownership and operation of midstream and other energy-related assets in North America. Antonio R. Sanchez, III, the son of Antonio R. Sanchez, Jr. and brother of Patricio D. Sanchez, is the Company’s President and Chief Executive Officer and is a member of the board of directors of both the Company and of the general partner of SNMP (“SNMP GP”). Patricio D. Sanchez, an Executive Vice President of the Company, is the President and Chief Operating Officer of SNMP and a director of SNMP GP. Eduardo A. Sanchez, the brother of Antonio R. Sanchez, III and Patricio D. Sanchez, and the son of Antonio R. Sanchez, Jr,. is a director of SNMP GP. Antonio R. Sanchez, Jr., the Executive Chairman of the Board of the Company, Antonio R. Sanchez, III, Eduardo A. Sanchez and Patricio D. Sanchez all directly or indirectly own certain equity interests in the Company, SNMP and SNMP GP. Antonio R. Sanchez, Jr., Antonio R. Sanchez, III, Eduardo A. Sanchez and Patricio D. Sanchez beneficially own approximately 0.80%, 3.01%, 3.00% and 4.14%, respectively, of the SNMP common units outstanding as of December 31, 2018 and, together with Ana Lee Sanchez Jacobs, indirectly own 100% of SNMP GP. Catarina Gathering As of December 31, 2018 and 2017, the Company had a net payable to SNMP of approximately $6.1 million and $9.8 million, respectively, that consisted primarily of the accrual for fees associated with the gathering agreement (the “Gathering Agreement”) signed with SNMP as part of the Company’s sale of SN Catarina’s interests in Catarina Midstream, LLC (“Catarina Midstream”), a wholly-owned subsidiary of SN Catarina (the “Western Catarina Midstream Divestiture”) which is reflected in the “Accrued Liabilities – Other” account on the consolidated balance sheets. On June 30, 2017, the Gathering Agreement was amended to, among other things, provide for an additional, incremental infrastructure fee payable to SNMP of $1.00 per barrel of water delivered by SNMP on or after April 1, 2017 through and including March 31, 2018. Since March 31, 2018, we have agreed with SNMP to continue the incremental fee on a month-to-month basis. On September 1, 2017, SN Catarina entered into an agreement with Seco Pipeline, LLC (“Seco Pipeline”), a wholly owned subsidiary of SNMP, whereby Seco Pipeline transports certain quantities of natural gas on a firm basis for $0.22 per MMBtu delivered on or after September 1, 2017. This agreement had an initial term of one month that expired on September 30, 2017, but the agreement continues month-to-month thereafter unless terminated by either party. Targa/SNMP Gathering and Processing In May 2018, SNMP executed a series of agreements with an affiliate of Targa pursuant to which the parties merged their respective 50% interests in Carnero Gathering and Carnero Processing to form an expanded 50/50 joint venture in South Texas, Carnero G&P LLC (“Carnero G&P”). In addition to the merger, Targa contributed 100% of the equity interests in the SOII Facility (as defined in “Item 8. Financial Statements and Supplementary Data – Note 17, Investments”), to Carnero G&P, expanding the processing capacity of the joint venture (“Carnero G&P Transaction”). Effective April 1, 2018, SN Maverick and Carnero G&P entered into a Firm Gas Gathering, Processing and Purchase Agreement (the “Carnero Gas Gathering Agreement”) and other related documentation providing for certain natural gas gathering, treating and processing services in exchange for an approximately 315,000 gross acreage dedication from SN Maverick and its working interest partners in our Comanche area. Additionally, effective April 1, 2018, and in connection with the Carnero G&P Transaction, SN Catarina and an affiliate of Targa also amended their Firm Gas Gathering Agreement (the “Amended Gathering Agreement”) and Firm Gas Processing Agreement (the “Amended Processing Agreement”), which were subsequently assigned by the Targa counterparty to Carnero G&P. Production Asset Transaction On November 22, 2016, we completed the Production Asset Transaction previously discussed with SNMP, which is a related party (see “Item 8. Financial Statements and Supplementary Data — Note 4, Acquisitions and Divestitures”). Carnero Processing Disposition On November 22, 2016, we sold our membership interests in Carnero Processing to SNMP, which is a related party (see “Item 8. Financial Statements and Supplementary Data — Note 17, Investments”). SNMP Unit Acquisition On November 22, 2016, a subsidiary of the Company purchased 2,272,727 common units of SNMP, which is a related party, for $25.0 million in a private placement (see “Item 8. Financial Statements and Supplementary Data – Note 17, Investments”). SNMP Lease Option On October 6, 2016, the Company and SN Terminal, LLC (“SNT”), a wholly owned subsidiary of the Company, on the one hand, and SNMP, on the other hand, entered into a Purchase and Sale Agreement (the “Lease Option Purchase Agreement”) pursuant to which SNT sold and conveyed to SNMP an option to acquire a ground lease (the “Lease Option”) to which SNT is a party for a tract of land leased from the Calhoun Port Authority in Point Comfort, Texas. In addition, if the Company or any of its affiliates entered into an option to engage in the construction of or participation in a Project (as defined below) and/or received the benefit of an acreage dedication from an affiliate of the Company relating to a Project, then such option and/or acreage dedication would have also been assigned to SNMP, if SNMP exercised the Lease Option. SNMP would have paid SNT an amount of $1.00 if the Lease Option was exercised, along with $250,000 if SNMP or any other person affiliated with SNMP elected to construct, own or operate a marine storage terminal on or within five miles of the Port Comfort lease or participated as an investor in the same, within five miles thereof (a “Project”), or the Company or its affiliates conveyed an acreage dedication to or an option regarding a Project. On September 11, 2017, the Company, SNT and SNMP entered into an agreement that terminated the Lease Option. Carnero Gathering Disposition On July 5, 2016, we sold our membership interests in Carnero Gathering to SNMP, which is a related party (see “Item 8. Financial Statements and Supplementary Data – Note 17, Investments”). SR SR Settlement On August 11, 2017, the Company, the plaintiffs and all named defendants entered into a Stipulation of Settlement (the “Stipulation”) reflecting the terms of the settlement of the derivative stockholder litigation entitled In re Sanchez Energy Derivative Litigation , Consolidated C.A. No. 9132-VCG in the Court of Chancery of the State of Delaware (the “Court”), relating to the Company’s August 2013 purchase of working interests in the TMS from Sanchez Resources. On November 6, 2017, the Stipulation was approved by the Court and became final on December 20, 2017, pursuant to which, among other things: (i) the defendants (or their insurance companies) made a payment to the Company of an aggregate of $11.8 million ($5.2 million, net of fees, expenses and other amounts); (ii) the sole member of Sanchez Resources transferred the equity of Sanchez Resources to us; (iii) Sanchez Resources transferred certain royalty interests in the TMS acreage held by Sanchez Resources to us; and (iv) Alan Jackson and Greg Colvin were removed from the Company’s Compensation Committee. Sanchez Resources and one of its subsidiaries is party to the SR Credit Agreement of which approximately $23.5 million was outstanding as of December 31, 2018. See “Item 8. Financial Statements and Supplementary Data – Note 6, Debt” for additional discussion of the SR Credit Agreement. The credit facility is solely secured by substantially all of the assets of Sanchez Resources and/or its subsidiary, without recourse to the Company or any of its other subsidiaries, consisting of approximately 14,000 net acres in the TMS. Proved oil and natural gas properties $ 17,719 Unproved properties 5,227 Other assets acquired 3,952 Fair value of assets acquired 26,898 Asset retirement obligations (2,902) Fair value of net assets acquired $ 23,996 Contribution Agreement On November 16, 2018, the Company along with SN TMS, LLC, SN UR Holdings, LLC, Sanchez Resources, LLC, and SR Acquisition I, LLC, all wholly owned subsidiaries of the Company, entered into a contribution agreement (the “Contribution Agreement”) whereby certain producing properties of SN TMS, LLC were contributed, assigned, transferred and conveyed to SR Acquisition I, LLC. This transfer was effective November 1, 2018, and as the transaction was between entities under common control, the contribution was recorded at historical cost. Blackstone, Gavilan, GSO According to a Schedule 13G, filed with the SEC on June 9, 2017, affiliates of and/or funds managed by or advised by Blackstone and/or GSO Capital Partners L.P. (“GSO”) beneficially own 10,395,000 shares of Company common stock, inclusive of shares of common stock underlying warrants. Comanche Acquisition On March 1, 2017, we closed the Comanche Acquisition previously discussed and, in connection with the closing, entered into a number of transactions with Gavilan, GSO and the Blackstone Warrantholders, or their affiliates, which are related parties (see “Item 8. Financial Statements and Supplementary Data — Note 4, Acquisitions and Divestitures”), including (i) the SPA with an investment vehicle owned by the GSO Funds and a controlled affiliate of GSO; (ii) warrant agreements with the Blackstone Warrantholders; (iii) Registration Rights Agreements with the Blackstone Warrantholders and GSO; (iv) the Partnership Agreement with an entity controlled by an affiliate of GSO; and (v) the GP LLC Agreement with a controlled affiliate of GSO (see “Item 8. Financial Statements and Supplementary Data – Note 7, Stockholders’ and Mezzanine Equity”). In addition, in connection with the closing of the Comanche Acquisition, we also entered into (i) separate standstill and voting agreements (the “Standstill Agreements”) with the Blackstone Funds (as defined below) and the GSO Funds, respectively; (ii) an eight-year (subject to earlier termination as provided for therein) JDA with Gavilan; (iii) a shareholders agreement (the “Shareholders Agreement”) with Gavilan Holdco; (iv) a management services agreement (the “Management Services Agreement”) with Gavilan Holdco and SN Comanche Manager, a wholly owned subsidiary of the Company; and (v) certain marketing agreements with Gavilan. Each Standstill Agreement (i) restricts the ability of each of Blackstone Capital Partners VII L.P. and Blackstone Energy Partners II L.P. (together, the “Blackstone Funds”) and the GSO Funds (and indirectly certain of their affiliates) to take certain actions relating to the acquisition of our securities or assets or participation in our management; (ii) contains a two-year lock-up restricting dispositions of the Company’s common stock or the warrants to purchase the Company’s common stock; and (iii) contains an agreement to vote any voting securities of the Company in the same manner as recommended by our Board. Pursuant to the Shareholders Agreement, Gavilan Holdco has the right, but not the obligation, to appoint one observer representative to be present at all regularly scheduled meetings of the full board of directors of the Company. The JDA provides for the administration, operation and transfer of the jointly owned Comanche Assets, and further provides for the (i) establishment of an operating committee to control the timing, scope and budgeting of operations on the Comanche Assets (subject to certain exceptions) and (ii) designation of SN Maverick as operator of the Comanche Assets and certain other interests (subject to forfeiture in the event of certain default events). The JDA also provides for mechanics relating to division of assets and operatorship among the parties, contains restrictions on the indirect or direct transfer of the parties’ interests in the Comanche Assets, including certain tag-along rights and rights of first offer provisions, and provides Gavilan with certain drag-along rights in the event of certain sale transactions, subject to certain exceptions and potential alternative structures or asset divisions. Pursuant to the Management Services Agreement, the Manager serves as manager of Gavilan Holdco’s business and provides comprehensive general, administrative, business and financial services at a price equal to Manager’s actual cost of providing such services (including an “administrative fee” equal to 2% of SOG’s total G&A costs), continuing until the occurrence of one or more events giving Manager or Gavilan Holdco the right to terminate the agreement. At the closing of the Comanche Acquisition, Gavilan Holdco paid $1.0 million to Manager under the agreement. The Management Services Agreement provides that Manager may not bill more than $500,000 of G&A costs per month to Gavilan Holdco (subject to reasonable adjustments that are consistent with market terms as a result of an increase in actual G&A costs incurred, and based upon a reasonable allocation of such costs). We also entered into a back-to-back management arrangement between Manager and SOG, on substantially the same terms and conditions as the Management Services Agreement, pursuant to which Manager delegated to SOG, and SOG agreed to perform for and on behalf of Manager, Manager’s duties and obligations under such services agreement. Manager is required to remit amounts received directly from Gavilan Holdco to Manager, including the $1.0 million paid at closing to Manager, and to pay SOG the 2% administrative fee referred to above. In addition, we entered into a management services agreement between SOG and SN UnSub pursuant to which SOG serves as manager of SN UnSub’s oil and natural gas properties and provides comprehensive general, administrative, business and financial services at a price equal to SOG’s actual cost of providing such services (including an “administrative fee” equal to 2% of SOG’s total G&A costs), with an initial term expiring on March 1, 2024 (subject to earlier termination as provided therein), renewing automatically for additional one-year terms thereafter unless either SN UnSub or SOG delivers written notice to the other of its desire not to renew the term at least 180 days prior to such anniversary date. SOG may not allocate G&A costs to SN UnSub in excess of $5 million per calendar year until March 1, 2019, or in excess of $10 million per calendar year thereafter. Pursuant to an oil production marketing agreement, a residue gas marketing agreement and a marketing agreement for NGLs between Gavilan and SN Maverick, Gavilan sells all of its production from the Comanche Assets to SN Maverick and SN Maverick purchases all such production from Gavilan, transports and sells such production and remits to Gavilan its proportionate share of the sale proceeds Pursuant to the LLC Agreement of GRHL, GRHL authorized and issued a total of 100 Class A Units to SN Comanche Manager. SN Comanche Manager, as holder of the Class A Units, does not have voting rights with respect to GRHL except regarding amendments to the LLC Agreement that adversely affect the holders of Class A Units, approval of affiliate transactions, or as required by law. Twenty percent of the Class A Units vest on each of the first five anniversaries of the effective date of March 1, 2017. The holders of Class A Units are entitled to distributions from Available Cash, as defined in and subject to the provisions of the LLC Agreement. As of December 31, 2018, no distributions of Available Cash had been made to the Company. GSO Share Purchase Funds managed or advised by GSO acquired 500,000 shares of the Company’s common stock in connection with an underwritten public offering that closed on February 6, 2017. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments | |
Derivative Instruments | Note 11. Derivative Instruments To reduce the impact of fluctuations in the price of oil, natural gas and NGLs on the Company’s business and results of operations, and to protect the economics of property acquisitions at the time of execution, the Company periodically enters into derivative contracts with respect to a portion of its projected oil and natural gas production through various transactions that fix or modify the future prices to be realized. The derivative contracts may include fixed price swaps (whereby, on the settlement date, the Company will receive or pay an amount based on the difference between a pre-determined fixed price and a variable market price for a notional quantity of production), put options (whereby the Company pays a cash premium in order to establish a fixed floor price for a notional quantity of production and, on the settlement date, receives the excess, if any, of the fixed price floor over a variable market price), and costless collars (whereby, on the settlement date, the Company receives the excess, if any, of a variable market price over a fixed floor price up to a fixed ceiling price for a notional quantity of production). In addition, the Company periodically enters into call swaptions as a way to achieve greater downside price protection than offered under prevailing fixed price swaps by agreeing to expand the notional quantity hedged or extend the notional quantity settlement period under a fixed price swap at the counterparty’s election on a designated date. These hedging activities, which are governed by the terms of the Credit Agreement (as defined in “Item 8. Financial Statements and Supplementary Data – Note 6, Debt”), the SN UnSub Credit Agreement and the terms of SN UnSub’s organizational documents, or were governed by our prior revolving credit facility, as applicable, are intended to support oil and natural gas prices at targeted levels and manage exposure to oil and natural gas price fluctuations. It is our policy to enter into derivative contracts only with counterparties that are creditworthy and competitive market participants. Any derivatives that are with (x) lenders, or affiliates of lenders, to our prior revolving credit facility or SN UnSub Credit Agreement, or (y) counterparties designated as secured with and under the Credit Agreement are, in each case, collateralized by the assets securing the applicable facility, and, therefore, do not currently require the posting of cash collateral. Any derivatives that are with (x) non-lender counterparties, as designated under the SN UnSub Credit Agreement, or (y) counterparties that are not designated as secured under the Credit Agreement are, in each case, unsecured and do not require the posting of cash or other collateral. It is never the Company’s intention to enter into derivative contracts for speculative trading purposes. All of our derivatives are accounted for as mark-to-market activities. Under ASC 815, “Derivatives and Hedging,” these instruments are recorded on the consolidated balance sheets at fair value as either short term or long term assets or liabilities based on their anticipated settlement date. The Company nets derivative assets and liabilities by commodity for counterparties where a legal right to such offset exists. Changes in the derivatives’ fair values are recognized in current earnings since the Company has elected not to designate its current derivative contracts as cash flow hedges for accounting purposes. The following table presents derivative positions for the periods indicated as of December 31, 2018: 2019 2020 2021 Oil positions: Fixed price swaps (NYMEX WTI): Hedged volume (Bbls) 3,149,000 1,055,560 - Average price ($/Bbl) $ 51.91 $ 55.36 $ - Natural gas positions: Fixed price swaps (NYMEX Henry Hub): Hedged volume (MMBtu) 17,644,000 6,893,150 - Average price ($/MMBtu) $ 2.90 $ 2.67 $ - The following table sets forth a reconciliation of the changes in fair value of the Company’s commodity derivatives for the years ended December 31, 2018, 2017, and 2016 (in thousands): Year Ended December 31, 2018 2017 2016 Fair value of commodity derivatives, beginning of period $ (54,255) $ (35,014) $ 178,283 Net losses on oil derivatives (9,878) (48,966) (47,389) Net gains (losses) on natural gas derivatives (17,897) 42,764 (30,307) Net settlements on derivative contracts: Oil 100,120 (11,807) (135,491) Natural gas 3,104 (1,232) (24,657) Net premiums on derivative contracts: Oil — — 24,547 Fair value of commodity derivatives, end of period $ 21,194 $ (54,255) $ (35,014) Embedded Derivatives In 2017, the Company entered into certain contracts for the purchase of sand and fractionation stimulation services that contain provisions that must be bifurcated from the contract and valued as derivatives. In the fourth quarter of 2018, the Company subsequently amended a few of these contracts removing the respective embedded derivative components. The embedded derivatives are valued using a Monte Carlo simulation model which utilizes observable inputs, including the NYMEX WTI oil price and NYMEX Henry Hub natural gas price at various points in time. The Company marked these derivatives to market and, as a result, incurred an approximate gain of $1.2 million and an approximate loss of $1.6 million for the years ended December 31, 2018 and 2017, respectively, which includes the impact of the fourth quarter 2018 removal of contracts that no longer qualify as embedded derivatives. Any gains or losses related to embedded derivatives are recorded as a component of other income (expense) in the consolidated statement of operations. Earnout Derivative As part of the Carnero Gathering Disposition we are entitled to receive earnout payments from SNMP based on natural gas delivered in excess of a threshold volume and tariff at the delivery points of the Carnero Gathering Pipeline (including gas processing at the Raptor Processing Facility), a pipeline owned by Carnero G&P. These payments were determined to be a derivative and the resulting earnout derivative was valued through the use of a Monte Carlo simulation model which utilized observable inputs such as the earnout price and volume commitment, as well as unobservable inputs related to the weighted probabilities of various throughput scenarios. As a result, the Company incurred an approximate loss of $0.5 million for year ended December 31, 2018. Any gains or losses related to the earnout derivative are recorded as a component of other income (expense) in the consolidated statement of operations. The following table sets forth a reconciliation of the changes in fair value of the Company’s embedded and earnout derivatives for the years ended December 31, 2018 and 2017 (in thousands): Year Ended December 31, 2018 2017 Fair value of other derivatives, beginning of period $ (1,551) $ — Gain (loss) on embedded derivatives 1,243 (1,551) Initial fair value of earnout derivative 6,401 — Loss on earnout derivatives (543) — Fair value of other derivatives, end of period $ 5,550 $ (1,551) Balance Sheet Presentation The Company nets derivative assets and liabilities by commodity for counterparties where legal right to such netting exists. Therefore, the Company’s derivatives are presented on a net basis as “Fair value of derivative instruments” on the consolidated balance sheets. The following information summarizes the gross fair values of derivative instruments, presenting the impact of offsetting derivative assets and liabilities on the Company’s consolidated balance sheets (in thousands): December 31, 2018 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 16,302 $ (588) $ 15,714 Long term asset 12,178 (76) 12,102 Total asset $ 28,480 $ (664) $ 27,816 Offsetting Derivative Liabilities: Current liability $ 1,294 $ (588) $ 706 Long term liability 442 (76) 366 Total liability $ 1,736 $ (664) $ 1,072 December 31, 2017 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 16,510 $ (80) $ 16,430 Long term asset 2,100 (672) 1,428 Total asset $ 18,610 $ (752) $ 17,858 Offsetting Derivative Liabilities: Current liability $ 56,270 $ (80) $ 56,190 Long term liability 18,146 (672) 17,474 Total liability $ 74,416 $ (752) $ 73,664 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 12. Fair Value of Financial Instruments Measurements of fair value of derivative instruments are classified according to the fair value hierarchy, which prioritizes the inputs to the valuation techniques used to measure fair value. Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories: Level 1: Measured based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Measured based on quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that can be valued using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instrument, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources. In some cases the inputs are supported by little or no market activity where such markets are highly illiquid or inactive. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. Fair Value on a Recurring Basis The following tables set forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash and cash equivalents: Money market funds $ 131,187 $ — $ — $ 131,187 Equity investment: Investment in SNMP 3,909 — — 3,909 Investment in Lonestar 5,475 — — 5,475 Oil derivative instruments: Swaps — 20,608 — 20,608 Gas derivative instruments: Swaps — 586 — 586 Other Embedded derivative instruments — (308) — (308) Earnout derivative asset — — 5,858 5,858 Total $ 140,571 $ 20,886 $ 5,858 $ 167,315 As of December 31, 2017 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash and cash equivalents: Money market funds $ 49,071 $ — $ — $ 49,071 Equity investment: Investment in SNMP 25,227 — — 25,227 Investment in Lonestar 5,955 — — 5,955 Oil derivative instruments: Swaps — (66,204) — (66,204) Call swaptions — (3,431) — (3,431) Gas derivative instruments: Swaps — 15,380 — 15,380 Other Embedded derivative instruments — (1,551) — (1,551) Total $ 80,253 $ (55,806) $ — $ 24,447 Financial Instruments The Level 1 instruments presented in the tables above consist of money market funds and time deposits included in cash and cash equivalents on the Company’s consolidated balance sheets as of December 31, 2018 and 2017. The Company’s money market funds and time deposits represent cash equivalents backed by the assets of banks and financial institutions. The Company identified the money market funds and time deposits as Level 1 instruments due to the fact that the money market funds have daily liquidity, quoted prices for the underlying investments can be obtained and there are active markets for the underlying investments. In addition, the Level 1 instruments include the Company’s equity investment in common units of SNMP as further discussed in “Item 8. Financial Statements and Supplementary Data – Note 17, Investments.” The investment in SNMP is accounted for under the fair value option and included in Investments on the Company’s consolidated balance sheets as of December 31, 2018 and 2017. The Company identified the SNMP common units as a Level 1 instruments due to the fact that SNMP is a publicly traded company on the NYSE American exchange with daily quoted prices that can be readily obtained. The Level 1 instruments also include the Company’s investment in the common shares of Lonestar as further discussed in “Item 8. Financial Statements and Supplementary Data – Note 17, Investments.” The investment in the Lonestar common shares is accounted for at fair value and included in Investments on the Company’s consolidated balance sheets as of December 31, 2018 and 2017. The Company identified the Lonestar common shares as Level 1 instruments due to the fact that Lonestar is a publicly traded company on the Nasdaq Global Market exchange with daily quoted prices that can be readily obtained. The Company’s derivative instruments consisted of swaps and swaptions as of December 31, 2018 and 2017. The fair values of the Company’s derivatives are based on third-party pricing models which utilize inputs that are either readily available in the public market, such as forward curves, or can be corroborated from active markets of broker quotes. Swaps generally have observable inputs and are classified as Level 2. Call swaption derivatives have inputs which are observable, either directly or indirectly, using market data. At December 31, 2018 and 2017, the Company believed that substantially all of the inputs required to calculate the fair value of swaps and call swaptions are observable in the marketplace throughout the term of these derivative instruments or supported by observable levels at which transactions are executed in the marketplace, and are, therefore, classified as Level 2. Derivative instruments are also subject to the risk that counterparties will be unable to meet their obligations. Such non-performance risk is considered in the valuation of the Company’s derivative instruments, but to date has not had a material impact on estimates of fair values. Significant changes in the quoted forward prices for commodities and changes in market volatility generally lead to corresponding changes in the fair value measurement of the Company’s derivative instruments. There were no commodity derivative instruments classified as Level 3 as of December 31, 2018 or December 31, 2017. Embedded Derivatives For a description of or additional information on our embedded derivative instruments, refer to “Item 8. Financial Statements and Supplementary Data – Note 11. Derivatives.” The Company believes that substantially all of the inputs required to calculate the embedded derivatives are observable in the marketplace throughout the term of these derivative instruments or supported by observable levels at which transactions are executed in the marketplace, and are, therefore, classified as Level 2 inputs. Changes in the inputs will impact the fair value measurement of the Company's embedded derivative contracts. The fair value of the Company’s embedded derivatives classified as Level 2 as of December 31, 2018 and 2017 was ($ (0.3) million) and ($1.6 million), respectively. Earnout Derivative For a description of or additional information on our earnout derivative instrument, refer to “Item 8. Financial Statements and Supplementary Data – Note 11. Derivatives.” As the Monte Carlo simulation model utilizes both observable and unobservable inputs, we have classified the fair value measurements of the earnout derivative as Level 3. The following table sets forth a reconciliation of changes in the fair value of the Company’s earnout derivative classified as Level 3 in the fair value hierarchy (in thousands): December 31, 2018 Beginning balance $ — Initial fair value of earnout derivative 6,401 Loss on earnout derivatives (543) Ending balance $ 5,858 Fair Value on a Non‑Recurring Basis The Company follows the provisions of ASC 820‑10 for nonfinancial assets and liabilities measured at fair value on a non‑recurring basis. Fair value measurements of assets acquired and liabilities assumed in business combinations are based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired properties is based on market and cost approaches. Our purchase price allocation for the Comanche Acquisition is presented in “Item 8. Financial Statements and Supplementary Data – Note 4, “Acquisitions and Divestitures.” Liabilities assumed include asset retirement obligations existing at the date of acquisition. Asset retirement obligation estimates are derived from historical costs as well as management’s expectation of future cost environments. As there is no corroborating market activity to support the assumptions, the Company has designated these liabilities as Level 3. A reconciliation of the beginning and ending balances of the Company’s asset retirement obligations is presented in “Item 8. Financial Statements and Supplementary Data – Note 13, Asset Retirement Obligations.” The fair value measurements of assets acquired and liabilities assumed in the Stipulation are based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired properties is based on market and cost approaches. The allocation of fair value to the assets acquired and liabilities assumed as part of the Stipulation settlement is presented in Note 10, “Related Party Transactions.” Liabilities assumed include asset retirement obligations existing and short term debt held by Sanchez Resources at the date of transfer. The Company has designated the asset retirement obligations as Level 3 as there is no corroborating market activity to support the assumptions. Additional discussion of the Stipulation can be found in “Item 8. Financial Statements and Supplementary Data – Note 10, Related Party Transactions.” A reconciliation of the beginning and ending balances of the Company’s asset retirement obligations is presented in “Item 8. Financial Statements and Supplementary Data – Note 13, Asset Retirement Obligations.” In connection with the exchange agreements entered into in February, May and August 2014 by the Company with certain holders of the Company’s Series A Preferred Stock and Series B Preferred Stock, the Company issued common stock according to the conversion rate pursuant to each agreement and additional shares to induce the holders of the preferred stock to convert prior to the date the Company could mandate conversion. In addition, on November 20, 2015, a holder of our Series B Preferred Stock exercised its right to convert 4,500 shares our Series B Preferred Stock at the prescribed initial conversion rate of 2.337 shares of common stock per share of Series B Preferred Stock, in exchange for 10,517 shares of our common stock. The fair value of the common stock issued is based on the price of the Company’s common stock on the date of issuance. There were no conversions of Series A Preferred Stock or Series B Preferred Stock into shares of the Company’s common stock during the year ended December 31, 2018. As there was an active market for the Company’s common stock in the periods referenced, the Company has designated this fair value measurement as Level 1. A detailed description of the Company’s common stock and preferred stock issuances and redemptions is presented in “Item 8. Financial Statements and Supplementary Data – Note 7, Stockholders’ and Mezzanine Equity.” For the years ended December 31, 2018 and December 31, 2016, the Company recorded proved property impairments of $6.6 million and $3.7 million, respectively to impair the value of our proved oil and natural gas properties in the TMS. The carrying values of the impaired proved properties were reduced to a fair value of $10.5 million and $3.3 million, respectively, estimated using inputs characteristic of a Level 3 fair value measurement. The Company did not record a proved property impairment during the year ended December 31, 2017. Fair Value of Other Financial Instruments The carrying amounts of our oil and natural gas receivables, accounts payable and accrued liabilities approximate fair value due to their highly liquid nature. The registered 7.75% Notes and 6.125% Notes are traded in an active market, and as such, are classified as Level 1 financial instruments. The estimated fair values of the 7.75% Notes and 6.125% Notes were $125.1 million and $213.9 million as of December 31, 2018, respectively, and were calculated using quoted market prices based on observed trades of such debt as of that date. The 7.25% Senior Secured Notes are classified as Level 1 financial instruments as they are traded in an active market under Rule 144A by institutional investors. The estimated fair value of the 7.25% Senior Secured Notes was $407.5 million as of December 31, 2018 and was calculated using quoted market prices based on observed trades of such debt as of that date. We believe that the carrying values of long term debt for the Credit Agreement, SN UnSub Credit Agreement and SR Credit Agreement approximate their fair values because the interest rates on the debt approximate market interest rates for debt with similar terms. The debt is classified as a Level 2 input in the fair value hierarchy and represents the amount at which the instrument could be valued in an exchange during a current transaction between willing parties. See “Item 8. Financial Statements and Supplementary Data – Note 6, Debt” for further discussion. |
Asset Retirement Obligations
Asset Retirement Obligations | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligations | |
Asset Retirement Obligations | Note 13. Asset Retirement Obligations The Company’s asset retirement obligations represent the present value of the estimated cash flows expected to be incurred to plug, abandon and remediate producing properties, excluding salvage values, at the end of their productive lives in accordance with applicable laws. Revisions in estimated liabilities during the period relate primarily to changes in estimates of asset retirement costs. Revisions in estimated liabilities can also include, but are not limited to, revisions of estimated inflation rates, changes in property lives, and the expected timing of settlement. The changes in the asset retirement obligation for the years ended December 31, 2018 and 2017 (in thousands) were as follows: As of December 31, 2018 2017 Abandonment liability, beginning of period $ 36,098 $ 25,087 Liabilities incurred during period 1,965 4,968 Acquisitions — 8,289 Divestitures (158) (3,538) Revisions 5,077 (1,343) Accretion expense 3,193 2,635 Abandonment liability, end of period $ 46,175 $ 36,098 |
Accrued Liabilities and Other C
Accrued Liabilities and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Liabilities and Other Current Liabilities. | |
Accrued Liabilities and Other Current Liabilities | Note 14. Accrued Liabilities and Other Current Liabilities The following information summarizes accrued liabilities as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 2017 Capital expenditures $ 61,970 $ 85,340 Other: General and administrative expenses 19,460 8,855 Production taxes 5,157 5,084 Ad valorem taxes 445 84 Lease operating expenses 24,138 32,152 Interest payable 47,866 34,632 Other accrued liabilities 5,662 3,987 Total accrued liabilities $ 164,698 $ 170,134 The following information summarizes other payables as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 2017 Revenue payable $ 71,296 $ 75,832 Production tax payable 3,443 2,774 Other (111) 3,364 Total other payables $ 74,628 $ 81,970 The following information summarizes other current liabilities as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 2017 Operated prepayment liability $ 51,844 $ 88,999 Deferred gain on Western Catarina Midstream Divestiture - short term 23,720 23,720 Phantom compensation payable - short term 17 2,525 Total other current liabilities $ 75,581 $ 115,244 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 15. Commitments and Contingencies Shareholder Derivative Litigation On August 29, 2018, a derivative action was filed in the Court of Chancery of the State of Delaware against certain of the Company’s directors (Armato et al. v. A.R. Sanchez, Jr. et al., No. 2018-0642, the “Derivative Action”). The complaint alleges breach of fiduciary duty, unjust enrichment and waste of corporate assets against directors of the Company based on purportedly excessive compensation of the Company’s non-employee directors. On October 22, 2018, the Company and defendant directors filed an answer to the Derivative Action. In their answer, the defendant directors denied any wrongdoing or liability in response to the allegations in the complaint. The Derivative Action remains in its preliminary stages. As a result, the Company is unable to reasonably predict an outcome of the Derivative Action or a timeframe for its resolution. The complaint does not specify damages sought. From time to time, the Company may be involved in lawsuits that arise in the normal course of its business. M anagement cannot predict the ultimate outcome of such lawsuits or claims. Management does not currently expect the outcome of any of the known claims or proceedings to individually or in the aggregate have a material adverse effect on our results of operations or financial condition. We are not aware of any material governmental proceedings against us or contemplated to be brought against us. Catarina Drilling Commitment In connection with the Catarina Acquisition, the undeveloped acreage we acquired is subject to a continuous drilling commitment. Such drilling commitment requires us to drill (i) 50 wells in each annual period commencing on July 1, 2014 and (ii) at least one well in any consecutive 120-day period, in order to maintain rights to any future undeveloped acreage. Up to 30 wells drilled in excess of the minimum 50 wells in a given annual period can be carried over to satisfy part of the 50-well requirement in the subsequent annual drilling period on a well-for-well basis. The lease also creates a customary security interest in the production therefrom in order to secure royalty payments to the lessor and other lease obligations. Our current capital budget and plans include the drilling of at least the minimum number of wells required to maintain access to such undeveloped acreage. Comanche Drilling Commitment In connection with the Comanche Acquisition, we, through our subsidiaries, SN Maverick and SN UnSub, and Gavilan, entered into a development agreement with Anadarko. The development agreement requires us to complete and equip 60 wells in each annual period commencing on September 1, 2017 and continuing thereafter until September 1, 2022 or pay a penalty for the failure to do so. The development agreement permits up to 30 wells completed and equipped in excess of the annual 60 well requirement to be carried over to satisfy part of the 60 well requirement in subsequent annual periods on a well-for-well basis. The development agreement contains a guarantee by Sanchez Energy Corporation of the performance of SN Maverick and SN UnSub. I f we fail to complete and equip the required number of wells in a given year (after applying any qualifying additional wells from previous years), we and Gavilan are jointly and severally liable to Anadarko E&P Onshore, LLC for a default fee of $0.2 million for each well we do not timely complete and equip. Our current capital budget and plans include the drilling of at least the minimum number of wells required to maintain access to such undeveloped acreage. Lease Payment Obligations As of December 31, 2018, the Company had $280.9 million in lease payment obligations that satisfy operating lease criteria. These obligations include: (i) $74.8 million in payments due with respect to firm commitment of oil and natural gas volumes under the gathering agreement contract signed with SNMP as part of the Western Catarina Midstream Divestiture that commenced on October 14, 2015 and will continue until October 13, 2020; (ii) $56.1 million and $64.8 million in payments due with respect to firm commitment of natural gas volumes associated with the Carnero Gathering Pipeline and the Raptor Processing Plant (as defined in “Item 8. Financial Statements and Supplementary Data – Note 17, Investments”), respectively, all owned by Carnero G&P and due under the Amended Gathering Agreement and Amended Processing Agreement, which commenced on October 2, 2015 and will continue until October 2, 2030; (iii) $40.5 million in payments due with respect to firm commitment of and natural gas volumes under a gas processing contract that commenced on March 1, 2017 and will continue until June 30, 2023; (iv) $40.6 million for corporate and field office leases with expiration dates through April 2024, March 2025 and December 2025; and (v) $4.1 million for a 10-year acreage lease agreement for a promotional ranch managed by the Company in Kenedy County, Texas. The lease agreement for the acreage in Kenedy County, Texas includes a contractual requirement for the Company to spend a minimum of $4 million to make permanent improvements over the 10-year life of the lease. The lease agreement does not specify the timing for such improvements to be made within the lease term. The Company has the right to terminate the lease obligation without penalty at any time with six months advance written notice and payment of any accrued leasehold expenses. Future lease obligations are presented below and in aggregate for each of the next five fiscal years (in thousands): 2019 2020 2021 2022 2023+ Total Office rent (1) $ 6,217 $ 6,321 $ 6,428 $ 6,537 $ 15,117 $ 40,620 Operating leases of midstream assets (2) 85,175 77,049 45,169 24,242 4,531 236,166 Other leases (3) 903 903 903 903 450 4,062 Total $ 92,295 $ 84,273 $ 52,500 $ 31,682 $ 20,098 $ 280,848 (1) Represents lease payments due for corporate office space in Houston and Carrizo Springs, Texas. The two lease agreements for Houston had terms of November 1, 2014 through March 31, 2025 and March 1, 2017 through December 31, 2025, and the lease agreement for Carrizo Springs had a term of January 1, 2017 through April 30, 2024. (2) Represents payments due with respect to firm commitment oil and natural gas volumes under: (i) the Gathering Agreement (as defined in “Item 8. Financial Statements and Supplementary Data — Note 10, Related Party Transactions” ) related to the Western Catarina Midstream Divestiture. As part of this sale, the Gathering Agreement represents an operating lease of the Catarina midstream assets. The firm commitment term under the Gathering Agreement commenced on October 14, 2015 and will continue until October 13, 2020; (ii) the Carnero Gathering Pipeline and the Raptor Processing Plant (as defined in “Item 8. Financial Statements and Supplementary Data — Note 17, Investments”), respectively, all owned by Carnero G&P LLC and due under the Amended Gathering Agreement and the Amended Processing Agreement (each as defined in “Item 8. Financial Statements and Supplementary Data – Note 10, Related Party Transactions”). These agreements commenced on October 2, 2015 and will continue until October 2, 2030; and (iii) a gas processing contract that commenced on March 1, 2017 and will continue until June 30, 2023. (3) Represents payments due for an acreage lease agreement for a promotional ranch managed by the Company in Kenedy County, Texas which commenced on March 1, 2014 and will continue until February 28, 2024. The lease agreement includes a contractual requirement for the Company to spend a minimum of $4 million to make permanent improvements over the 10-year life of the lease. The lease agreement does not specify the timing for such improvements to be made within the lease term. The Company has the right to terminate the lease obligation without penalty at any time with six months advance written notice and payment of any accrued leasehold expenses. Total expenses incurred under the above lease obligations were $106.6 million, $68.0 million and $59.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. Volume Commitments As is common in our industry, the Company is party to certain oil and natural gas gathering and transportation and natural gas processing agreements that obligate us to deliver a specified volume of production over a defined time horizon. If not fulfilled, the Company is subject to deficiency payments. As of December 31, 2018, the Company had approximately $453.5 million in future commitments related to oil and natural gas gathering and transportation agreements ($187.0 million for 2019 through 2021, $129.0 million from 2022 through 2024, and $137.5 million under commitments expiring after December 31, 2024, in the aggregate) and approximately $55.4 million in future commitments related to natural gas processing agreements ($54.7 million for 2019 through 2021 and $0.7 million from 2024 through 2024) that are not recorded in the accompanying consolidated balance sheets. For the years ended December 31, 2018 and 2017, the Company incurred expenses related to deficiency fees of approximately $5.8 million and $4.8 million, respectively, that are reported on the consolidated statements of operations in the Oil and natural gas production expenses line item. We expect to have additional expenses in 2019 related to our volume commitments. |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 12 Months Ended |
Dec. 31, 2018 | |
Condensed Consolidating Financial Information | |
Condensed Consolidating Financial Information | Note 16. Condensed Consolidating Financial Information The Company’s 7.75% Notes and 6.125% Notes have been registered with the SEC and are guaranteed by all of the Company’s subsidiaries, except for SN UR Holdings, LLC, SN Services, LLC, SNT, SN Midstream, Manager, SN UnSub General Partner, SN UnSub Holdings, SN UnSub, SN Capital, LLC, Sanchez Resources, SR Acquisition I, LLC, SR Acquisition III, LLC and SR TMS, LLC which are unrestricted subsidiaries of the Company. As of December 31, 2018 such guarantor subsidiaries are 100% owned by the Company and the guarantees by these subsidiaries are full and unconditional (except for customary release provisions) and are joint and several. Rule 3-10 of Regulation S-X requires that, in lieu of providing separate financial statements for subsidiary guarantors, condensed consolidating financial information be provided where the subsidiaries have guaranteed the debt of a registered security, where the guarantees are full, unconditional and joint and several and where the voting interests of the subsidiaries are 100% owned by the registrant. The Company has no assets or operations independent of its subsidiaries and there are no significant restrictions upon the ability of its subsidiary guarantors to distribute funds to the Company by dividends or loans. The following is a presentation of condensed consolidating financial information on the parent company, combined guarantor subsidiaries, combined non-guarantor subsidiaries and consolidated basis (in thousands) in accordance with Rule 3-10 of Regulation S-X and should be read in conjunction with the consolidated financial statements. The financial information may not necessarily be indicative of results of operations, cash flows, or financial position had such guarantor subsidiaries operated as independent entities. Investments in subsidiaries are accounted for by the respective parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are, therefore, reflected in the parent company’s investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions. Typically in a condensed consolidating financial statement, the net income and equity of the parent company equals the net income and equity of the consolidated entity. A summary of the condensed consolidated guarantor balance sheets for the periods ended December 31, 2018 and December 31, 2017 (in thousands) is presented below: December 31, 2018 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 473,062 $ 69,934 $ 146,765 $ (316,780) $ 372,981 Total oil and natural gas properties, net 36 1,600,378 758,711 — 2,359,125 Investment in subsidiaries 1,577,054 — (7,280) (1,569,774) — Other assets 22,917 10,307 54,630 — 87,854 Total Assets $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 Liabilities and Shareholders' Equity Current liabilities $ 155,396 $ 282,719 $ 226,964 $ (316,780) $ 348,299 Long term liabilities 2,203,546 51,211 208,599 — 2,463,356 Mezzanine equity — — 452,828 — 452,828 Total shareholders' equity (deficit) (285,873) 1,346,689 64,435 (1,569,774) (444,523) Total Liabilities and Shareholders' Equity (Deficit) $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 December 31, 2017 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 447,984 $ 98,758 $ 117,031 $ (312,975) $ 350,798 Total oil and natural gas properties, net 3,987 1,275,153 748,319 — 2,027,459 Investment in subsidiaries 1,081,692 — (7,280) (1,074,412) — Other assets 25,451 4,415 62,512 — 92,378 Total Assets $ 1,559,114 $ 1,378,326 $ 920,582 $ (1,387,387) $ 2,470,635 Liabilities and Shareholders' Equity Current liabilities $ 212,026 $ 312,531 $ 250,946 $ (312,975) $ 462,528 Long term liabilities 1,827,072 26,787 195,876 — 2,049,735 Mezzanine equity — — 427,512 — 427,512 Total shareholders' equity (deficit) (479,984) 1,039,008 46,248 (1,074,412) (469,140) Total Liabilities and Shareholders' Equity (Deficit) $ 1,559,114 $ 1,378,326 $ 920,582 $ (1,387,387) $ 2,470,635 A summary of the condensed consolidated guarantor statements of operations for the periods ended December 31, 2018, 2017 and 2016 (in thousands) is presented below: Year Ended December 31, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 736,953 $ 319,961 $ — $ 1,056,914 Total operating costs and expenses (73,290) (456,845) (234,378) 540 (763,973) Other income (expense) (185,017) 5,775 (27,954) (540) (207,736) Income (loss) before income taxes (258,307) 285,883 57,629 — 85,205 Income tax benefit — — — — — Equity in income of subsidiaries 343,512 — — (343,512) — Net income (loss) $ 85,205 $ 285,883 $ 57,629 $ (343,512) $ 85,205 Year Ended December 31, 2017 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 509,701 $ 230,630 $ — $ 740,331 Total operating costs and expenses (92,008) (387,614) (168,942) 680 (647,884) Other income (expense) (121,603) 75,837 (5,145) (680) (51,591) Income (loss) before income taxes (213,611) 197,924 56,543 - 40,856 Income tax benefit 2,336 — — — 2,336 Equity in income of subsidiaries 193,376 — — (193,376) — Net income (loss) $ (17,899) $ 197,924 $ 56,543 $ (193,376) $ 43,192 Year Ended December 31, 2016 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 431,326 $ — $ — $ 431,326 Total operating costs and expenses (111,155) (367,541) (1,947) — (480,643) Other income (expense) (177,710) 82,948 4,418 — (90,344) Income (loss) before income taxes (288,865) 146,733 2,471 — (139,661) Income tax expense (1,825) — — — (1,825) Equity in income of subsidiaries 33,730 — — (33,730) — Net income (loss) $ (256,960) $ 146,733 $ 2,471 $ (33,730) $ (141,486) A summary of the condensed consolidated guarantor statements of cash flows for the periods ended December 31, 2018, 2017 and 2016 (in thousands) is presented below: Year Ended December 31, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (273,393) $ 396,788 $ 142,579 $ — $ 265,974 Net cash provided by (used in) investing activities (164,291) (570,223) (46,356) 165,330 (615,540) Net cash provided by (used in) financing activities 419,511 202,817 (94,253) (165,330) 362,745 Net increase (decrease) in cash and cash equivalents (18,173) 29,382 1,970 — 13,179 Cash and cash equivalents, beginning of period 86,937 29,046 68,451 — 184,434 Cash and cash equivalents, end of period $ 68,764 $ 58,428 $ 70,421 $ — $ 197,613 Year Ended December 31, 2017 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (148,259) $ 346,345 $ 94,003 $ — $ 292,089 Net cash provided by (used in) investing activities (266,135) (620,382) (760,909) 264,626 (1,382,800) Net cash provided by (used in) financing activities 157,390 303,083 577,381 (264,626) 773,228 Net increase (decrease) in cash and cash equivalents (257,004) 29,046 (89,525) — (317,483) Cash and cash equivalents, beginning of period 343,941 — 157,976 — 501,917 Cash and cash equivalents, end of period $ 86,937 $ 29,046 $ 68,451 $ — $ 184,434 Year Ended December 31, 2016 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (36,741) $ 218,864 $ 631 $ — $ 182,754 Net cash provided by (used in) investing activities (46,602) (133,412) 55,571 16,209 (108,234) Net cash provided by (used in) financing activities (7,650) (85,452) 101,660 (16,209) (7,651) Net increase (decrease) in cash and cash equivalents (90,993) — 157,862 — 66,869 Cash and cash equivalents, beginning of period 434,934 — 114 — 435,048 Cash and cash equivalents, end of period $ 343,941 $ — $ 157,976 $ — $ 501,917 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2018 | |
Investments | |
Investments | Note 17. Investments On June 15, 2017, the Company received 1,500,000 shares of Lonestar’s Series B Convertible Preferred Stock as part of the consideration for the Marquis Disposition. The Series B Convertible Preferred Stock converted into Lonestar Class A Common Stock on November 3, 2017. As of December 31, 2018, this ownership represents approximately 6.1% of Lonestar’s outstanding shares of common stock. The investment in Lonestar accounted for by the Company as an investment in equity securities measured at fair value in the consolidated balance sheets at the end of each reporting period. The Company recorded losses related to the investment in Lonestar for the years ended December 31, 2018 and 2017 of $0.5 million and less than $0.1 million, respectively. Any gains or losses related to the investment in Lonestar are recorded as a component of other income (expense) in the consolidated statement of operations. On June 14, 2017, SN Catarina, LLC (“SN Catarina”), a wholly owned subsidiary of the Company, completed the sale of its 10% undivided interest in the Silver Oak II Gas Processing Facility in Bee County, Texas (the “SOII Facility”) to a subsidiary of Targa Resources Corp. (“Targa”) with an effective date of June 1, 2017 for $12.5 million of cash (the “SOII Disposition”). Prior to the SOII Disposition, the Company had invested $12.5 million in the SOII Facility. No gain or loss was recorded on the SOII Disposition. The Company recorded earnings of approximately $0.8 million from its equity interest in the SOII Facility for the period from March 1, 2017 through June 1, 2017, the effective date of the transaction. On March 1, 2017, pursuant to the LLC Agreement of GRHL, GRHL authorized and issued a total of 100 Class A Units to SN Comanche Manager, a wholly owned unrestricted subsidiary of the Company. GRHL is the parent of Gavilan. SN Comanche Manager, as holder of the Class A Units, does not have voting rights with respect to GRHL except regarding amendments to the LLC Agreement that adversely affect the holders of Class A Units, approval of affiliate transactions, or as required by law. Twenty percent of the Class A Units vest on each of the first five anniversaries of the Effective Date. The Class A Units are entitled to distributions from Available Cash, as defined in and subject to the provisions of the LLC Agreement. The Company accounts for the interest in GRHL as a cost method investment. As of December 31, 2018, the carrying value of the investment in GRHL was $7.3 million, based on the estimated fair value as of March 1, 2017. In general, the fair value of a cost method investment is not evaluated unless circumstances are present that may have an adverse effect on the fair value. The Company has not identified any such circumstances as of December 31, 2018. The Company did not record any earnings or distributions from its ownership of the Class A Units for the periods ended December 31, 2018 and 2017. On November 22, 2016, a subsidiary of the Company purchased 2,272,727 common units of SNMP for $25.0 million in a private placement that closed in November 2016 concurrently with SNMP’s public offering of approximately 6.5 million common units, and invested approximately $5.4 million in other assets. As of December 31, 2018, this ownership represents approximately 13.8% of SNMP’s outstanding common units. The Company elected the fair value option to account for its interest in SNMP and records the equity investment at fair value at the end of each reporting period. For the years ended December 31, 2018, 2017 and 2016, the Company recorded a loss of approximately $21.3 million, a loss of $1.6 million and a gain of $1.8 million, respectively, related to the investment in SNMP. In addition, for the years ended December 31, 2018 and 2017, the Company recorded dividend income of approximately $3.5 million and $4.1 million, respectively, from quarterly distributions on the SNMP common units. The Company did not record any dividend income from quarterly distributions on the SNMP common units for the year ended December 31, 2016. Any gains or losses and dividend income related to the investment in SNMP are recorded as a component of other income (expense) in the consolidated statement of operations. On November 22, 2016, SN Midstream sold its membership interests in Carnero Processing to SNMP for an initial payment of $55.5 million in cash and the assumption by SNMP of remaining capital commitments to Carnero Processing, which are estimated at approximately $24.5 million. Carnero Processing merged with Carnero Gathering and Carnero Gathering was renamed Carnero G&P through the Carnero G&P Transaction; however, t he Company accounted for this joint venture as an equity method investment as Targa is the operator of the joint venture and has the most influence with respect to the normal day-to-day construction and operating decisions. Prior to the sale, the Company had invested approximately $48.0 million in the Carnero Processing joint venture. The membership interests disposed of constitute 50% of the outstanding membership interests in Carnero Processing. The remaining 50% membership interests of Carnero Processing are owned by an affiliate of Targa. Prior to the sale of Carnero Processing, the Company recorded losses of approximately $0.1 million from equity investments during 2016. The Company recorded a deferred gain of approximately $7.5 million included in “Other Liabilities” on the consolidated balance sheet as a result of the Amended Processing Agreement that remains in effect between the Company and Carnero G&P. This deferred gain was to be amortized over the term of the Amended Processing Agreement according to volumes processed through the Carnero Processing facility; however, upon adoption of ASC 606, this deferred gain was reversed and opening retained earnings was adjusted as of January 1, 2018. Refer to “Item 8. Financial Statements and Supplementary Data -- Note 3, Revenue Recognition” for additional discussion. On July 5, 2016, SN Midstream sold its membership interests in Carnero Gathering to SNMP for an initial payment of approximately $37.0 million in cash and the assumption by SNMP of remaining capital commitments to Carnero Gathering, estimated at approximately $7.4 million. In connection with the Carnero G&P Transaction, Carnero Processing merged with Carnero Gathering, and Carnero Gathering was renamed Carnero G&P. However, as part of the original disposition of Carnero Gathering, the Company accounted for this joint venture as an equity method investment as Targa is the operator of the joint venture and has the most influence with respect to the normal day-to-day construction and operating decisions. Prior to the sale, the Company had invested approximately $26.0 million in the Carnero Gathering joint venture. As part of the Carnero Gathering Disposition, SNMP is required to pay SN Midstream a monthly “earnout” based on natural gas received at the Raptor Processing Facility from the Company and other parties. The membership interests disposed of constitute 50% of the outstanding membership interests in Carnero Gathering. The remaining 50% membership interests of Carnero Gathering are owned by an affiliate of Targa. Prior to the sale of Carnero Gathering, the Company recorded earnings of approximately $2.3 million from equity investments during 2016. The Company recorded a deferred gain of approximately $8.7 million included in “Other Liabilities” on the consolidated balance sheet as a result of the Amended Gathering Agreement that remains in effect between the Company and Carnero G&P. This deferred gain was to be amortized periodically over the term of the Amended Gathering Agreement according to volumes processed through the Carnero Processing facility; however, upon adoption of ASC 606, this deferred gain was reversed and opening retained earnings was adjusted as of January 1, 2018. The Company recognized an earnout derivative asset related to the Carnero Gathering Disposition in the amount of $6.4 million upon adoption of ASC 606 which is revalued at each reporting period. Refer to “Item 8. Financial Statements and Supplementary Data – Note 11, Derivative Instruments” for additional discussion of the earnout derivative asset and “Item 8. Financial Statements and Supplementary Data -- Note 3, Revenue Recognition” for additional discussion of the impact of ASC 606. On October 2, 2015, the Company, by SN Catarina, purchased from a subsidiary of Targa a 10% undivided interest in the Silver Oak II Gas Processing Facility in Bee County, Texas for a purchase price of $12.5 million. Targa owned the remaining undivided 90% interest in the SOII Facility, which is operated by Targa. Concurrently with the execution of the purchase and sale agreement for the SOII Facility, the Company entered into a firm gas processing agreement, whereby Targa would process a firm quantity, 125,000 Mcf per day, until the in-service date of the Raptor Processing Facility. As of December 31, 2016, the Company had invested capital of $12.5 million in the SOII Facility. The Company recorded earnings from the SOII Facility investment of approximately $1.2 million from equity investments during 2016. On June 14, 2017, SN Catarina completed the SOII Disposition for $12.5 million in cash. Prior to the SOII Disposition, the Company accounted for the investment in the SOII Facility as an equity method investment as Targa is the operator and majority interest owner of the SOII Facility. |
Variable Interest Entities
Variable Interest Entities | 12 Months Ended |
Dec. 31, 2018 | |
Variable Interest Entities | |
Variable Interest Entities | Note 18. Variable Interest Entities As noted previously in “Item 8. Financial Statements and Supplementary Data – Note 17, Investments,” pursuant to the LLC Agreement of GRHL, GRHL authorized and issued a total of 100 Class A Units to SN Comanche Manager, a wholly owned unrestricted subsidiary of the Company. Although the Company did not pay any cash for the Class A Units, the Company’s investment in GRHL represents a VIE that could expose the Company to losses limited to the estimated fair value of the investment. The carrying amounts of the investment in GRHL and the Company’s maximum exposure to loss as of December 31, 2018 and 2017 was approximately $7.3 million. The Company did not record any earnings from its ownership of the Class A Units for the period from March 1, 2017 through December 31, 2017 or the period from January 1, 2018 through December 31, 2018. The Company determined that Blackstone is the primary beneficiary of the VIE as the Company has no significant voting rights in GRHL under the LLC Agreement and no power over decisions related to the business activities of GRHL, other than with respect to the operation of the properties. As noted previously in “Item 8. Financial Statements and Supplementary Data – Note 17, Investments,” the Company, by SN Catarina, purchased from a subsidiary of Targa a 10% undivided interest in the SOII Facility in 2015. The Company determined that ownership in the SOII Facility is more similar to limited partnerships than corporations. Under the revised guidance of ASU 2015-02, a limited partnership or similar entity with equity at risk will not be a VIE if they are able to exercise kick-out rights over the general partner(s) or they are able to exercise substantive participating rights. On June 14, 2017, SN Catarina completed the SOII Disposition for $12.5 million in cash. Prior to the SOII Disposition, we concluded that the investment in SOII Facility is a VIE under the revised guidance because we cannot remove Targa as operator and we do not have substantive participating rights. In addition, we determined that Targa is the primary beneficiary of the VIE as Targa is the operator of the SOII Facility and has the most influence with respect to the normal day-to-day operating decisions of the facility and has the discretion to direct activities of the VIEs regarding the risks associated with price, operations and capital investment which have the most significant impact on the economic performance of the VIE. Prior to the sale, we included the VIE in “Other Assets - Investments” under long term assets on the balance sheet. As noted previously in “Item 8. Financial Statements and Supplementary Data – Note 17, Investments,” in November 2016, the Company purchased common units of SNMP for $25.0 million as part of a private unit issuance. Rather than accounting for the investment under the equity method, the Company elected the fair value option to account for its interest in SNMP. The Company’s investment in SNMP represents a VIE that could expose the Company to losses limited to the equity in the investment at any point in time. The carrying amounts of the investment in SNMP and the Company’s maximum exposure to loss as of December 31, 2018 and 2017, was approximately $3.9 million and $25.2 million, respectively. Below is a comparison of the carrying amounts of the assets and liabilities of the VIE and the Company’s maximum exposure to loss as of December 31, 2018 and December 31, 2017 (in thousands): December 31, 2018 2017 Beginning Balance $ 32,507 $ 39,656 Initial investment in GRHL — 7,280 Distributions from equity investments — (311) Loss from change in fair value of investment in SNMP (21,318) (1,591) Sale of investments — (12,527) Maximum exposure to loss $ 11,189 $ 32,507 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events. | |
Subsequent Events | Note 19: Subsequent Events Letter of Credit On January 10, 2019, a standby letter of credit was issued on our behalf by Royal Bank of Canada under the Credit Agreement to Carnero G&P in the amount of approximately $17.1 million. This letter of credit currently remains undrawn and is in support of our obligations under the Amended Gathering Agreement and Amended Processing Agreement. Suspension of Preferred Stock Dividends for Quarter Ended March 31, 2019 Our board of directors recently determined to suspend the dividend on our Series A Preferred Stock and Series B Preferred Stock, beginning with the three-month period ending March 31, 2019. Preferred Stock Conversions On February 12, 2019, 245,832 shares of Series B Preferred Stock converted into 574,510 shares of our common stock and 72,500 shares of Series A Preferred Stock converted into 168,563 shares of our common stock, at the election of the holders thereof. SN UnSub Debt Repayment On February 15, 2019, SN UnSub made a repayment under the SN UnSub Credit Agreement of $2.5 million, resulting in an outstanding principal balance of $165.0 million. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07 “Compensation - Stock Compensation (ASC 718) - Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01 “Business Combinations (ASC 805) - Clarifying the Definition of a Business,” which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is now effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. The Company adopted this ASU on January 1, 2018 using a prospective method; the clarified definition of a business will be applied by the Company to transactions executed subsequent to the effective date. In October 2016, the FASB issued ASU 2016-16 “Income Taxes (ASC 740): Intra-Entity Transfers of Assets Other Than Inventory,” which eliminates a current exception in U.S. GAAP to the recognition of the income tax effects of temporary differences that result from intra-entity transfers of non-inventory assets. The intra-entity exception is being eliminated under the ASU. The standard is required to be applied on a modified retrospective basis and is now effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. The adoption of ASU 2016-16 did not have an impact on the Company’s consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15 “Statement of Cash Flows (ASC 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU is intended to clarify the presentation of cash receipts and payments in specific situations. The amendments in this ASU are now effective for financial statements issued for annual periods beginning after December 15, 2017. The Company adopted this ASU on January 1, 2018 using a retrospective method. The adoption of ASU 2016-15 did not have an impact on the Company’s consolidated statement of cash flows. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses, if applicable. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019, and earlier adoption is permitted. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 “Leases (ASC 842),” effective for annual and interim periods for public companies beginning after December 15, 2018. The standards update the previous lease guidance by requiring the recognition of a right-to-use asset and lease liability on the statement of financial position for all leases with lease terms of more than 12 months. The lease liability represents the discounted obligation to make future minimum lease payments and corresponding right-of-use asset on the balance sheet for most leases. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. The Company has several operating leases as further discussed in “Item 8. Financial Statements and Supplementary Data - Note 15, Commitments and Contingencies,” which will be impacted by the new rules under this standard. The Company will apply the revised lease rules for our interim and annual reporting periods starting January 1, 2019. The Company has substantially completed its review of the impact of the new standard as well as the implementation of a lease accounting software. Adoption of the standard is expected to result in the recognition of assets and liabilities in our consolidated balance sheets for existing operating leases such as drilling rig contracts, office rental agreements, and potential other wellhead equipment still being evaluated. Concurrent with the software implementation, the Company is incorporating necessary updates to its business processes and controls. The quantitative impacts of the new standard are dependent on the active leases at the time of adoption. As a result, the evaluation of the effect of the new standards will extend over future periods. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (ASC 606).” In March, April, May and December of 2016, the FASB issued rules clarifying several aspects of the new revenue recognition standard. The new guidance is effective for fiscal years and interim periods beginning after December 15, 2017. This guidance outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods and services. The new standard also requires more detailed disclosures related to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. See “Item 8. Financial Statements and Supplementary Data — Note 3, Revenue Recognition” for discussion of the Company’s adoption of the new standard. |
Principles of Consolidation | Principles of Consolidation The Company’s consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The accompanying consolidated financial statements are prepared in conformity with U.S. GAAP, which 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates pertain to proved oil and natural gas reserves and related cash flow estimates used in the depletion and impairment of oil and natural gas properties, the evaluation of unproved properties for impairment, the fair value of commodity derivative contracts, embedded derivatives, asset retirement obligations, accrued oil and natural gas revenues and expenses and the allocation of general and administrative expenses. Actual results could differ materially from those estimates. |
Oil and Natural Gas Properties | Oil and Natural Gas Properties The Company’s oil and natural gas properties are accounted for using the successful efforts method of accounting. All direct and certain indirect costs associated with the acquisition, successful exploration, and development of oil and natural gas properties are capitalized. Once evaluated, these costs, as well as the estimated costs to retire the assets, are included in the amortization base and amortized to depletion expense using the units‑of‑production method. Depletion is calculated based on estimated proved oil and natural gas reserves. Proceeds from the sale or disposition of oil and natural gas properties are applied to reduce net capitalized costs unless the sale or disposition causes a significant change in the relationship between costs and the estimated quantities of proved reserves, in which case the proceeds are applied to reduce net capital costs. Depreciation, depletion and amortization— Depreciation, depletion and amortization (“DD&A”) is provided using the units-of-production method based upon estimates of proved reserves of oil, natural gas and NGLs with production of the same converted to a common unit of measure based upon the relative energy content of the hydrocarbons. The Company groups its oil and natural gas properties with a common geological structure or stratigraphic condition (“common operating field”) in accordance with ASC 932 “Extractive Activities – Oil and Gas” for purposes of computing DD&A, assessing proved property impairments and accounting for asset dispositions. All capitalized costs of oil and natural gas properties are amortized using the units-of-production method based on proved reserves. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to proved oil and natural gas properties amortization begins. All other properties are stated at historical cost, net of impairments, and are depreciated using the straight-line method over their respective useful lives. In arriving at depletion rates under the units‑of‑production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by internal and third-party geologists and engineers, which require significant judgment as does the projection of future production volumes and levels of future costs. All of these judgments may have significant impact on the calculation of depletion expense. Impairment of Oil and Natural Gas Properties —Capitalized costs (net of accumulated depreciation, depletion and amortization and impairment) of proved oil and natural gas properties are subjected to an impairment test when facts and circumstances indicate that their carrying value may not be recoverable. Net capitalized costs of proved oil and natural gas properties are compared to estimated undiscounted future net cash flows using management’s expectations of future oil and natural gas prices. If net capitalized costs exceed estimated undiscounted future net cash flows, the measurement of impairment is based on estimated fair value, using estimated discounted future net cash flows. The estimated future cash flows used to determine whether an impairment is present and the related fair value calculations are typically based on judgmental assessments of future production, commodity prices, operating expenses, and capital expenditures, utilizing the available information. The underlying commodity prices embedded in the estimated cash flows are the product of a process that begins with NYMEX forward curve pricing, adjusted for estimated location and quality differentials, as well as other factors that are expected to impact the realizable price. During the years ended December 31, 2018 and 2016, we recorded proved property impairment of $6.6 million and $3.7 million, respectively, due to the decline of oil and natural gas prices during the periods. We did not record a proved property impairment during the year ended December 31, 2017. Unproved Properties —Costs associated with unproved properties and properties under development are excluded from the amortization base until the properties have been evaluated. Additionally, the costs associated with leasehold acreage and wells currently being drilled are also initially excluded from the amortization base. Unproved properties are identified on a project basis, with a project being an area in which significant leasehold interests are acquired within a contiguous area. Unproved properties are reviewed periodically by management and transferred into the amortization base when management determines that a core area has been evaluated through drilling operations or a thorough geologic evaluation. If the results of an assessment indicate that the properties are impaired, the carrying amount of the identified unproved properties are reduced to their fair value. We recorded impairment charges to our unproved oil and natural gas properties of $7.8 million for the year ended December 31, 2018 due to acreage expiration from changes in our development plan, $39.6 million for the year ended December 31, 2017 due to a write-down of our TMS acreage to fair value and $43.7 million due to acreage abandonment from changes in development plan for the year ended December 31, 2016. The costs of retaining unproved properties and the impairment of unsuccessful leases, are included in “Impairment expense” in the Company’s Consolidated Statements of Operations. |
Oil and Natural Gas Reserve Quantities | Oil and Natural Gas Reserve Quantities The Company’s most significant estimates relate to its proved oil and natural gas reserves. The estimates of oil and natural gas reserves as of December 31, 2018, 2017 and 2016 are based on reports prepared by a third-party engineering firm, Ryder Scott Company, L.P. (“Ryder Scott”). Estimates of proved reserves are based on the quantities of oil and natural gas that engineering and geological analyses demonstrate, with reasonable certainty, to be recoverable from established reservoirs in the future under current operating and economic parameters. Ryder Scott has historically prepared a reserve and economic evaluation of the Company’s properties, utilizing information provided to it by management and other information available, including information from the operators of the property. The standards of the FASB and rules of the SEC permit the use of new technologies to determine proved reserve estimates if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volume estimates. These rules allow, but do not require, companies to disclose their probable and possible reserves to investors in documents filed with the SEC. In addition, the disclosure guidelines require companies to report oil and natural gas reserves using an average price based upon the prior 12-month first-day-of-the-month price rather than a period-end price. Reserves and their relation to estimated future net cash flows impact the depletion and impairment calculations. As a result, adjustments to depletion and impairment are made concurrently with changes to reserve estimates. The reserve estimates and the projected cash flows derived from these reserve estimates are prepared in accordance with SEC guidelines. The independent engineering firm noted above adheres to these guidelines when preparing their reserve reports. The accuracy of the reserve estimates is a function of many factors including the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions, and the judgments of the individuals preparing the estimates, all of which could deviate significantly from actual results. As such, reserve estimates may materially vary from the ultimate quantities of oil and natural gas eventually recovered. |
Asset Retirement Obligations | Asset Retirement Obligations Asset retirement obligations represent the present value of the estimated cash flows expected to be incurred to plug, abandon and remediate producing properties, excluding salvage values, at the end of their productive lives in accordance with applicable laws. The significant unobservable inputs to this fair value measurement include estimates of plugging, abandonment and remediation costs, well life, inflation and the credit-adjusted risk-free rate. The inputs are calculated based on historical data as well as current estimates. When the liability is initially recorded, the carrying amount of the related long-lived asset is increased. Over time, accretion of the liability is recognized each period, and the capitalized cost is amortized over the useful life of the related asset and is included in “Depreciation, depletion, amortization and accretion” in the Company’s Consolidated Statements of Operations. To estimate the fair value of an asset retirement obligation, the Company employs a present value technique, which reflects certain assumptions, including its credit‑adjusted risk‑free interest rate, inflation rate, the estimated settlement date of the liability and the estimated current cost to settle the liability. Changes in timing or to the original estimate of cash flows will result in change to the carrying amount of the liability. |
Stock-Based Compensation | Stock‑Based Compensation The Company records stock-based compensation expense for awards granted to its directors (for their services as directors) in accordance with the provisions of Accounting Standards Codification (“ASC”) ASC 718, “Compensation—Stock Compensation.” Stock-based compensation expense for these awards is based on the grant-date fair value and recognized over the vesting period using the straight-line method. Stock-based compensation awards and phantom stock awards, including those awards with market performance acceleration conditions, granted to employees of the Sanchez Group (as defined in “Item 8. Financial Statements and Supplementary Data - Note 8, Stock-Based Compensation”) (including those employees of the Sanchez Group who also serve as the Company’s officers) and consultants in exchange for services are considered awards to non-employees and the Company records stock-based compensation expense for these awards at fair value in accordance with the provisions of ASC 505-50, “Equity-Based Payments to Non-Employees.” For awards granted to non-employees, the Company records compensation expenses equal to the fair value of the stock-based award at the measurement date, which is determined to be the earlier of the performance commitment date or the service completion date. Compensation expense for unvested awards to non-employees is revalued at each period end and is amortized over the vesting period of the stock-based award. Stock-based payments are measured based on the fair value of the equity instruments granted, as it is more determinable than the value of the services rendered. In accordance with the guidance, the inclusion of market performance acceleration conditions does not change the accounting classification as compared to those awards without market performance acceleration conditions. The phantom stock awards are required to be settled in cash by the Company and are classified as a liability. Compensation expense for the unvested awards is revalued at each period end and is amortized over the vesting period of the stock-based award. |
Revenue Recognition | Revenue Recognition We recognize revenue from the sale of oil, natural gas and NGLs in the period that the performance obligations are satisfied in accordance with ASC 606. Our performance obligations are primarily comprised of the delivery of oil, gas or NGLs at a delivery point. Each barrel of oil, MMBtu of natural gas or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer through monthly delivery of oil, natural gas and NGLs. The Company’s oil, natural gas and NGLs were sold to certain customers representing 10% or more of its total revenues for the years ended December 31, 2018, 2017 and 2016 as listed below: 2018 2017 2016 Customer A Customer B Customer C Customer D Customer E Production is normally sold to relatively few customers. Substantially all of the Company’s customers are concentrated in the oil and natural gas industry and revenue can be materially affected by current economic conditions, the price of certain commodities such as oil and natural gas and the availability of alternate purchasers. Management believes the loss of any of the Company’s major customers would not have a long term material adverse effect on the Company’s operations. The majority of the Company’s receivables arise from sales of oil, natural gas liquids (“NGLs”) or natural gas. The Company does not have any off‑balance‑sheet credit exposure related to its customers. Receivables from the sale of oil and natural gas are generally unsecured. Allowances for doubtful accounts are determined based on management’s assessment of the creditworthiness of the customer. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are written off against the allowance for doubtful accounts only after all the collection attempts have been exhausted. At December 31, 2018 and 2017, management believed that all balances were fully collectible and no allowance for doubtful accounts was deemed necessary. |
Derivative Instruments | Derivative Instruments The Company utilizes derivative instruments in order to manage price risk associated with future oil and natural gas production. We recognize all derivatives as either assets or liabilities, measured at fair value, and recognizes changes in the fair value of derivatives in current earnings because it does not designate its derivatives as cash flow hedges. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities arise from the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce the deferred tax asset to the amount more likely than not (a likelihood of more than 50%) to be recovered. Additionally, the Company is required to determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position in order to record any financial statement benefit. If that step is satisfied, then the Company must measure the tax position to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that has greater than a 50% likelihood of being realized upon ultimate settlement. Any interest or penalties would be recognized as a component of income tax expense. The Company applies significant judgment in evaluating its tax positions and estimating its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is estimated. The actual outcome of these future tax consequences could differ significantly from these estimates, which could impact the Company’s financial position, results of operations and cash flows. The Company does not have any material uncertain tax positions during the years ended December 31, 2018 or 2017. |
Earnings per Share | Earnings per Share Basic net income (loss) per common share are computed using the two-class method. The two-class method is required for those entities that have participating securities. The two-class method is an earnings allocation formula that determines net income (loss) per share for participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s restricted shares of common stock (see “Item 8. Financial Statements and Supplementary Data — Note 8, Stock‑Based Compensation”) are participating securities under ASC 260, “Earnings per Share,” because they may participate in undistributed earnings with common stock. Participating securities do not have a contractual obligation to share in the Company’s losses. Therefore, in periods of net loss, no portion of the loss is allocated to participating securities. Diluted net income (loss) per common share reflect the dilutive effects of the participating securities using the two-class method or the treasury stock method, whichever is more dilutive. They also reflect the effects of the potential conversion of the Company’s Series A Preferred Stock and Series B Preferred Stock using the if‑converted method, if the effect is dilutive. In addition, they also reflect the effects of the warrants issued in connection with the Comanche Acquisition using the treasury stock method, if the effect is dilutive. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Schedule of entity's oil, NGL and natural gas production sold to certain customers representing 10% or more of its total revenues | 2018 2017 2016 Customer A Customer B Customer C Customer D Customer E |
Revenue Recognition (Tables)
Revenue Recognition (Tables) - Accounting Standards Update 2014-09 | 12 Months Ended |
Dec. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of changes for adoption of ASC 606 | The cumulative effect of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of ASC 606 were as follows (in thousands): As of Adjustments Due As of Balance Sheet December 31, 2017 to ASC 606 January 1, 2018 Assets Fair value of derivative instruments $ 16,430 $ 150 $ 16,580 Total current assets 350,798 150 350,948 Fair value of derivative instruments 1,428 6,251 7,679 Total assets $ 2,470,635 $ 6,401 $ 2,477,036 Liabilities Other liabilities $ 65,480 $ (16,338) $ 49,142 Total liabilities 2,512,263 (16,338) 2,495,925 Stockholders' equity (deficit) Accumulated deficit (1,832,156) 22,739 (1,809,417) Total stockholders' equity (deficit) (469,140) 22,739 (446,401) Total liabilities and stockholders' equity (deficit) $ 2,470,635 $ 6,401 $ 2,477,036 |
Reconciliation of balance sheet | In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet as of December 31, 2018 is as follows (in thousands): As of December 31, 2018 Balances without Effect of change Adoption of ASC 606 higher/(lower) As Reported Assets Fair value of derivative instruments $ 15,587 $ 127 $ 15,714 Total current assets 372,854 127 372,981 Fair value of derivative instruments 6,371 5,731 12,102 Total assets $ 2,814,102 $ 5,858 $ 2,819,960 Liabilities Other liabilities $ 37,745 $ (16,338) $ 21,407 Total liabilities 2,827,993 (16,338) 2,811,655 Stockholders' equity (deficit) Accumulated deficit (1,835,080) 22,196 (1,812,884) Total stockholders' equity (deficit) (466,719) 22,196 (444,523) Total liabilities and stockholders' equity (deficit) $ 2,814,102 $ 5,858 $ 2,819,960 |
Reconciliation of income statement | In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of operations for the year ended December 31, 2018 is as follows (in thousands): Year ended December 31, 2018 Balances without Effect of change Adoption of ASC 606 higher/(lower) As Reported Other income (expense) $ (7,458) $ (543) $ (8,001) Total other income (expense) (207,193) (543) (207,736) Income (loss) before income taxes 85,748 (543) 85,205 Net income (loss) $ 85,748 $ (543) $ 85,205 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions and Divestitures | |
Schedule of total purchase price allocated to the assets purchased and liabilities assumed based upon their fair values on the date of acquisition | The total purchase price was allocated to the assets purchased and liabilities assumed based upon their fair values on the date of acquisition as follows (in thousands): Proved oil and natural gas properties $ 781,789 Unproved properties 263,471 Other assets acquired 6,702 Fair value of assets acquired 1,051,962 Asset retirement obligations (8,289) Fair value of net assets acquired $ 1,043,673 |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Cash and Cash Equivalents | |
Schedule of cash and cash equivalents | As of December 31, 2018 and 2017, cash and cash equivalents consisted of the following (in thousands): As of December 31, 2018 2017 Cash at banks $ 66,426 $ 135,363 Money market funds 131,187 49,071 Total cash and cash equivalents $ 197,613 $ 184,434 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt | |
Schedule of long-term debt | Amount Outstanding as of December 31, Interest Rate Maturity Date 2018 2017 (in thousands) Short Term Debt SR Credit Agreement (1)(2) Variable - $ 304 $ 23,996 Total short term debt $ 304 $ 23,996 Long Term Debt 7.75% Notes 7.75% June 15, 2021 $ 600,000 $ 600,000 SN UnSub Credit Agreement (1) Variable March 1, 2022 167,500 175,500 4.59% Non-Recourse Subsidiary Term Loan (1) 4.59% August 31, 2022 3,803 4,164 SR Credit Agreement (1) Variable October 31, 2022 23,187 — 6.125% Notes 6.125% January 15, 2023 1,150,000 1,150,000 Credit Agreement Variable February 14, 2023 — 50,000 7.25% Senior Secured Notes 7.25% February 15, 2023 500,000 — 2,444,490 1,979,664 Unamortized discount on Additional 7.75% Notes (2,222) (3,126) Unamortized premium on Additional 6.125% Notes 1,090 1,360 Unamortized discount on 7.25% Senior Secured Notes (4,241) — Unamortized debt issuance costs (43,709) (47,215) Total long term debt $ 2,395,408 $ 1,930,683 (1) These debt instruments are Non-Recourse to the Company. (2) Incurred interest at a weighted-average rate of 6.849% and 5.122% for the year ended December 31, 2018 and for the month ended December 31, 2017. |
Schedule of interest expense | The components of interest expense are (in thousands): Year Ended December 31, 2018 2017 2016 Interest on SR Credit Agreement $ (1,775) $ (105) $ — Interest on Senior Notes (148,455) (116,938) (116,938) Interest and commitment fees on SN UnSub Credit Agreement (8,835) (7,639) — Interest on Non-Recourse Subsidiary Term Loan (185) (65) — Interest and commitment fees on Credit Agreement (758) (2,135) (1,561) Amortization of debt issuance costs (16,322) (12,647) (7,840) Amortization of discounts and premium on Senior Notes (1,528) (634) (634) Total interest expense $ (177,858) $ (140,163) $ (126,973) |
Stockholders' and Mezzanine E_2
Stockholders' and Mezzanine Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' and Mezzanine Equity | |
Preferred Units accounted for as mezzanine equity | The SN UnSub Preferred Units issued in March 2017 are accounted for as mezzanine equity in the consolidated balance sheets and consisted of the following as of December 31, 2018 and 2017, respectively (in thousands): Year Ended December 31, 2018 2017 Mezzanine equity, beginning balance $ 427,512 $ — Private placement of SN UnSub Preferred Units — 500,000 Discount — (90,527) Accretion of discount 25,316 18,039 Dividends accrued (1) 50,000 41,667 Dividends prepaid (2) (2,592) — Dividends/distributions paid (3) (47,408) (41,667) Mezzanine equity, ending balance $ 452,828 $ 427,512 (1) In accordance with the Partnership Agreement and SN UnSub Credit Agreement, cash distributions for the 10% dividend on the SN UnSub Preferred Units were prohibited through February 28, 2018, and thus, the dividends for the year ended December 31, 2017 were deemed to have been accrued and offset by the tax distributions paid. The dividends for the first, second, third and fourth quarters of 2018 were accrued and paid in cash on March 30, 2018, July 2, 2018, October 1, 2018 and December 31, 2018 respectively. (2) In 2017, tax distributions of approximately $2.6 million were paid in excess of the accrued dividend. The excess distribution was offset against a portion of the dividend accrued and paid during the three months ended March 31, 2018. (3) Distributions paid in 2017 represent tax distributions from available cash to holders of the SN UnSub Preferred Units. The Partnership Agreement provides that tax distributions shall be treated as advances of and shall be offset against any amounts holders of the SN UnSub Preferred Units are entitled to receive. |
Schedule of computation of basic and diluted net income (loss) per share | The following table shows the computation of basic and diluted net earnings (loss) per share for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share amounts): Year Ended December 31, 2018 2017 2016 Net income (loss) $ 85,205 $ 43,192 $ (141,486) Less: Preferred stock dividends (15,948) (15,948) (15,948) Preferred unit dividends and distributions (47,408) (44,259) — Preferred unit amortization (25,316) (18,039) — Net income allocable to participating securities (1)(2) — — — Net loss attributable to common stockholders $ (3,467) $ (35,054) $ (157,434) Weighted average number of unrestricted outstanding common shares used to calculate basic net loss per share 81,764 75,608 58,900 Dilutive shares (3)(4)(5) — — — Denominator for diluted loss per common share 81,764 75,608 58,900 Net loss per common share - basic and diluted $ (0.04) $ (0.46) $ (2.67) (1) The Company's restricted shares of common stock are participating securities. (2) For the years ended December 31, 2018, 2017 and 2016, no losses were allocated to participating restricted stock because such securities do not have a contractual obligation to share in the Company's losses. (3) The year ended December 31, 2018 excludes 2,540,922 shares of weighted average restricted stock and 12,520,179 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. (4) The year ended December 31, 2017 excludes 2,755,893 shares of weighted average restricted stock and 12,520,179 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock and 100,000 contingently issuable shares from the calculation of the denominator for diluted loss per common share as these shares were anti-dilutive. (5) The year ended December 31, 2016 excludes 2,113,462 shares of weighted average restricted stock and 12,554,481 shares of common stock resulting from an assumed conversion of the Company's Series A Preferred Stock and Series B Preferred Stock from the calculation of the denominator for diluted earnings (loss) per common share as these shares were anti-dilutive. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance-based phantom stock awards granted | On April 17, 2018, the Company and certain of its key executives entered into new equity award agreements pursuant to the LTIP, whereby certain key executives were granted a total of 2,113,904 stock-settled performance-based phantom stock awards and 2,113,905 cash-settled performance-based phantom stock awards. |
Schedule of stock-based compensation expense | The Company recognized the following stock-based compensation expense (benefit) (in thousands) which is included in general and administrative expense in the consolidated statements of operations. Year Ended December 31, 2018 2017 2016 Restricted stock awards, directors $ 1,260 $ 6,726 $ 1,000 Restricted stock awards, non-employees 92 15,455 23,961 Performance awards (560) 728 — Phantom stock awards (1,756) 17,389 12,129 Total stock-based compensation expense (benefit) $ (964) $ 40,298 $ 37,090 |
Restricted shares and PARS | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of the activity of the non-vested shares | A summary of the activity of the non‑vested restricted common shares and PARS as of December 31, 2018 is presented below (in thousands, except per share amounts): Aggregate Weighted Intrinsic Number of Average Value Shares Fair Value (in thousands) Non-vested shares at December 31, 2017 4,896,728 $ 10.42 $ 51,024 Granted 3,407,103 3.53 12,027 Vested (2,529,704) 3.96 (10,018) Forfeited (750,425) 6.43 (4,825) Non-vested shares at December 31, 2018 5,023,702 $ 9.60 $ 48,208 |
Phantom stock shares and PAPS | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of the activity of the non-vested shares | A summary of the activity of the non‑vested Phantom Stock and PAPS for the year ended December 31, 2018 is presented below (in thousands, except per share amounts): Aggregate Weighted Intrinsic Number of Average Value Shares Fair Value (in thousands) Non-vested shares at December 31, 2017 3,588,644 $ 5.74 $ 20,599 Granted 4,046,345 3.43 13,879 Vested (1,534,779) 3.09 (4,742) Forfeited (974,262) 6.09 (5,933) Non-vested shares at December 31, 2018 5,125,948 $ 4.64 $ 23,803 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of components of the federal income tax provision | The components of the federal income tax provision for the years ended December 31, 2018, 2017 and 2016 are (in thousands): Year Ended December 31, 2018 2017 2016 Current expense (benefit) as a result of current operations $ — $ (1,599) $ 1,825 Deferred expense (benefit) as a result of current operations 23,707 257,358 (46,191) Increase (Decrease) in valuation allowance (23,707) (258,095) 46,191 Net income tax expense (benefit) $ — $ (2,336) $ 1,825 |
Summary of difference between the statutory federal income taxes calculated using U.S. Federal statutory corporate income tax rate of 35% and company's effective tax rate | The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the federal statutory rates of 21% for 2018 and 35% for 2017 and 2016 to income before income taxes (in thousands): Year Ended December 31, 2018 2017 2016 Income tax expense (benefit) at the federal statutory rate $ 17,893 $ 14,300 $ (48,882) Officers’ compensation limitation 1,232 9,570 3,115 State taxes (net of federal benefit) 3,551 2,607 (232) Non-deductible general and administrative expenses 1,048 841 743 Percentage depletion carryforward (34) (86) (144) Other — (52) 39 Minimum Tax Credit Recoverability — (1,599) — US Tax Reform - Impact to Deferreds — 227,392 — Differences between actual income taxes and amounts estimated in prior years 17 2,786 995 Income tax expense (benefit) 23,707 255,759 (44,366) US Tax Reform - One-Time Valuation Allowance Change — (227,392) — Other Valuation Allowance Change (23,707) (30,703) 46,191 Net income tax expense (benefit) $ — $ (2,336) $ 1,825 |
Schedule of significant components of the deferred tax assets | Significant components of the deferred tax assets and liabilities are as follows (in thousands): As of December 31, 2018 2017 Deferred tax assets (liabilities): Derivative assets (obligations) $ (2,281) $ 9,536 Depreciable, depletable property, plant and equipment (101,147) (22,351) Share-based compensation (1,017) 936 Revenue recognition 3,280 3,593 Investments in joint ventures (53,640) (22,561) Other 1,308 321 Interest carryforward 33,161 — Federal net operating loss carryforward 425,954 364,922 State net operating loss carryforward 4,387 4,246 Deferred tax assets: 310,005 338,642 Valuation allowance (310,005) (338,642) Total deferred tax assets $ — $ — |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of total purchase price allocated to the assets purchased and liabilities assumed based upon their fair values on the date of acquisition | The total purchase price was allocated to the assets purchased and liabilities assumed based upon their fair values on the date of acquisition as follows (in thousands): Proved oil and natural gas properties $ 781,789 Unproved properties 263,471 Other assets acquired 6,702 Fair value of assets acquired 1,051,962 Asset retirement obligations (8,289) Fair value of net assets acquired $ 1,043,673 |
SR | TMS | |
Schedule of total purchase price allocated to the assets purchased and liabilities assumed based upon their fair values on the date of acquisition | Proved oil and natural gas properties $ 17,719 Unproved properties 5,227 Other assets acquired 3,952 Fair value of assets acquired 26,898 Asset retirement obligations (2,902) Fair value of net assets acquired $ 23,996 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivatives Fair Value [Line Items] | |
Schedule of derivative positions | 2019 2020 2021 Oil positions: Fixed price swaps (NYMEX WTI): Hedged volume (Bbls) 3,149,000 1,055,560 - Average price ($/Bbl) $ 51.91 $ 55.36 $ - Natural gas positions: Fixed price swaps (NYMEX Henry Hub): Hedged volume (MMBtu) 17,644,000 6,893,150 - Average price ($/MMBtu) $ 2.90 $ 2.67 $ - |
Schedule of reconciliation of changes in fair value of commodity derivatives | The following table sets forth a reconciliation of the changes in fair value of the Company’s commodity derivatives for the years ended December 31, 2018, 2017, and 2016 (in thousands): Year Ended December 31, 2018 2017 2016 Fair value of commodity derivatives, beginning of period $ (54,255) $ (35,014) $ 178,283 Net losses on oil derivatives (9,878) (48,966) (47,389) Net gains (losses) on natural gas derivatives (17,897) 42,764 (30,307) Net settlements on derivative contracts: Oil 100,120 (11,807) (135,491) Natural gas 3,104 (1,232) (24,657) Net premiums on derivative contracts: Oil — — 24,547 Fair value of commodity derivatives, end of period $ 21,194 $ (54,255) $ (35,014) |
Summary of balance sheet presentation of the Company's commodity derivatives | The following information summarizes the gross fair values of derivative instruments, presenting the impact of offsetting derivative assets and liabilities on the Company’s consolidated balance sheets (in thousands): December 31, 2018 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 16,302 $ (588) $ 15,714 Long term asset 12,178 (76) 12,102 Total asset $ 28,480 $ (664) $ 27,816 Offsetting Derivative Liabilities: Current liability $ 1,294 $ (588) $ 706 Long term liability 442 (76) 366 Total liability $ 1,736 $ (664) $ 1,072 December 31, 2017 Gross Amounts Net Amounts Gross Amount Offset in the Presented in the of Recognized Consolidated Consolidated Assets and Liabilities Balance Sheets Balance Sheets Offsetting Derivative Assets: Current asset $ 16,510 $ (80) $ 16,430 Long term asset 2,100 (672) 1,428 Total asset $ 18,610 $ (752) $ 17,858 Offsetting Derivative Liabilities: Current liability $ 56,270 $ (80) $ 56,190 Long term liability 18,146 (672) 17,474 Total liability $ 74,416 $ (752) $ 73,664 |
Embedded derivatives | |
Derivatives Fair Value [Line Items] | |
Schedule of reconciliation of the changes in fair value of the Company's commodity derivatives | The following table sets forth a reconciliation of the changes in fair value of the Company’s embedded and earnout derivatives for the years ended December 31, 2018 and 2017 (in thousands): Year Ended December 31, 2018 2017 Fair value of other derivatives, beginning of period $ (1,551) $ — Gain (loss) on embedded derivatives 1,243 (1,551) Initial fair value of earnout derivative 6,401 — Loss on earnout derivatives (543) — Fair value of other derivatives, end of period $ 5,550 $ (1,551) |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The following tables set forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash and cash equivalents: Money market funds $ 131,187 $ — $ — $ 131,187 Equity investment: Investment in SNMP 3,909 — — 3,909 Investment in Lonestar 5,475 — — 5,475 Oil derivative instruments: Swaps — 20,608 — 20,608 Gas derivative instruments: Swaps — 586 — 586 Other Embedded derivative instruments — (308) — (308) Earnout derivative asset — — 5,858 5,858 Total $ 140,571 $ 20,886 $ 5,858 $ 167,315 As of December 31, 2017 Active Market for Identical Observable Unobservable Total Assets Inputs Inputs Carrying (Level 1) (Level 2) (Level 3) Value Cash and cash equivalents: Money market funds $ 49,071 $ — $ — $ 49,071 Equity investment: Investment in SNMP 25,227 — — 25,227 Investment in Lonestar 5,955 — — 5,955 Oil derivative instruments: Swaps — (66,204) — (66,204) Call swaptions — (3,431) — (3,431) Gas derivative instruments: Swaps — 15,380 — 15,380 Other Embedded derivative instruments — (1,551) — (1,551) Total $ 80,253 $ (55,806) $ — $ 24,447 |
Reconciliation of changes in the fair value of derivative instruments classified as Level 3 in the fair value hierarchy | The following table sets forth a reconciliation of changes in the fair value of the Company’s earnout derivative classified as Level 3 in the fair value hierarchy (in thousands): December 31, 2018 Beginning balance $ — Initial fair value of earnout derivative 6,401 Loss on earnout derivatives (543) Ending balance $ 5,858 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligations | |
Schedule of changes in asset retirement obligation | The changes in the asset retirement obligation for the years ended December 31, 2018 and 2017 (in thousands) were as follows: As of December 31, 2018 2017 Abandonment liability, beginning of period $ 36,098 $ 25,087 Liabilities incurred during period 1,965 4,968 Acquisitions — 8,289 Divestitures (158) (3,538) Revisions 5,077 (1,343) Accretion expense 3,193 2,635 Abandonment liability, end of period $ 46,175 $ 36,098 |
Accrued Liabilities and Other_2
Accrued Liabilities and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Liabilities and Other Current Liabilities | |
Summary of accrued liabilities | The following information summarizes accrued liabilities as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 2017 Capital expenditures $ 61,970 $ 85,340 Other: General and administrative expenses 19,460 8,855 Production taxes 5,157 5,084 Ad valorem taxes 445 84 Lease operating expenses 24,138 32,152 Interest payable 47,866 34,632 Other accrued liabilities 5,662 3,987 Total accrued liabilities $ 164,698 $ 170,134 |
Summary of other payables | The following information summarizes other payables as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 2017 Revenue payable $ 71,296 $ 75,832 Production tax payable 3,443 2,774 Other (111) 3,364 Total other payables $ 74,628 $ 81,970 |
Summary of other current liabilities | The following information summarizes other current liabilities as of December 31, 2018 and 2017 (in thousands): As of December 31, 2018 2017 Operated prepayment liability $ 51,844 $ 88,999 Deferred gain on Western Catarina Midstream Divestiture - short term 23,720 23,720 Phantom compensation payable - short term 17 2,525 Total other current liabilities $ 75,581 $ 115,244 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Summary of future lease obligations | 2019 2020 2021 2022 2023+ Total Office rent (1) $ 6,217 $ 6,321 $ 6,428 $ 6,537 $ 15,117 $ 40,620 Operating leases of midstream assets (2) 85,175 77,049 45,169 24,242 4,531 236,166 Other leases (3) 903 903 903 903 450 4,062 Total $ 92,295 $ 84,273 $ 52,500 $ 31,682 $ 20,098 $ 280,848 (1) Represents lease payments due for corporate office space in Houston and Carrizo Springs, Texas. The two lease agreements for Houston had terms of November 1, 2014 through March 31, 2025 and March 1, 2017 through December 31, 2025, and the lease agreement for Carrizo Springs had a term of January 1, 2017 through April 30, 2024. (2) Represents payments due with respect to firm commitment oil and natural gas volumes under: (i) the Gathering Agreement (as defined in “Item 8. Financial Statements and Supplementary Data — Note 10, Related Party Transactions” ) related to the Western Catarina Midstream Divestiture. As part of this sale, the Gathering Agreement represents an operating lease of the Catarina midstream assets. The firm commitment term under the Gathering Agreement commenced on October 14, 2015 and will continue until October 13, 2020; (ii) the Carnero Gathering Pipeline and the Raptor Processing Plant (as defined in “Item 8. Financial Statements and Supplementary Data — Note 17, Investments”), respectively, all owned by Carnero G&P LLC and due under the Amended Gathering Agreement and the Amended Processing Agreement (each as defined in “Item 8. Financial Statements and Supplementary Data – Note 10, Related Party Transactions”). These agreements commenced on October 2, 2015 and will continue until October 2, 2030; and (iii) a gas processing contract that commenced on March 1, 2017 and will continue until June 30, 2023. (3) Represents payments due for an acreage lease agreement for a promotional ranch managed by the Company in Kenedy County, Texas which commenced on March 1, 2014 and will continue until February 28, 2024. The lease agreement includes a contractual requirement for the Company to spend a minimum of $4 million to make permanent improvements over the 10-year life of the lease. The lease agreement does not specify the timing for such improvements to be made within the lease term. The Company has the right to terminate the lease obligation without penalty at any time with six months advance written notice and payment of any accrued leasehold expenses. |
Condensed Consolidating Finan_2
Condensed Consolidating Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Condensed Consolidating Financial Information | |
Condensed balance sheets | A summary of the condensed consolidated guarantor balance sheets for the periods ended December 31, 2018 and December 31, 2017 (in thousands) is presented below: December 31, 2018 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 473,062 $ 69,934 $ 146,765 $ (316,780) $ 372,981 Total oil and natural gas properties, net 36 1,600,378 758,711 — 2,359,125 Investment in subsidiaries 1,577,054 — (7,280) (1,569,774) — Other assets 22,917 10,307 54,630 — 87,854 Total Assets $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 Liabilities and Shareholders' Equity Current liabilities $ 155,396 $ 282,719 $ 226,964 $ (316,780) $ 348,299 Long term liabilities 2,203,546 51,211 208,599 — 2,463,356 Mezzanine equity — — 452,828 — 452,828 Total shareholders' equity (deficit) (285,873) 1,346,689 64,435 (1,569,774) (444,523) Total Liabilities and Shareholders' Equity (Deficit) $ 2,073,069 $ 1,680,619 $ 952,826 $ (1,886,554) $ 2,819,960 December 31, 2017 Assets Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total current assets $ 447,984 $ 98,758 $ 117,031 $ (312,975) $ 350,798 Total oil and natural gas properties, net 3,987 1,275,153 748,319 — 2,027,459 Investment in subsidiaries 1,081,692 — (7,280) (1,074,412) — Other assets 25,451 4,415 62,512 — 92,378 Total Assets $ 1,559,114 $ 1,378,326 $ 920,582 $ (1,387,387) $ 2,470,635 Liabilities and Shareholders' Equity Current liabilities $ 212,026 $ 312,531 $ 250,946 $ (312,975) $ 462,528 Long term liabilities 1,827,072 26,787 195,876 — 2,049,735 Mezzanine equity — — 427,512 — 427,512 Total shareholders' equity (deficit) (479,984) 1,039,008 46,248 (1,074,412) (469,140) Total Liabilities and Shareholders' Equity (Deficit) $ 1,559,114 $ 1,378,326 $ 920,582 $ (1,387,387) $ 2,470,635 |
Condensed statements of operations | A summary of the condensed consolidated guarantor statements of operations for the periods ended December 31, 2018, 2017 and 2016 (in thousands) is presented below: Year Ended December 31, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 736,953 $ 319,961 $ — $ 1,056,914 Total operating costs and expenses (73,290) (456,845) (234,378) 540 (763,973) Other income (expense) (185,017) 5,775 (27,954) (540) (207,736) Income (loss) before income taxes (258,307) 285,883 57,629 — 85,205 Income tax benefit — — — — — Equity in income of subsidiaries 343,512 — — (343,512) — Net income (loss) $ 85,205 $ 285,883 $ 57,629 $ (343,512) $ 85,205 Year Ended December 31, 2017 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 509,701 $ 230,630 $ — $ 740,331 Total operating costs and expenses (92,008) (387,614) (168,942) 680 (647,884) Other income (expense) (121,603) 75,837 (5,145) (680) (51,591) Income (loss) before income taxes (213,611) 197,924 56,543 - 40,856 Income tax benefit 2,336 — — — 2,336 Equity in income of subsidiaries 193,376 — — (193,376) — Net income (loss) $ (17,899) $ 197,924 $ 56,543 $ (193,376) $ 43,192 Year Ended December 31, 2016 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Total revenues $ — $ 431,326 $ — $ — $ 431,326 Total operating costs and expenses (111,155) (367,541) (1,947) — (480,643) Other income (expense) (177,710) 82,948 4,418 — (90,344) Income (loss) before income taxes (288,865) 146,733 2,471 — (139,661) Income tax expense (1,825) — — — (1,825) Equity in income of subsidiaries 33,730 — — (33,730) — Net income (loss) $ (256,960) $ 146,733 $ 2,471 $ (33,730) $ (141,486) |
Condensed cash flows statements | A summary of the condensed consolidated guarantor statements of cash flows for the periods ended December 31, 2018, 2017 and 2016 (in thousands) is presented below: Year Ended December 31, 2018 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (273,393) $ 396,788 $ 142,579 $ — $ 265,974 Net cash provided by (used in) investing activities (164,291) (570,223) (46,356) 165,330 (615,540) Net cash provided by (used in) financing activities 419,511 202,817 (94,253) (165,330) 362,745 Net increase (decrease) in cash and cash equivalents (18,173) 29,382 1,970 — 13,179 Cash and cash equivalents, beginning of period 86,937 29,046 68,451 — 184,434 Cash and cash equivalents, end of period $ 68,764 $ 58,428 $ 70,421 $ — $ 197,613 Year Ended December 31, 2017 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (148,259) $ 346,345 $ 94,003 $ — $ 292,089 Net cash provided by (used in) investing activities (266,135) (620,382) (760,909) 264,626 (1,382,800) Net cash provided by (used in) financing activities 157,390 303,083 577,381 (264,626) 773,228 Net increase (decrease) in cash and cash equivalents (257,004) 29,046 (89,525) — (317,483) Cash and cash equivalents, beginning of period 343,941 — 157,976 — 501,917 Cash and cash equivalents, end of period $ 86,937 $ 29,046 $ 68,451 $ — $ 184,434 Year Ended December 31, 2016 Parent Company Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (36,741) $ 218,864 $ 631 $ — $ 182,754 Net cash provided by (used in) investing activities (46,602) (133,412) 55,571 16,209 (108,234) Net cash provided by (used in) financing activities (7,650) (85,452) 101,660 (16,209) (7,651) Net increase (decrease) in cash and cash equivalents (90,993) — 157,862 — 66,869 Cash and cash equivalents, beginning of period 434,934 — 114 — 435,048 Cash and cash equivalents, end of period $ 343,941 $ — $ 157,976 $ — $ 501,917 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Variable Interest Entities | |
Schedule of carrying amounts of assets and liabilities of VIE | Below is a comparison of the carrying amounts of the assets and liabilities of the VIE and the Company’s maximum exposure to loss as of December 31, 2018 and December 31, 2017 (in thousands): December 31, 2018 2017 Beginning Balance $ 32,507 $ 39,656 Initial investment in GRHL — 7,280 Distributions from equity investments — (311) Loss from change in fair value of investment in SNMP (21,318) (1,591) Sale of investments — (12,527) Maximum exposure to loss $ 11,189 $ 32,507 |
Organization and Business (Deta
Organization and Business (Details) - Eagle Ford Shale | Dec. 31, 2018a |
Area under agreement, gross (in acres) | 472,000 |
Area under agreement, net (in acres) | 271,000 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (RecentAcctg) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Basis of Presentation and Summary of Significant Accounting Policies | |||
Net cash provided by (used in) operating activities | $ 265,974 | $ 292,089 | $ 182,754 |
Net cash provided by (used in) financing activities | $ 362,745 | 773,228 | $ (7,651) |
Fair Value of Financial Instruments | |||
Sale of investments | $ 12,527 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Sep. 12, 2014 | Sep. 18, 2013 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 27, 2014 | Jun. 13, 2013 |
Oil and Natural Gas Receivables | |||||||
Allowance for doubtful accounts | $ 0 | $ 0 | |||||
Oil and Natural Gas Properties | |||||||
Impairment of proved properties | 6,600 | 0 | $ 3,700 | ||||
Impairment of unproved properties | 7,800 | 39,600 | 43,700 | ||||
Debt Issuance Costs | |||||||
Debt issuance costs | $ 16,322 | $ 12,647 | $ 7,840 | ||||
6.125% Notes | |||||||
Debt Issuance Costs | |||||||
Debt issuance costs | $ 6,400 | ||||||
Interest rate (as a percent) | 6.125% | 6.125% | |||||
7.75% Notes | |||||||
Debt Issuance Costs | |||||||
Debt issuance costs | $ 4,200 | ||||||
Interest rate (as a percent) | 7.75% | 7.75% | |||||
7.25% Senior Secured Notes | |||||||
Debt Issuance Costs | |||||||
Interest rate (as a percent) | 7.25% |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies (Concentrations) (Details) - Total revenues - Customer concentration risk | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Customer A | |||
Sales to Major Customers | |||
Concentration risk percentage | 31.00% | 19.00% | 2.00% |
Customer B | |||
Sales to Major Customers | |||
Concentration risk percentage | 25.00% | 26.00% | 33.00% |
Customer C | |||
Sales to Major Customers | |||
Concentration risk percentage | 17.00% | 23.00% | 20.00% |
Customer D | |||
Sales to Major Customers | |||
Concentration risk percentage | 17.00% | 14.00% | 0.00% |
Customer E | |||
Sales to Major Customers | |||
Concentration risk percentage | 6.00% | 9.00% | 14.00% |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | Dec. 31, 2015 | |
Total revenues | $ 1,056,914 | $ 740,331 | $ 431,326 | ||
Oil and natural gas receivables | 87,222 | 101,396 | |||
Derivative, Gain (Loss) on Derivative, Net | (543) | ||||
Assets | |||||
Fair value of derivative instruments | 15,714 | 16,430 | $ 16,580 | ||
Total current assets | 372,981 | 350,798 | 350,948 | ||
Fair value of derivative instruments | 12,102 | 1,428 | 7,679 | ||
Total assets | 2,819,960 | 2,470,635 | 2,477,036 | ||
Liabilities | |||||
Other liabilities | 21,407 | 65,480 | 49,142 | ||
Total liabilities | 2,811,655 | 2,512,263 | 2,495,925 | ||
Stockholders' equity (deficit) | |||||
Accumulated deficit | (1,812,884) | (1,832,156) | (1,809,417) | ||
Total stockholders' equity (deficit) | (444,523) | (469,140) | (683,982) | (446,401) | $ (559,483) |
Total liabilities and stockholders' equity (deficit) | 2,819,960 | 2,470,635 | $ 2,477,036 | ||
Statement of Operations | |||||
Other income (expense) | (8,001) | 11,102 | 134 | ||
Total other income (expense) | (207,736) | (51,591) | (90,344) | ||
income (loss) before income taxes | 85,205 | 40,856 | (139,661) | ||
Net income (loss) | 85,205 | 43,192 | $ (141,486) | ||
Accounting Standards Update 2014-09 | Balances without Adoption ASC 606 | |||||
Assets | |||||
Fair value of derivative instruments | 15,587 | 16,430 | |||
Total current assets | 372,854 | 350,798 | |||
Fair value of derivative instruments | 6,371 | 1,428 | |||
Total assets | 2,814,102 | 2,470,635 | |||
Liabilities | |||||
Other liabilities | 37,745 | 65,480 | |||
Total liabilities | 2,827,993 | 2,512,263 | |||
Stockholders' equity (deficit) | |||||
Accumulated deficit | (1,835,080) | (1,832,156) | |||
Total stockholders' equity (deficit) | (466,719) | (469,140) | |||
Total liabilities and stockholders' equity (deficit) | 2,814,102 | 2,470,635 | |||
Statement of Operations | |||||
Other income (expense) | (7,458) | ||||
Total other income (expense) | (207,193) | ||||
income (loss) before income taxes | 85,748 | ||||
Net income (loss) | 85,748 | ||||
Accounting Standards Update 2014-09 | Effect of change higher/(lower) | |||||
Assets | |||||
Fair value of derivative instruments | 127 | 150 | |||
Total current assets | 127 | 150 | |||
Fair value of derivative instruments | 5,731 | 6,251 | |||
Total assets | 5,858 | 6,401 | |||
Liabilities | |||||
Other liabilities | (16,338) | (16,338) | |||
Total liabilities | (16,338) | (16,338) | |||
Stockholders' equity (deficit) | |||||
Accumulated deficit | 22,196 | 22,739 | |||
Total stockholders' equity (deficit) | 22,196 | 22,739 | |||
Total liabilities and stockholders' equity (deficit) | 5,858 | $ 6,401 | |||
Statement of Operations | |||||
Other income (expense) | (543) | ||||
Total other income (expense) | (543) | ||||
income (loss) before income taxes | (543) | ||||
Net income (loss) | $ (543) |
Acquisitions and Divestitures_2
Acquisitions and Divestitures (Details) $ in Thousands | Mar. 01, 2017USD ($)a | Dec. 31, 2018a | Jul. 01, 2016USD ($) |
The "Comanche Assets" | |||
Acquisitions | |||
Gross acres | a | 318,000 | ||
Net acres | a | 155,000 | ||
Fair value of net assets acquired | $ | $ 2,100,000 | $ 1,043,673 | |
Ownership interest acquired (as a percentage) | 49.00% | ||
Total purchase price allocated to assets purchased and liabilities assumed | |||
Proved oil and natural gas properties | $ | 781,789 | ||
Unproved properties | $ | 263,471 | ||
Other assets acquired | $ | 6,702 | ||
Fair value of assets acquired | $ | 1,051,962 | ||
Asset retirement obligations | $ | (8,289) | ||
Fair value of net assets acquired | $ | $ 2,100,000 | $ 1,043,673 | |
The "Comanche Assets" | SN UnSub | |||
Acquisitions | |||
Purchase price percentage | 37.00% | ||
Cash contribution | $ | $ 100,000 | ||
Estimated total proved developed producing reserves (in percent) | 50.00% | ||
Estimated total proved developed non-producing reserves (in percent) | 20.00% | ||
Total proved undeveloped reserves (in percent) | 20.00% | ||
The "Comanche Assets" | SN Maverick | |||
Acquisitions | |||
Purchase price percentage | 13.00% | ||
Estimated total proved developed producing reserves (in percent) | 0.00% | ||
Estimated total proved developed non-producing reserves (in percent) | 30.00% | ||
Total proved undeveloped reserves (in percent) | 30.00% | ||
The "Comanche Assets" | Gavilan | |||
Acquisitions | |||
Total proved undeveloped reserves (in percent) | 50.00% | ||
Eagle Ford Shale | |||
Acquisitions | |||
Gross acres | a | 472,000 | ||
Net acres | a | 271,000 | ||
Eagle Ford Shale | The "Comanche Assets" | |||
Acquisitions | |||
Gross acres | a | 252,000 | ||
Net acres | a | 122,000 | ||
Pearsall Shale | The "Comanche Assets" | |||
Acquisitions | |||
Gross acres | a | 66,000 | ||
Net acres | a | 33,000 |
Acquisitions and Divestitures_3
Acquisitions and Divestitures (Disposition) (Details) | Sep. 19, 2017USD ($)a | Jun. 15, 2017USD ($)aMMBoeBoeitemshares | Mar. 01, 2017a$ / sharesshares | Dec. 14, 2016USD ($) | Nov. 22, 2016USD ($)item | Jul. 05, 2016USD ($) | Jun. 01, 2016aMMBoeBoeitem | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)aitem | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) |
Divestitures | |||||||||||
Gain (reduction) on disposition | $ 1,528,000 | $ 81,955,000 | $ 85,322,000 | ||||||||
Preferred Units issued ( in shares) | 500,000,000 | ||||||||||
Javelina Disposition | |||||||||||
Divestitures | |||||||||||
Consideration | $ 105,000,000 | ||||||||||
Undeveloped net acres | a | 68,000 | ||||||||||
Gain (losses) on disposal | $ 73,700,000 | ||||||||||
Marquis Disposition | Lonestar | |||||||||||
Divestitures | |||||||||||
Consideration | $ 44,000,000 | ||||||||||
Consideration in stock (in shares) | shares | 6,000,000 | ||||||||||
Consideration in common stock (in shares) | shares | 1,500,000 | ||||||||||
Net acres | a | 21,000 | ||||||||||
Net proved reserves | MMBoe | 2.7 | ||||||||||
Reserves developed (as a percentage) | 100.00% | ||||||||||
Net proved reserves per day | Boe | 1,750 | ||||||||||
Number of wells, gross | item | 104 | ||||||||||
Number of wells, net | item | 65 | ||||||||||
Cotulla | Carrizo LLC | |||||||||||
Divestitures | |||||||||||
Gain (reduction) on disposition | $ 10,400,000 | ||||||||||
Production Asset Transaction | |||||||||||
Divestitures | |||||||||||
Percentage of working interest to be retained per wellbore | 2.50% | ||||||||||
Carnero Gathering, LLC | |||||||||||
Divestitures | |||||||||||
Gross acres | a | 315,000 | ||||||||||
SN Cotulla Assets, LLC | Carrizo LLC | |||||||||||
Divestitures | |||||||||||
Consideration | $ 153,500,000 | ||||||||||
Number of additional sale closings | item | 2 | ||||||||||
Consideration | $ 167,400,000 | ||||||||||
Net acres | a | 15,000 | ||||||||||
Net proved reserves | MMBoe | 6.9 | ||||||||||
Reserves developed (as a percentage) | 90.00% | ||||||||||
Net proved reserves per day | Boe | 3,000 | ||||||||||
Number of wells, gross | item | 112 | ||||||||||
Number of wells, net | item | 93 | ||||||||||
Gain (reduction) on disposition | $ 85,300,000 | ||||||||||
SNMP | Production Asset Transaction | |||||||||||
Divestitures | |||||||||||
Consideration | $ 24,200,000 | ||||||||||
Number of wellbores having partial interest | item | 23 | 11 | |||||||||
Percentage of working interest initially conveyed per wellbore | 17.92% | ||||||||||
Percentage of working interest | 47.50% | ||||||||||
SNMP | Carnero Gathering, LLC | |||||||||||
Divestitures | |||||||||||
Consideration | $ 37,000,000 | ||||||||||
Assumption of capital commitments | $ 7,400,000 | ||||||||||
The "Comanche Assets" | |||||||||||
Divestitures | |||||||||||
Gross acres | a | 318,000 | ||||||||||
Net acres | a | 155,000 | ||||||||||
The "Comanche Assets" | GSO Capital Partners LP | |||||||||||
Divestitures | |||||||||||
Number of shares issued (in shares) | shares | 1,455,000 | ||||||||||
Issuance of warrants | shares | 1,940,000 | ||||||||||
Issuance of warrants (in dollars per share) | $ / shares | $ 10 | ||||||||||
The "Comanche Assets" | Intrepid Private Equity V-A, LLC | |||||||||||
Divestitures | |||||||||||
Number of shares issued (in shares) | shares | 45,000 | ||||||||||
Issuance of warrants | shares | 60,000 | ||||||||||
Issuance of warrants (in dollars per share) | $ / shares | $ 10 | ||||||||||
The "Comanche Assets" | SN UnSub Preferred Units | GSO Capital Partners LP | |||||||||||
Divestitures | |||||||||||
Preferred Units issued ( in shares) | $ 485,000 | ||||||||||
Preferred Units issued | $ 485,000,000 | ||||||||||
The "Comanche Assets" | SN UnSub Preferred Units | Intrepid Private Equity V-A, LLC | |||||||||||
Divestitures | |||||||||||
Preferred Units issued ( in shares) | $ 15,000 | ||||||||||
Preferred Units issued | $ 15,000,000 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Cash and cash equivalents | ||||
Total cash and cash equivalents | $ 197,613 | $ 184,434 | $ 501,917 | $ 435,048 |
Cash at banks | ||||
Cash and cash equivalents | ||||
Total cash and cash equivalents | 66,426 | 135,363 | ||
Money market funds | ||||
Cash and cash equivalents | ||||
Total cash and cash equivalents | $ 131,187 | $ 49,071 |
Debt (Summary) (Details)
Debt (Summary) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 27, 2015 | Sep. 12, 2014 | Jul. 18, 2014 | Jun. 27, 2014 | Sep. 18, 2013 | Jun. 13, 2013 |
Long-Term Debt | ||||||||
Short term debt | $ 304 | $ 23,996 | ||||||
Long term debt before unamortized discount | 2,444,490 | 1,979,664 | ||||||
Unamortized debt issuance costs | (43,709) | (47,215) | ||||||
Total long-term debt | $ 2,395,408 | 1,930,683 | ||||||
7.75% Notes | ||||||||
Long-Term Debt | ||||||||
Face value of debt | $ 600,000 | $ 200,000 | $ 400,000 | |||||
Interest rate (as a percent) | 7.75% | 7.75% | ||||||
Long term debt before unamortized discount | $ 600,000 | 600,000 | ||||||
Unamortized discount on Additional Notes | $ (2,222) | (3,126) | ||||||
4.59% Non-Recourse Subsidiary Term Loan | ||||||||
Long-Term Debt | ||||||||
Interest rate (as a percent) | 4.59% | |||||||
Long term debt before unamortized discount | $ 3,803 | 4,164 | ||||||
6.125% Notes | ||||||||
Long-Term Debt | ||||||||
Face value of debt | $ 1,150,000 | $ 300,000 | $ 850,000 | |||||
Interest rate (as a percent) | 6.125% | 6.125% | ||||||
Long term debt before unamortized discount | $ 1,150,000 | 1,150,000 | ||||||
Unamortized premium on Additional 6.125% Notes | $ 1,090 | 1,360 | $ 2,300 | |||||
7.25% Senior Secured Notes | ||||||||
Long-Term Debt | ||||||||
Interest rate (as a percent) | 7.25% | |||||||
Long term debt before unamortized discount | $ 500,000 | |||||||
Unamortized discount on Additional Notes | (4,241) | |||||||
Second Amended And Restated Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Long term debt before unamortized discount | 50,000 | |||||||
SN UnSub Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Long term debt before unamortized discount | 167,500 | 175,500 | ||||||
SR Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Short term debt | 304 | $ 23,996 | ||||||
Long term debt before unamortized discount | $ 23,187 | |||||||
Weighted average interest rate | 6.849% | 5.122% |
Debt (Interest Expense Componen
Debt (Interest Expense Components) (Details) - USD ($) $ in Thousands | Sep. 12, 2014 | Sep. 18, 2013 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Interest expense | |||||
Amortization of debt issuance costs | $ (16,322) | $ (12,647) | $ (7,840) | ||
Amortization of (discount) premium | (1,528) | (634) | (633) | ||
Total interest expense | (177,858) | (140,163) | (126,973) | ||
4.59% Non-Recourse Subsidiary Term Loan | |||||
Interest expense | |||||
Interest | (185) | (65) | |||
Senior Notes | |||||
Interest expense | |||||
Interest | (148,455) | (116,938) | (116,938) | ||
7.75% Notes | |||||
Interest expense | |||||
Amortization of debt issuance costs | $ (4,200) | ||||
Amortization of (discount) premium | (1,528) | (634) | (634) | ||
6.125% Notes | |||||
Interest expense | |||||
Amortization of debt issuance costs | $ (6,400) | ||||
Second Amended And Restated Credit Agreement | |||||
Interest expense | |||||
Interest | (758) | (2,135) | $ (1,561) | ||
SN UnSub Credit Agreement | |||||
Interest expense | |||||
Interest | (8,835) | (7,639) | |||
SR Credit Agreement | |||||
Interest expense | |||||
Interest | $ (1,775) | $ (105) |
Debt (Details)
Debt (Details) | Dec. 31, 2018USD ($)asubsidiary | Mar. 01, 2017USD ($) | Sep. 12, 2014USD ($) | Jun. 27, 2014USD ($) | Sep. 18, 2013USD ($) | Jun. 13, 2013USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | Sep. 30, 2013USD ($) | Dec. 31, 2018USD ($)a | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Feb. 22, 2019USD ($) | Dec. 10, 2018USD ($) | Dec. 09, 2018USD ($) | May 11, 2018USD ($) | Feb. 14, 2018USD ($) | Dec. 20, 2017USD ($) | Feb. 27, 2015USD ($) | Jul. 18, 2014USD ($) |
Long-Term Debt | |||||||||||||||||||||
Proceeds from issuance of debt | $ 542,365,000 | $ 373,250,000 | $ 60,000,000 | ||||||||||||||||||
Debt issuance costs | 16,322,000 | 12,647,000 | $ 7,840,000 | ||||||||||||||||||
SR | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Borrowings | $ 23,500,000 | 23,500,000 | $ 24,000,000 | ||||||||||||||||||
Letters of credit outstanding | $ 23,500,000 | $ 23,500,000 | |||||||||||||||||||
SR | TMS | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Net acres | a | 14,000 | 14,000 | |||||||||||||||||||
7.25% Senior Notes | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Face value of debt | $ 500,000,000 | ||||||||||||||||||||
Minimum subsidiary indebtedness guarantee | $ 10,000,000 | ||||||||||||||||||||
Minimum subsidiary indebtedness guarantee (as a percent) | 100.00% | ||||||||||||||||||||
Equity interest in restricted subsidiaries (percent) | 100.00% | ||||||||||||||||||||
7.25% Senior Notes | Prior to February 15, 2020 | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Redemption price of debt instrument (as a percent) | 35.00% | ||||||||||||||||||||
Debt redeemable during the period (as a percent) | 107.25% | ||||||||||||||||||||
7.75% Notes | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Face value of debt | $ 200,000,000 | $ 400,000,000 | $ 600,000,000 | ||||||||||||||||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | ||||||||||||||||||
Percentage value of Additional Notes at which they are offered in private offering | 96.50% | ||||||||||||||||||||
Proceeds for issuance of notes, net of discount/premium and related offering expenses | $ 188,800,000 | $ 388,000,000 | $ 192,900,000 | ||||||||||||||||||
Debt issuance costs | $ 4,200,000 | ||||||||||||||||||||
Proceeds from interest received | $ 4,100,000 | ||||||||||||||||||||
6.125% Notes | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Face value of debt | $ 300,000,000 | $ 850,000,000 | $ 1,150,000,000 | ||||||||||||||||||
Proceeds from issuance of debt | $ 295,900,000 | $ 829,000,000 | |||||||||||||||||||
Interest rate (as a percent) | 6.125% | 6.125% | 6.125% | ||||||||||||||||||
Percentage value of Additional Notes at which they are offered in private offering | 100.75% | ||||||||||||||||||||
Proceeds for issuance of notes, net of discount/premium and related offering expenses | $ 299,700,000 | ||||||||||||||||||||
Premium on face value of debt | $ 1,090,000 | $ 2,300,000 | $ 1,090,000 | $ 1,360,000 | |||||||||||||||||
Debt issuance costs | $ 6,400,000 | ||||||||||||||||||||
Accrued interest | $ 3,800,000 | ||||||||||||||||||||
Previous First Lien Credit Agreement | 6.125% Notes | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Repayment of debt using proceeds from senior note offering | $ 100,000,000 | ||||||||||||||||||||
Third Amended And Restated Credit Agreement | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Maximum borrowing capacity | $ 25,000,000 | ||||||||||||||||||||
Borrowings | 0 | 0 | |||||||||||||||||||
Letters of credit outstanding | 0 | $ 0 | $ 17,000,000 | ||||||||||||||||||
Percentage of commitment fee on unused committed amount | 0.50% | ||||||||||||||||||||
Third Amended And Restated Credit Agreement | Maximum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Cross default covenant, aggregate principal amount threshold | $ 40,000,000 | ||||||||||||||||||||
Third Amended And Restated Credit Agreement | Alternate base rate | Minimum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 1.50% | ||||||||||||||||||||
Third Amended And Restated Credit Agreement | Alternate base rate | Maximum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 2.25% | ||||||||||||||||||||
Third Amended And Restated Credit Agreement | Eurodollar rate | Minimum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 2.50% | ||||||||||||||||||||
Third Amended And Restated Credit Agreement | Eurodollar rate | Maximum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 3.25% | ||||||||||||||||||||
SN UnSub Credit Agreement | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Maximum borrowing capacity | $ 500,000,000 | ||||||||||||||||||||
Borrowings | 167,500,000 | $ 167,500,000 | $ 23,500,000 | ||||||||||||||||||
Letters of credit outstanding | $ 0 | $ 0 | |||||||||||||||||||
Borrowing base | $ 330,000,000 | $ 315,000,000 | $ 380,000,000 | $ 380,000,000 | |||||||||||||||||
Percentage of increased net debt used to calculate reduction in borrowing base | 25.00% | ||||||||||||||||||||
Aggregate principal amount | $ 25,000,000 | ||||||||||||||||||||
Junior debt issuances | $ 200,000,000 | ||||||||||||||||||||
Effective borrowing base | 5.00% | ||||||||||||||||||||
Number of subsidiaries | subsidiary | 0 | ||||||||||||||||||||
SN UnSub Credit Agreement | Minimum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Current ratio | 1 | 1 | |||||||||||||||||||
SN UnSub Credit Agreement | Maximum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Percentage of commitment fee on unused committed amount | 0.50% | ||||||||||||||||||||
Ratio of total debt outstanding to consolidated EBITDA | 4 | 4 | |||||||||||||||||||
SN UnSub Credit Agreement | Alternate base rate | Minimum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 1.00% | ||||||||||||||||||||
SN UnSub Credit Agreement | Alternate base rate | Maximum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 2.00% | ||||||||||||||||||||
SN UnSub Credit Agreement | Eurodollar rate | Minimum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 2.00% | ||||||||||||||||||||
SN UnSub Credit Agreement | Eurodollar rate | Maximum | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Variable rate basis, spread percentage | 3.00% | ||||||||||||||||||||
Letters of credit | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||||||||||||||||
SR Credit Agreement | |||||||||||||||||||||
Long-Term Debt | |||||||||||||||||||||
Interest coverage ratio | 2.50% | ||||||||||||||||||||
Liquidity | $ 500,000 | $ 500,000 | |||||||||||||||||||
Asset coverage ratio | 58.50% |
Stockholders' and Mezzanine E_3
Stockholders' and Mezzanine Equity (Details) | Mar. 01, 2017item$ / sharesshares | Feb. 06, 2017USD ($)$ / sharesshares | Jul. 28, 2015shares | Mar. 26, 2013USD ($)$ / sharesshares | Sep. 17, 2012USD ($)$ / sharesshares | Dec. 31, 2018USD ($)agreementitem$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | May 25, 2017USD ($) |
Issuance of common stock | $ | $ 135,942,000 | |||||||
Common shares issued | $ | $ 567,000 | 134,863,000 | ||||||
Preferred Units issued ( in shares) | $ | 500,000,000 | |||||||
Number of rights declared for each common stock | 1 | |||||||
Number of rights automatically attached | 1 | |||||||
Dividends accrued or accumulated | $ | $ 5,662,000 | $ 3,987,000 | ||||||
SN Comanche Manager | Class A Units | ||||||||
Total units authorized for issuance | 100 | |||||||
Vesting percentage of class A | 20.00% | |||||||
Number of anniversaries | item | 5 | |||||||
Common Stock | ||||||||
Number of shares issued (in shares) | 10,000,000 | |||||||
Shares issued, price per share (in dollars per share) | $ / shares | $ 12.50 | |||||||
Number of shares of common stock to be issued if all preferred shares are converted | 4,275,640 | |||||||
Series A Preferred Stock | ||||||||
Number of shares issued (in shares) | 3,000,000 | |||||||
Shares issued, price per share (in dollars per share) | $ / shares | $ 50 | |||||||
Proceeds from the private placement of preferred stock | $ | $ 144,500,000 | |||||||
Issuance costs related to preferred units | $ | $ 5,500,000 | |||||||
Conversion ratio (in shares) | 2.3250 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 21.51 | |||||||
Annual dividend (as a percent) | 4.875% | 4.875% | ||||||
Liquidation preference (in dollars per share) | $ / shares | $ 50 | |||||||
Number of directors who can be elected upon failure to pay dividend for six or more quarters | item | 2 | |||||||
Preferred stock converted into shares of common stock | 0 | |||||||
Series A Preferred Stock | Minimum | ||||||||
Period of failure to pay dividend, resulting into appointment of board of directors | 1 year 6 months | |||||||
Condition for automatic conversion: Closing sale price of common stock as a percentage of conversion price for specified period prior to conversion | 130.00% | |||||||
Series B Preferred Stock | ||||||||
Number of shares issued (in shares) | 4,500,000 | |||||||
Shares issued, price per share (in dollars per share) | $ / shares | $ 50 | |||||||
Proceeds from the private placement of preferred stock | $ | $ 216,600,000 | |||||||
Issuance costs related to preferred units | $ | $ 8,400,000 | |||||||
Conversion ratio (in shares) | 2.3370 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 21.40 | |||||||
Number of shares of common stock to be issued if all preferred shares are converted | 8,244,539 | |||||||
Annual dividend (as a percent) | 6.50% | 6.50% | ||||||
Liquidation preference (in dollars per share) | $ / shares | $ 50 | |||||||
Number of directors who can be elected upon failure to pay dividend for six or more quarters | item | 2 | |||||||
Preferred stock converted into shares of common stock | 0 | |||||||
Series B Preferred Stock | Minimum | ||||||||
Period of failure to pay dividend, resulting into appointment of board of directors | 1 year 6 months | |||||||
Condition for automatic conversion: Closing sale price of common stock as a percentage of conversion price for specified period prior to conversion | 130.00% | |||||||
SN UnSub Preferred Units | ||||||||
Internal rate of return | 14.00% | |||||||
Purchase price for unit | 1.5 | |||||||
ATM offering | Common Stock | Maximum | ||||||||
Common stock available for issuance | $ | $ 75,000,000 | |||||||
IPO | Common Stock | ||||||||
Net of underwriters discounts (in dollars per share) | $ / shares | $ 11.7902 | |||||||
Over-allotment option | ||||||||
Number of shares issued (in shares) | 1,500,000 | |||||||
Period of options to purchase common stock | 30 days | |||||||
Payments for underwriting discounts | $ | $ 7,800,000 | |||||||
Common shares issued | $ | $ 135,900,000 | |||||||
The "Comanche Assets" | SN UnSub Preferred Units | ||||||||
Distributions (as percent) | 10.00% | |||||||
The "Comanche Assets" | GSO Capital Partners LP | ||||||||
Number of shares issued (in shares) | 1,455,000 | |||||||
Issuance of warrants | 1,940,000 | |||||||
Issuance of warrants (in dollars per share) | $ / shares | $ 10 | |||||||
The "Comanche Assets" | GSO Capital Partners LP | SN UnSub Preferred Units | ||||||||
Preferred Units issued ( in shares) | $ | $ 485,000 | |||||||
Preferred Units issued | $ | $ 485,000,000 | |||||||
The "Comanche Assets" | Intrepid Private Equity V-A, LLC | ||||||||
Number of shares issued (in shares) | 45,000 | |||||||
Issuance of warrants | 60,000 | |||||||
Issuance of warrants (in dollars per share) | $ / shares | $ 10 | |||||||
The "Comanche Assets" | Intrepid Private Equity V-A, LLC | SN UnSub Preferred Units | ||||||||
Preferred Units issued ( in shares) | $ | $ 15,000 | |||||||
Preferred Units issued | $ | $ 15,000,000 | |||||||
The "Comanche Assets" | Blackstone Warrant Holders | ||||||||
Number of warrants | agreement | 3 | |||||||
Issuance of warrants | 6,500,000 | |||||||
Issuance of warrants (in dollars per share) | $ / shares | $ 10 |
Stockholders' and Mezzanine E_4
Stockholders' and Mezzanine Equity (Mezzanine Equity) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders' and Mezzanine Equity | ||
Mezzanine equity, beginning balance | $ 427,512 | |
Private placement of SN UnSub Preferred Units | $ 500,000 | |
Discount | (90,527) | |
Accretion of discount | 25,316 | 18,039 |
Dividends accrued | 50,000 | 41,667 |
Dividends prepaid | (2,592) | |
Dividends/distributions paid | (47,408) | (41,667) |
Mezzanine equity, ending balance | $ 452,828 | $ 427,512 |
Stockholders' and Mezzanine E_5
Stockholders' and Mezzanine Equity (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings (Loss) Per Share | |||
Net income (loss) | $ 85,205 | $ 43,192 | $ (141,486) |
Preferred stock dividends | (15,948) | (15,948) | (15,948) |
Preferred unit dividends and distributions | (47,408) | (44,259) | |
Preferred unit amortization | (25,316) | (18,039) | |
Net loss attributable to common stockholders | $ (3,467) | $ (35,054) | $ (157,434) |
Weighted average number of shares used to calculate net loss attributable to common stockholders - basic | 81,764,000 | 75,608,000 | 58,900,000 |
Denominator for diluted income (loss) per common share | 81,764,000 | 75,608,000 | 58,900,000 |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.04) | $ (0.46) | $ (2.67) |
Restricted stock | |||
Earnings (Loss) Per Share | |||
Anti-dilutive stock | 2,540,922 | 2,755,893 | 2,113,462 |
Non-vested common stock (in shares) | 0 | 0 | 0 |
Common Stock | |||
Earnings (Loss) Per Share | |||
Anti-dilutive stock | 12,520,179 | 12,520,179 | 12,554,481 |
Convertible Preferred Stock | |||
Earnings (Loss) Per Share | |||
Anti-dilutive stock | 100,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) $ / shares in Units, $ in Thousands | Apr. 17, 2018shares | Mar. 01, 2017shares | Dec. 31, 2018USD ($)directoritem$ / sharesshares | Dec. 31, 2017USD ($)director$ / sharesshares | Dec. 31, 2016USD ($)director$ / sharesshares |
Stock-Based Compensation | |||||
Maximum number of shares of common stock | 17,239,790 | ||||
Common stock available for incentive awards, as a percentage of the issued and outstanding shares of common stock | 15.00% | ||||
Number of new forms of stock award agreements | item | 2 | ||||
Total stock-based compensation expense (benefit) | $ | $ (964) | $ 40,298 | $ 37,090 | ||
Additional disclosure related to compensation cost | |||||
Closing price of common stock (in dollars per share) | $ / shares | $ 0.27 | ||||
Minimum | |||||
Additional disclosure related to compensation cost | |||||
Target phantom shares granted (as a percent) | 0.00% | ||||
Maximum | |||||
Additional disclosure related to compensation cost | |||||
Target phantom shares granted (as a percent) | 200.00% | ||||
Restricted stock | |||||
Additional disclosure related to compensation cost | |||||
Unrecognized compensation costs related to non-vested restricted shares outstanding | $ | $ 11,300 | ||||
Expected average period for recognition of unrecognized compensation costs | 1 year 9 months 18 days | ||||
Number of Non-Vested Shares | |||||
Shares available for future issuance to participants | 6,100,000 | ||||
Restricted stock | Vesting in equal annual increments over three year period | |||||
Stock-Based Compensation | |||||
Vesting period | 3 years | ||||
Restricted stock | Cliff vesting after five years | |||||
Stock-Based Compensation | |||||
Vesting period | 5 years | ||||
Restricted stock | Employees of SOG | |||||
Stock-Based Compensation | |||||
Vesting period | 3 years | ||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 3,400,000 | ||||
Restricted stock | Employees and consultants of SOG | |||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 2,100,000 | 4,400,000 | |||
Restricted stock | Employees and consultants of SOG | Three-year vesting period | |||||
Stock-Based Compensation | |||||
Vesting period | 3 years | ||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 3,300,000 | ||||
Restricted stock | Employees and consultants of SOG | Five-year vesting period | |||||
Stock-Based Compensation | |||||
Vesting period | 5 years | ||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 1,100,000 | ||||
Restricted stock | Directors | |||||
Stock-Based Compensation | |||||
Number of directors to whom awards are issued | director | 7 | 6 | 5 | ||
Vesting period | 1 year | 1 year | 1 year | ||
Granted (in dollars per share) | $ / shares | $ 4.01 | $ 6.32 | $ 8 | ||
Total stock-based compensation expense (benefit) | $ | $ 1,260 | $ 6,726 | $ 1,000 | ||
Additional disclosure related to compensation cost | |||||
Closing price of common stock (in dollars per share) | $ / shares | $ 1.76 | $ 5.81 | |||
Number of Non-Vested Shares | |||||
Granted (in shares) | 371,509 | 200,334 | 156,126 | ||
Weighted Average Fair Value | |||||
Granted (in dollars per share) | $ / shares | $ 4.01 | $ 6.32 | $ 8 | ||
Restricted stock | Non-employees | |||||
Stock-Based Compensation | |||||
Total stock-based compensation expense (benefit) | $ | $ 92 | $ 15,455 | $ 23,961 | ||
PARS | |||||
Additional disclosure related to compensation cost | |||||
Expected average period for recognition of unrecognized compensation costs | 2 years 3 months 15 days | ||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 0 | 0 | |||
PARS | Maximum | |||||
Additional disclosure related to compensation cost | |||||
Unrecognized compensation costs related to non-vested restricted shares outstanding | $ | $ 100 | ||||
PARS | Employees of SOG | Cliff vesting after five years | |||||
Stock-Based Compensation | |||||
Vesting period | 5 years | 5 years | 5 years | ||
PARS | Employees of SOG | Five-year vesting period | |||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 1,100,000 | ||||
PAPS | |||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 0 | ||||
PARS, PAPS, and Phantom Stock award shares | |||||
Stock-Based Compensation | |||||
Total stock-based compensation expense (benefit) | $ | $ (1,756) | $ 17,389 | $ 12,129 | ||
PARS, PAPS, and Phantom Stock award shares | Vesting in equal annual increments over three year period | |||||
Stock-Based Compensation | |||||
Vesting period | 3 years | ||||
PARS, PAPS, and Phantom Stock award shares | Cliff vesting after five years | |||||
Stock-Based Compensation | |||||
Vesting period | 5 years | ||||
Restricted shares and PARS | |||||
Stock-Based Compensation | |||||
Granted (in dollars per share) | $ / shares | $ 3.53 | ||||
Number of Non-Vested Shares | |||||
Non-vested shares, beginning of period (in shares) | 4,896,728 | ||||
Granted (in shares) | 3,407,103 | ||||
Vested (in shares) | (2,529,704) | ||||
Forfeited (in shares) | (750,425) | ||||
Non-vested shares, end of the period (in shares) | 5,023,702 | 4,896,728 | |||
Weighted Average Fair Value | |||||
Non-vested shares at the beginning of the period (in dollars per share) | $ / shares | $ 10.42 | ||||
Granted (in dollars per share) | $ / shares | 3.53 | ||||
Vested (in dollars per share) | $ / shares | 3.96 | ||||
Forfeited (in dollars per share) | $ / shares | 6.43 | ||||
Non-vested shares at the end of the period (in dollars per share) | $ / shares | $ 9.60 | $ 10.42 | |||
Aggregate Intrinsic Value | |||||
Non-vested shares, beginning of period (in dollars) | $ | $ 51,024 | ||||
Granted (in dollars) | $ | 12,027 | ||||
Vested (in dollars) | $ | (10,018) | ||||
Forfeited (in dollars) | $ | (4,825) | ||||
Non-vested shares, end of period (in dollars) | $ | $ 48,208 | $ 51,024 | |||
Phantom stock shares and PAPS | |||||
Stock-Based Compensation | |||||
Vesting percentage | 0.00% | ||||
Granted (in dollars per share) | $ / shares | $ 3.43 | ||||
Additional disclosure related to compensation cost | |||||
Unrecognized compensation costs related to non-vested restricted shares outstanding | $ | $ 900 | ||||
Expected average period for recognition of unrecognized compensation costs | 1 year 9 months 18 days | ||||
Number of Non-Vested Shares | |||||
Non-vested shares, beginning of period (in shares) | 3,588,644 | ||||
Granted (in shares) | 4,046,345 | ||||
Vested (in shares) | (1,534,779) | ||||
Forfeited (in shares) | (974,262) | ||||
Non-vested shares, end of the period (in shares) | 5,125,948 | 3,588,644 | |||
Weighted Average Fair Value | |||||
Non-vested shares at the beginning of the period (in dollars per share) | $ / shares | $ 5.74 | ||||
Granted (in dollars per share) | $ / shares | 3.43 | ||||
Vested (in dollars per share) | $ / shares | 3.09 | ||||
Forfeited (in dollars per share) | $ / shares | 6.09 | ||||
Non-vested shares at the end of the period (in dollars per share) | $ / shares | $ 4.64 | $ 5.74 | |||
Aggregate Intrinsic Value | |||||
Non-vested shares, beginning of period (in dollars) | $ | $ 20,599 | ||||
Granted (in dollars) | $ | 13,879 | ||||
Vested (in dollars) | $ | (4,742) | ||||
Forfeited (in dollars) | $ | (5,933) | ||||
Non-vested shares, end of period (in dollars) | $ | $ 23,803 | $ 20,599 | |||
Phantom stock shares and PAPS | Employees of SOG | |||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 4,000,000 | ||||
Phantom stock shares and PAPS | Employees and consultants of SOG | |||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 4,000,000 | ||||
Phantom stock shares and PAPS | Employees and consultants of SOG | Three-year vesting period | |||||
Stock-Based Compensation | |||||
Vesting period | 3 years | 3 years | |||
Number of Non-Vested Shares | |||||
Granted (in shares) | 2,800,000 | ||||
Phantom stock shares and PAPS | Employees and consultants of SOG | Five-year vesting period | |||||
Stock-Based Compensation | |||||
Vesting period | 5 years | ||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 1,200,000 | ||||
Performance awards | |||||
Stock-Based Compensation | |||||
Total stock-based compensation expense (benefit) | $ | $ (560) | $ 728 | |||
Additional disclosure related to compensation cost | |||||
Expected average period for recognition of unrecognized compensation costs | 2 years 11 months 19 days | ||||
Performance awards | Maximum | |||||
Additional disclosure related to compensation cost | |||||
Unrecognized compensation costs related to non-vested restricted shares outstanding | $ | $ 100 | ||||
PBPS awards | |||||
Stock-Based Compensation | |||||
Vesting period | 3 years | ||||
Number of performance criteria used in determination of performance awards earned | item | 4 | ||||
Additional disclosure related to compensation cost | |||||
Unrecognized compensation costs related to non-vested restricted shares outstanding | $ | $ 500 | ||||
Expected average period for recognition of unrecognized compensation costs | 1 year 6 months 29 days | ||||
Target shares awarded (as a percent) | 71.00% | ||||
PBPS awards | Minimum | |||||
Stock-Based Compensation | |||||
Vesting period | 60 days | ||||
Additional disclosure related to compensation cost | |||||
Target phantom shares granted (as a percent) | 0.00% | ||||
PBPS awards | Maximum | |||||
Additional disclosure related to compensation cost | |||||
Target phantom shares granted (as a percent) | 200.00% | ||||
PBPS awards | Three performance measures other than Safety (TRIR) | |||||
Stock-Based Compensation | |||||
Performance measure weighting in determination of performance awards earned (as a percent) | 30.00% | ||||
PBPS awards | Performance measure for Safety (TRIR) | |||||
Stock-Based Compensation | |||||
Performance measure weighting in determination of performance awards earned (as a percent) | 10.00% | ||||
PBPS awards | Overall results determination of shares earned during performance period | |||||
Stock-Based Compensation | |||||
Performance measure weighting in determination of performance awards earned (as a percent) | 33.00% | ||||
Stock-settled PBPS awards | |||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 2,113,904 | ||||
Cash-settled PBPS awards | |||||
Number of Non-Vested Shares | |||||
Granted (in shares) | 2,113,905 | ||||
LTIP PLan | |||||
Stock-Based Compensation | |||||
Vesting period | 5 years | ||||
LTIP PLan | Executive Chairman of the Board | Maximum | |||||
Additional disclosure related to compensation cost | |||||
Target shares | 245,234 | ||||
LTIP PLan | Chief Executive Officer | Maximum | |||||
Additional disclosure related to compensation cost | |||||
Target shares | 245,234 | ||||
LTIP PLan | Chief Operating Officer | Maximum | |||||
Additional disclosure related to compensation cost | |||||
Target shares | 245,234 | ||||
LTIP PLan | President | Maximum | |||||
Additional disclosure related to compensation cost | |||||
Target shares | 81,745 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Components of income tax provision | |||
Current expense (benefit) as a result of current operations | $ (1,599) | $ 1,825 | |
Deferred expense (benefit) as a result of current operations | $ 23,707 | 257,358 | (46,191) |
Increase (Decrease) in valuation allowance | $ (23,707) | (258,095) | 46,191 |
Net income tax expense (benefit) | $ (2,336) | $ 1,825 | |
Reconciliation of the statutory federal income tax with the income tax provision | |||
Federal statutory rate | 21.00% | 35.00% | 35.00% |
Income tax expense (benefit) at the federal statutory rate | $ 17,893 | $ 14,300 | $ (48,882) |
Officers' compensation limitation | 1,232 | 9,570 | 3,115 |
State taxes (net of federal benefit) | 3,551 | 2,607 | (232) |
Non-deductible general and administrative expenses | 1,048 | 841 | 743 |
Percentage depletion carry forward | (34) | (86) | (144) |
Other | (52) | 39 | |
Minimum Tax Credit Recoverability | (1,599) | ||
US Tax Reform - Impact to Deferreds | 227,392 | ||
Differences between actual income taxes and amounts estimated in prior years | 17 | 2,786 | 995 |
Income tax expense (benefit) | 23,707 | 255,759 | (44,366) |
US Tax Reform - One-Time Valuation Allowance Change | (227,392) | ||
Other Valuation Allowance change | (23,707) | (30,703) | 46,191 |
Net income tax expense (benefit) | (2,336) | $ 1,825 | |
Deferred tax assets (liabilities): | |||
Derivative assets | 9,536 | ||
Derivative (obligations) | (2,281) | ||
Depreciable, depletable property, plant and equipment | (101,147) | (22,351) | |
Share based compensation | 936 | ||
Share based compensation | (1,017) | ||
Revenue recognition | 3,280 | 3,593 | |
Investments in joint ventures | (53,640) | (22,561) | |
Other | 1,308 | 321 | |
Interest carryforward | 33,161 | ||
Federal net operating loss carryforward | 425,954 | 364,922 | |
State net operating loss carryforward | 4,387 | 4,246 | |
Deferred tax assets | 310,005 | 338,642 | |
Valuation allowance | (310,005) | (338,642) | |
Current: | |||
Derivative assets (obligations) | 9,536 | ||
Noncurrent: | |||
Other | 1,308 | 321 | |
Net operating loss carryforwards | $ 2,028,300 | ||
Evaluation of cumulative loss period | 3 years | ||
Provisional non cash adjustment | $ 227,400 | ||
NOLs which begin to expire in 2031 | |||
Noncurrent: | |||
Net operating loss carryforwards | $ 1,729,100 |
Related Party Transactions (Det
Related Party Transactions (Details) | Dec. 20, 2017USD ($) | Mar. 01, 2017USD ($)itemshares | Feb. 06, 2017shares | Jun. 30, 2017USD ($) | Dec. 31, 2018USD ($)a$ / MMBTUshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Aug. 11, 2017USD ($) | Nov. 22, 2016USD ($)shares | Oct. 06, 2016USD ($)mi | Jul. 05, 2016USD ($) |
Related Party Transactions | |||||||||||
Accounts receivable - related entities | $ 6,099,000 | $ 4,491,000 | |||||||||
General and administrative expenses | $ 98,002,000 | 144,401,000 | $ 110,081,000 | ||||||||
Carnero Gathering, LLC | |||||||||||
Related Party Transactions | |||||||||||
Gross acres | a | 315,000 | ||||||||||
Comanche | |||||||||||
Related Party Transactions | |||||||||||
Initial term of the administrative services agreement | 8 years | ||||||||||
Administration Fee (as a percent) | 2.00% | ||||||||||
Costs, fees or other expenses payable | $ 1,000,000 | ||||||||||
Period for which agreement will extend automatically | 1 year | ||||||||||
Written notice period for termination of administrative services agreement | 180 days | ||||||||||
Comanche | Maximum | Per Month | |||||||||||
Related Party Transactions | |||||||||||
General and administrative expenses | $ 500,000 | ||||||||||
Comanche | Maximum | Per year until March 1, 2019 | |||||||||||
Related Party Transactions | |||||||||||
General and administrative expenses | 5,000,000 | ||||||||||
Comanche | Maximum | Per year, thereafter | |||||||||||
Related Party Transactions | |||||||||||
General and administrative expenses | $ 10,000,000 | ||||||||||
SOG | |||||||||||
Related Party Transactions | |||||||||||
Related party, cumulative ownership of equity interests by affiliates (as a percent) | 100.00% | ||||||||||
General and administrative expenses and oil and natural gas production expenses | $ 64,900,000 | 73,300,000 | $ 45,900,000 | ||||||||
Accounts receivable - related entities | 6,100,000 | 4,500,000 | |||||||||
SR | |||||||||||
Related Party Transactions | |||||||||||
Litigation settlement, amount from other party | $ 11,800,000 | ||||||||||
Litigation settlement, amount from third party | 5,200,000 | ||||||||||
Credit agreement, amount outstanding | $ 24,000,000 | $ 23,500,000 | |||||||||
SR | TMS | |||||||||||
Related Party Transactions | |||||||||||
Net acres | a | 14,000 | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||||||||
Proved oil and natural gas properties | $ 17,719,000 | ||||||||||
Unproved properties | 5,227,000 | ||||||||||
Other assets acquired | 3,952,000 | ||||||||||
Fair value of assets acquired | 26,898,000 | ||||||||||
Asset retirement obligations | (2,902,000) | ||||||||||
Fair value of net assets acquired | $ 23,996,000 | ||||||||||
SNMP | |||||||||||
Related Party Transactions | |||||||||||
Accounts payable - related entities | $ 6,100,000 | $ 9,800,000 | |||||||||
Incremental fee per barrel of water, payable to SNMP | $ 1 | ||||||||||
Contingent lease option exercise payment | $ 1 | ||||||||||
Contingent crude storage terminal payment | $ 250,000 | ||||||||||
Contingent payment, crude storage terminal within number of miles of a project | mi | 5 | ||||||||||
Ownership of General Partner (as a percent) | 100.00% | ||||||||||
SNMP | Carnero Gathering, LLC | |||||||||||
Related Party Transactions | |||||||||||
Ownership of investment (as a percent) | 50.00% | ||||||||||
Assumption of capital commitments | $ 7,400,000 | ||||||||||
Seco Pipeline, LLC | |||||||||||
Related Party Transactions | |||||||||||
Agreement for transported natural gas quantities to SN Catarina (price per unit) | $ / MMBTU | 0.22 | ||||||||||
Perpetual term of agreement unless terminated | 1 month | ||||||||||
SN Comanche Manager | Class A Units | |||||||||||
Related Party Transactions | |||||||||||
Total units authorized for issuance | shares | 100 | ||||||||||
Vesting percentage of class A | 20.00% | ||||||||||
Number of anniversaries | item | 5 | ||||||||||
Antonio R. Sanchez, Jr. | |||||||||||
Related Party Transactions | |||||||||||
Ownership of investment (as a percent) | 0.80% | ||||||||||
Antonio R. Sanchez, III | |||||||||||
Related Party Transactions | |||||||||||
Ownership of investment (as a percent) | 3.01% | ||||||||||
Patricio D. Sanchez | |||||||||||
Related Party Transactions | |||||||||||
Ownership of investment (as a percent) | 3.00% | ||||||||||
Eduardo A. Sanchez | |||||||||||
Related Party Transactions | |||||||||||
Ownership of investment (as a percent) | 4.14% | ||||||||||
Targa | Carnero Gathering, LLC | |||||||||||
Related Party Transactions | |||||||||||
Ownership of investment (as a percent) | 50.00% | ||||||||||
SOII Facility | Targa | |||||||||||
Related Party Transactions | |||||||||||
Related party, cumulative ownership of equity interests by affiliates (as a percent) | 100.00% | ||||||||||
Common Stock | SNMP | |||||||||||
Related Party Transactions | |||||||||||
Investments (in shares or units) | shares | 2,272,727 | ||||||||||
Investments | $ 25,000,000 | ||||||||||
Common Stock | Blackstone Gavilan, GSO | |||||||||||
Related Party Transactions | |||||||||||
Number of shares owned by related parties | shares | 10,395,000 | ||||||||||
Common Stock | GSO Capital Partners L.P. | |||||||||||
Related Party Transactions | |||||||||||
Number of shares owned by related parties | shares | 500,000 |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)MMBTU$ / bbl$ / MMBTUbbl | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Derivatives Fair Value [Line Items] | |||
Embedded derivative, loss | $ 1,600 | ||
Embedded derivatives, gain | $ 1,200 | ||
Reconciliation of the changes in fair value of the commodity derivatives | |||
Fair value of commodity derivatives, beginning of period | (1,551) | ||
Gain (loss) on embedded derivatives | 1,243 | ||
Loss on embedded derivatives | (1,600) | ||
Gain on embedded derivatives | 1,200 | ||
Initial fair value of earnout derivatives | 6,401 | ||
Gains (losses) on derivatives | (543) | ||
Fair value of commodity derivatives, end of period | 5,550 | (1,551) | |
Embedded derivatives | |||
Reconciliation of the changes in fair value of the commodity derivatives | |||
Fair value of commodity derivatives, beginning of period | (1,551) | ||
Gain (loss) on embedded derivatives | (1,551) | ||
Fair value of commodity derivatives, end of period | (1,551) | ||
Not designated as hedges | Commodity derivatives | |||
Reconciliation of the changes in fair value of the commodity derivatives | |||
Fair value of commodity derivatives, beginning of period | (54,255) | (35,014) | $ 178,283 |
Fair value of commodity derivatives, end of period | 21,194 | (54,255) | (35,014) |
Not designated as hedges | Commodity derivatives | Oil Reserves | |||
Reconciliation of the changes in fair value of the commodity derivatives | |||
Gains (losses) on derivatives | (9,878) | (48,966) | (47,389) |
Net settlements paid (received) on commodity derivative contracts: | (100,120) | 11,807 | 135,491 |
Net premiums on derivative contracts | (24,547) | ||
Not designated as hedges | Commodity derivatives | Natural gas | |||
Reconciliation of the changes in fair value of the commodity derivatives | |||
Gains (losses) on derivatives | (17,897) | 42,764 | (30,307) |
Net settlements paid (received) on commodity derivative contracts: | $ (3,104) | $ 1,232 | $ 24,657 |
Not designated as hedges | Swaps | 2019 | Oil Reserves | |||
Derivatives Fair Value [Line Items] | |||
Notional amount (in barrels) | bbl | 3,149,000 | ||
Average swap price per unit | $ / bbl | 51.91 | ||
Not designated as hedges | Swaps | 2019 | Natural gas | |||
Derivatives Fair Value [Line Items] | |||
Notional amount (in MMBtu) | MMBTU | 17,644,000 | ||
Average swap price per unit | $ / MMBTU | 2.90 | ||
Not designated as hedges | Swaps | 2020 | Oil Reserves | |||
Derivatives Fair Value [Line Items] | |||
Notional amount (in barrels) | bbl | 1,055,560 | ||
Average swap price per unit | $ / bbl | 55.36 | ||
Not designated as hedges | Swaps | 2020 | Natural gas | |||
Derivatives Fair Value [Line Items] | |||
Notional amount (in MMBtu) | MMBTU | 6,893,150 | ||
Average swap price per unit | $ / MMBTU | 2.67 |
Derivative Instruments (Balance
Derivative Instruments (BalanceSheet) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Offsetting Derivative Assets: | ||
Gross Amount of Recognized Assets | $ 28,480 | $ 18,610 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (664) | (752) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 27,816 | 17,858 |
Offsetting Derivative Liabilities: | ||
Gross Amount of Recognized Liabilities | 1,736 | 74,416 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (664) | (752) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 1,072 | 73,664 |
Current asset | ||
Offsetting Derivative Assets: | ||
Gross Amount of Recognized Assets | 16,302 | 16,510 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (588) | (80) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 15,714 | 16,430 |
Long-term asset | ||
Offsetting Derivative Assets: | ||
Gross Amount of Recognized Assets | 12,178 | 2,100 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (76) | (672) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 12,102 | 1,428 |
Current liability | ||
Offsetting Derivative Liabilities: | ||
Gross Amount of Recognized Liabilities | 1,294 | 56,270 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (588) | (80) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | 706 | 56,190 |
Long-term liability | ||
Offsetting Derivative Liabilities: | ||
Gross Amount of Recognized Liabilities | 442 | 18,146 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (76) | (672) |
Net Amounts Presented in the Condensed Consolidated Balance Sheets | $ 366 | $ 17,474 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value of Financial Instruments | ||
Gain on embedded derivatives | $ 1,200 | |
Level 3 | ||
Fair Value of Financial Instruments | ||
Derivative instruments | 0 | $ 0 |
Recurring basis | ||
Fair Value of Financial Instruments | ||
Investments | 3,900 | 25,200 |
Embedded derivative instruments | (308) | (1,551) |
Earnout derivative asset | 5,858 | |
Total | 167,315 | 24,447 |
Recurring basis | SNMP | ||
Fair Value of Financial Instruments | ||
Investments | 3,909 | 25,227 |
Recurring basis | Lonestar | ||
Fair Value of Financial Instruments | ||
Investments | 5,475 | 5,955 |
Recurring basis | Money market funds | ||
Fair Value of Financial Instruments | ||
Cash and cash equivalents | 131,187 | 49,071 |
Recurring basis | Active Market for Identical Assets (Level 1) | ||
Fair Value of Financial Instruments | ||
Total | 140,571 | 80,253 |
Recurring basis | Active Market for Identical Assets (Level 1) | SNMP | ||
Fair Value of Financial Instruments | ||
Investments | 3,909 | 25,227 |
Recurring basis | Active Market for Identical Assets (Level 1) | Lonestar | ||
Fair Value of Financial Instruments | ||
Investments | 5,475 | 5,955 |
Recurring basis | Active Market for Identical Assets (Level 1) | Money market funds | ||
Fair Value of Financial Instruments | ||
Cash and cash equivalents | 131,187 | 49,071 |
Recurring basis | Observable Inputs (Level 2) | ||
Fair Value of Financial Instruments | ||
Embedded derivative instruments | (308) | (1,551) |
Total | 20,886 | |
Total | (55,806) | |
Recurring basis | Level 3 | ||
Fair Value of Financial Instruments | ||
Earnout derivative asset | 5,858 | |
Total | 5,858 | |
Oil Reserves | Recurring basis | Swaption | Call | ||
Fair Value of Financial Instruments | ||
Derivative instruments | (3,431) | |
Oil Reserves | Recurring basis | Swaption | Call | Observable Inputs (Level 2) | ||
Fair Value of Financial Instruments | ||
Derivative instruments | (3,431) | |
Swaps | Oil Reserves | Recurring basis | ||
Fair Value of Financial Instruments | ||
Derivative instruments | 20,608 | (66,204) |
Swaps | Oil Reserves | Recurring basis | Observable Inputs (Level 2) | ||
Fair Value of Financial Instruments | ||
Derivative instruments | 20,608 | (66,204) |
Swaps | Natural gas | Recurring basis | ||
Fair Value of Financial Instruments | ||
Derivative instruments | 586 | 15,380 |
Swaps | Natural gas | Recurring basis | Observable Inputs (Level 2) | ||
Fair Value of Financial Instruments | ||
Derivative instruments | $ 586 | $ 15,380 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments (Other) (Details) - USD ($) $ in Thousands | Nov. 20, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 27, 2014 | Jun. 13, 2013 | Mar. 26, 2013 | Sep. 17, 2012 |
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Impairment of proved properties | $ 6,600 | $ 0 | $ 3,700 | |||||
Level 3 | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Carrying value of impaired proved properties | $ 10,500 | $ 3,300 | ||||||
7.75% Notes | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Interest rate (as a percent) | 7.75% | 7.75% | ||||||
7.75% Notes | Active Market for Identical Assets (Level 1) | Estimated Fair Value | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Debt fair value | $ 125,100 | |||||||
6.125% Notes | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Interest rate (as a percent) | 6.125% | 6.125% | ||||||
6.125% Notes | Active Market for Identical Assets (Level 1) | Estimated Fair Value | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Debt fair value | $ 213,900 | |||||||
7.25% Senior Secured Notes | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Interest rate (as a percent) | 7.25% | |||||||
7.25% Senior Secured Notes | Active Market for Identical Assets (Level 1) | Estimated Fair Value | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Debt fair value | $ 407,500 | |||||||
Recurring basis | Derivative instrument | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Initial fair value of earnout derivative | 6,401 | |||||||
Loss on earnout derivative | (543) | |||||||
Ending balance | $ 5,858 | |||||||
Series A Preferred Stock | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Preferred stock converted into shares of common stock | 0 | |||||||
Conversion ratio (in shares) | 2.3250 | |||||||
Series B Preferred Stock | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Preferred stock converted into shares of common stock | 0 | |||||||
Conversion ratio (in shares) | 2.3370 | |||||||
Series B Preferred Stock | Non-Recurring | Active Market for Identical Assets (Level 1) | ||||||||
Changes in the fair value of the company s oil derivative instruments classified as Level 3 in the fair value hierarchy | ||||||||
Preferred stock converted into shares of common stock | 4,500 | |||||||
Conversion ratio (in shares) | 2.337 | |||||||
Shares of common stock issued upon conversion of preferred stock | 10,517 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in the asset retirement obligation | ||
Abandonment liability, beginning of period | $ 36,098 | $ 25,087 |
Liabilities incurred during period | 1,965 | 4,968 |
Acquisitions | 8,289 | |
Divestitures | (158) | (3,538) |
Revisions | 5,077 | (1,343) |
Accretion expense | 3,193 | 2,635 |
Abandonment liability, end of period | $ 46,175 | $ 36,098 |
Accrued Liabilities and Other_3
Accrued Liabilities and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Liabilities and Other Current Liabilities. | ||
Capital expenditures | $ 61,970 | $ 85,340 |
General and administrative expenses | 19,460 | 8,855 |
Production taxes | 5,157 | 5,084 |
Ad valorem taxes | 445 | 84 |
Lease operating expenses | 24,138 | 32,152 |
Interest payable | 47,866 | 34,632 |
Preferred stock dividends and other | 5,662 | 3,987 |
Total accrued liabilities | 164,698 | 170,134 |
Revenue payable | 71,296 | 75,832 |
Production tax payable | 3,443 | 2,774 |
Other | (111) | |
Other | 3,364 | |
Total other payables | 74,628 | 81,970 |
Operated prepayment liability | 51,844 | 88,999 |
Deferred gain on Western Catarina Midstream Divestiture - short term | 23,720 | 23,720 |
Phantom compensation payable - short term | 17 | 2,525 |
Total other current liabilities | $ 75,581 | $ 115,244 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Dec. 20, 2017USD ($) | Jun. 14, 2017USD ($) | Nov. 22, 2016USD ($) | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Oct. 06, 2016USD ($) | Jul. 05, 2016USD ($) | Oct. 02, 2015USD ($) |
Operating leases | |||||||||
Lease payment obligation | $ 280,848 | ||||||||
SR | |||||||||
Commitments and contingencies | |||||||||
Litigation settlement, amount from other party | $ 11,800 | ||||||||
SN Catarina | |||||||||
Commitments and contingencies | |||||||||
Maximum number of wells to be drilled in each annual period | item | 50 | ||||||||
Minimum number of wells to be drilled in accordance with agreement | item | 1 | ||||||||
Consecutive period over which at least one well can be drilled in order to continue to maintain rights to any future undeveloped acreage | 120 days | ||||||||
Number of wells that can be carried over to satisfy part of the well requirement in the subsequent annual period on a well-for-well basis | item | 30 | ||||||||
Acreage Lease | |||||||||
Operating leases | |||||||||
Term of lease | 10 years | ||||||||
Permanent improvements | |||||||||
Operating leases | |||||||||
Lease payment obligation | $ 4,000 | ||||||||
Term of lease | 10 years | ||||||||
Western Catarina Midstream Divestiture | |||||||||
Operating leases | |||||||||
Lease payment obligations | $ 74,800 | ||||||||
Carnero Gathering, LLC | |||||||||
Investment | |||||||||
Equity method investment cost | $ 48,000 | $ 26,000 | |||||||
Carnero Gathering, LLC | SNMP | |||||||||
Investment | |||||||||
Consideration | $ 55,500 | ||||||||
Ownership of investment (as a percent) | 50.00% | 50.00% | |||||||
SOII Facility | |||||||||
Investment | |||||||||
Amount committed | $ 12,500 | ||||||||
Consideration | $ 12,500 | ||||||||
Equity method investment cost | $ 12,500 | $ 12,500 | |||||||
Anadarko E&P Onshore, LLC | The "Comanche Assets" | |||||||||
Commitments and contingencies | |||||||||
Minimum number of wells to be drilled in accordance with agreement | item | 60 | ||||||||
Number of wells that can be carried over to satisfy part of the well requirement in the subsequent annual period on a well-for-well basis | item | 30 | ||||||||
Contingent per well default fee | $ 200 |
Commitments and Contingencies -
Commitments and Contingencies - Future lease obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Total | |||
2,019 | $ 92,295 | ||
2,020 | 84,273 | ||
2,021 | 52,500 | ||
2,022 | 31,682 | ||
2,023 | 20,098 | ||
Total | 280,848 | ||
Lease obligation expenses | 106,600 | $ 68,000 | $ 59,200 |
Office rent | |||
Total | |||
2,019 | 6,217 | ||
2,020 | 6,321 | ||
2,021 | 6,428 | ||
2,022 | 6,537 | ||
2,023 | 15,117 | ||
Total | 40,620 | ||
Operating leases of midstream assets | |||
Total | |||
2,019 | 85,175 | ||
2,020 | 77,049 | ||
2,021 | 45,169 | ||
2,022 | 24,242 | ||
2,023 | 4,531 | ||
Total | 236,166 | ||
Other leases | |||
Total | |||
2,019 | 903 | ||
2,020 | 903 | ||
2,021 | 903 | ||
2,022 | 903 | ||
2,023 | 450 | ||
Total | $ 4,062 |
Commitments and Contingencies_3
Commitments and Contingencies (Volume Commitments) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Gathering and processing fees | $ 305,515 | $ 244,461 | $ 155,660 |
Lease payment obligation | 280,848 | ||
Volume commitments | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Future commitments | 453,500 | ||
Volume commitments 2019 through 2021 | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Future commitments | 187,000 | ||
Volume commitments 2022 through 2024 | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Future commitments | 129,000 | ||
Volume commitments expiring after December 31, 2024 | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Future commitments | 137,500 | ||
Natural gas | Volume commitments | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Future commitments | 55,400 | ||
Lease payment obligation | 40,500 | ||
Natural gas | Volume commitments | Carnero Gathering, LLC | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Gathering and processing fees | 56,100 | ||
Natural gas | Volume commitments | SOII Facility | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Gathering and processing fees | 64,800 | ||
Natural gas | Volume commitments 2019 through 2021 | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Future commitments | 54,700 | ||
Natural gas | Volume commitments 2022 through 2024 | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Future commitments | 700 | ||
Volume commitment deficiency fees | |||
Oil and Gas Delivery Commitments and Contracts [Line Items] | |||
Gathering and processing fees | $ 5,800 | $ 4,800 |
Condensed Consolidating Finan_3
Condensed Consolidating Financial Information (Details) | Dec. 31, 2018 | Jun. 27, 2014 | Jun. 13, 2013 |
Ownership interest in subsidiaries (as a percent) | 100.00% | ||
7.75% Notes | |||
Interest rate (as a percent) | 7.75% | 7.75% | |
6.125% Notes | |||
Interest rate (as a percent) | 6.125% | 6.125% |
Condensed Consolidating Finan_4
Condensed Consolidating Financial Information (BalanceSheet) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | |||||
Total current assets | $ 372,981 | $ 350,948 | $ 350,798 | ||
Total oil and natural gas properties, net | 2,359,125 | 2,027,459 | |||
Other assets | 87,854 | 92,378 | |||
Total assets | 2,819,960 | 2,477,036 | 2,470,635 | ||
Liabilities and Shareholders' Equity | |||||
Current liabilities | 348,299 | 462,528 | |||
Long-term liabilities | 2,463,356 | 2,049,735 | |||
Mezzanine equity | 452,828 | 427,512 | |||
Total shareholders' equity (deficit) | (444,523) | (446,401) | (469,140) | $ (683,982) | $ (559,483) |
Total liabilities and stockholders' equity (deficit) | 2,819,960 | $ 2,477,036 | 2,470,635 | ||
Eliminations | |||||
Assets | |||||
Total current assets | (316,780) | (312,975) | |||
Investment in subsidiaries | (1,569,774) | (1,074,412) | |||
Total assets | (1,886,554) | (1,387,387) | |||
Liabilities and Shareholders' Equity | |||||
Current liabilities | (316,780) | (312,975) | |||
Total shareholders' equity (deficit) | (1,569,774) | (1,074,412) | |||
Total liabilities and stockholders' equity (deficit) | (1,886,554) | (1,387,387) | |||
Parent Company | |||||
Assets | |||||
Total current assets | 473,062 | 447,984 | |||
Total oil and natural gas properties, net | 36 | 3,987 | |||
Investment in subsidiaries | 1,577,054 | 1,081,692 | |||
Other assets | 22,917 | 25,451 | |||
Total assets | 2,073,069 | 1,559,114 | |||
Liabilities and Shareholders' Equity | |||||
Current liabilities | 155,396 | 212,026 | |||
Long-term liabilities | 2,203,546 | 1,827,072 | |||
Total shareholders' equity (deficit) | (285,873) | (479,984) | |||
Total liabilities and stockholders' equity (deficit) | 2,073,069 | 1,559,114 | |||
Combined Guarantor Subsidiaries | |||||
Assets | |||||
Total current assets | 69,934 | 98,758 | |||
Total oil and natural gas properties, net | 1,600,378 | 1,275,153 | |||
Other assets | 10,307 | 4,415 | |||
Total assets | 1,680,619 | 1,378,326 | |||
Liabilities and Shareholders' Equity | |||||
Current liabilities | 282,719 | 312,531 | |||
Long-term liabilities | 51,211 | 26,787 | |||
Total shareholders' equity (deficit) | 1,346,689 | 1,039,008 | |||
Total liabilities and stockholders' equity (deficit) | 1,680,619 | 1,378,326 | |||
Combined Non-Guarantor Subsidiaries | |||||
Assets | |||||
Total current assets | 146,765 | 117,031 | |||
Total oil and natural gas properties, net | 758,711 | 748,319 | |||
Investment in subsidiaries | (7,280) | (7,280) | |||
Other assets | 54,630 | 62,512 | |||
Total assets | 952,826 | 920,582 | |||
Liabilities and Shareholders' Equity | |||||
Current liabilities | 226,964 | 250,946 | |||
Long-term liabilities | 208,599 | 195,876 | |||
Mezzanine equity | 452,828 | 427,512 | |||
Total shareholders' equity (deficit) | 64,435 | 46,248 | |||
Total liabilities and stockholders' equity (deficit) | $ 952,826 | $ 920,582 |
Condensed Consolidating Finan_5
Condensed Consolidating Financial Information (IncomeStatement) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Condensed Income Statements, Captions [Line Items] | |||
Total revenues | $ 1,056,914 | $ 740,331 | $ 431,326 |
Total operating costs and expenses | (763,973) | (647,884) | (480,643) |
Other income (expense) | (207,736) | (51,591) | (90,344) |
Income (loss) before income taxes | 85,205 | 40,856 | (139,661) |
Income tax benefit (expense) | 2,336 | (1,825) | |
Net income (loss) | 85,205 | 43,192 | (141,486) |
Eliminations | |||
Condensed Income Statements, Captions [Line Items] | |||
Total operating costs and expenses | 540 | 680 | |
Other income (expense) | (540) | (680) | |
Equity in income of subsidiaries | (343,512) | (193,376) | (33,730) |
Net income (loss) | (343,512) | (193,376) | (33,730) |
Parent Company | |||
Condensed Income Statements, Captions [Line Items] | |||
Total operating costs and expenses | (73,290) | (92,008) | (111,155) |
Other income (expense) | (185,017) | (121,603) | (177,710) |
Income (loss) before income taxes | (258,307) | (213,611) | (288,865) |
Income tax benefit (expense) | 2,336 | (1,825) | |
Equity in income of subsidiaries | 343,512 | 193,376 | 33,730 |
Net income (loss) | 85,205 | (17,899) | (256,960) |
Combined Guarantor Subsidiaries | |||
Condensed Income Statements, Captions [Line Items] | |||
Total revenues | 736,953 | 509,701 | 431,326 |
Total operating costs and expenses | (456,845) | (387,614) | (367,541) |
Other income (expense) | 5,775 | 75,837 | 82,948 |
Income (loss) before income taxes | 285,883 | 197,924 | 146,733 |
Net income (loss) | 285,883 | 197,924 | 146,733 |
Combined Non-Guarantor Subsidiaries | |||
Condensed Income Statements, Captions [Line Items] | |||
Total revenues | 319,961 | 230,630 | |
Total operating costs and expenses | (234,378) | (168,942) | (1,947) |
Other income (expense) | (27,954) | (5,145) | 4,418 |
Income (loss) before income taxes | 57,629 | 56,543 | 2,471 |
Net income (loss) | $ 57,629 | $ 56,543 | $ 2,471 |
Condensed Consolidating Finan_6
Condensed Consolidating Financial Information (CashFlows) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided by (used in) operating activities | $ 265,974 | $ 292,089 | $ 182,754 |
Net cash provided by (used in) investing activities | (615,540) | (1,382,800) | (108,234) |
Net cash provided by (used in) financing activities | 362,745 | 773,228 | (7,651) |
Increase (decrease) in cash and cash equivalents | 13,179 | (317,483) | 66,869 |
Cash and cash equivalents, beginning of period | 184,434 | 501,917 | 435,048 |
Cash and cash equivalents, end of period | 197,613 | 184,434 | 501,917 |
Eliminations | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided by (used in) investing activities | 165,330 | 264,626 | 16,209 |
Net cash provided by (used in) financing activities | (165,330) | (264,626) | (16,209) |
Parent Company | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided by (used in) operating activities | (273,393) | (148,259) | (36,741) |
Net cash provided by (used in) investing activities | (164,291) | (266,135) | (46,602) |
Net cash provided by (used in) financing activities | 419,511 | 157,390 | (7,650) |
Increase (decrease) in cash and cash equivalents | (18,173) | (257,004) | (90,993) |
Cash and cash equivalents, beginning of period | 86,937 | 343,941 | 434,934 |
Cash and cash equivalents, end of period | 68,764 | 86,937 | 343,941 |
Combined Guarantor Subsidiaries | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided by (used in) operating activities | 396,788 | 346,345 | 218,864 |
Net cash provided by (used in) investing activities | (570,223) | (620,382) | (133,412) |
Net cash provided by (used in) financing activities | 202,817 | 303,083 | (85,452) |
Increase (decrease) in cash and cash equivalents | 29,382 | 29,046 | |
Cash and cash equivalents, beginning of period | 29,046 | ||
Cash and cash equivalents, end of period | 58,428 | 29,046 | |
Combined Non-Guarantor Subsidiaries | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided by (used in) operating activities | 142,579 | 94,003 | 631 |
Net cash provided by (used in) investing activities | (46,356) | (760,909) | 55,571 |
Net cash provided by (used in) financing activities | (94,253) | 577,381 | 101,660 |
Increase (decrease) in cash and cash equivalents | 1,970 | (89,525) | 157,862 |
Cash and cash equivalents, beginning of period | 68,451 | 157,976 | 114 |
Cash and cash equivalents, end of period | $ 70,421 | $ 68,451 | $ 157,976 |
Investments (Details)
Investments (Details) $ in Thousands | Jun. 15, 2017USD ($)shares | Jun. 14, 2017USD ($) | Nov. 22, 2016USD ($)shares | Oct. 06, 2016USD ($) | Jul. 05, 2016USD ($) | Oct. 02, 2015USD ($)Mcf | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Mar. 01, 2017shares |
Investments in marketable securities | ||||||||||
Investment gains (losses) recorded | $ (21,318) | $ (1,591) | ||||||||
Gain or loss on equity method investment | (21,798) | (871) | $ 1,818 | |||||||
Equity method gains (losses) | 779 | 3,466 | ||||||||
Initial investment in GRHL | 7,280 | |||||||||
Earnout derivative | 6,401 | |||||||||
SOII Facility | ||||||||||
Investments in marketable securities | ||||||||||
Ownership of investment (as a percent) | 10.00% | 10.00% | ||||||||
Equity method investment cost | 12,500 | 12,500 | ||||||||
Gain or loss on equity method investment | $ 0 | |||||||||
Equity method gains (losses) | 800 | $ 1,200 | ||||||||
Consideration | $ 12,500 | |||||||||
Amount committed | $ 12,500 | |||||||||
Gas processing plant capacity per day (in MMcf) | Mcf | 125,000 | |||||||||
Carnero Gathering, LLC | ||||||||||
Investments in marketable securities | ||||||||||
Equity method investment cost | $ 48,000 | $ 26,000 | ||||||||
Equity method gains (losses) | $ (100) | 2,300 | ||||||||
Deferred gain | $ 7,500 | $ 8,700 | ||||||||
Targa | SOII Facility | ||||||||||
Investments in marketable securities | ||||||||||
Ownership of investment (as a percent) | 90.00% | |||||||||
Targa | Carnero Gathering, LLC | ||||||||||
Investments in marketable securities | ||||||||||
Ownership of investment (as a percent) | 50.00% | 50.00% | ||||||||
Lonestar | ||||||||||
Investments in marketable securities | ||||||||||
Investments (in shares or units) | shares | 1,500,000 | |||||||||
Investment gains (losses) recorded | $ (500) | |||||||||
Lonestar | Marquis Disposition | ||||||||||
Investments in marketable securities | ||||||||||
Consideration in common stock (in shares) | shares | 1,500,000 | |||||||||
Consideration | $ 44,000 | |||||||||
Lonestar | Maximum | ||||||||||
Investments in marketable securities | ||||||||||
Investment gains (losses) recorded | (100) | |||||||||
SNMP | Carnero Gathering, LLC | ||||||||||
Investments in marketable securities | ||||||||||
Ownership of investment (as a percent) | 50.00% | 50.00% | ||||||||
Consideration | $ 55,500 | |||||||||
Assumption of capital commitments | $ 24,500 | |||||||||
SN Comanche Manager | Class A Units | ||||||||||
Investments in marketable securities | ||||||||||
Total units authorized for issuance | shares | 100 | |||||||||
Common Stock | Lonestar | ||||||||||
Investments in marketable securities | ||||||||||
Ownership of investment (as a percent) | 6.10% | |||||||||
Common Stock | SNMP | ||||||||||
Investments in marketable securities | ||||||||||
Investments (in shares or units) | shares | 2,272,727 | |||||||||
Investments | $ 25,000 | |||||||||
Ownership of investment (as a percent) | 13.80% | |||||||||
Dividend income | $ 3,500 | $ 4,100 | ||||||||
Private Placement | SNMP | ||||||||||
Investments in marketable securities | ||||||||||
Investments (in shares or units) | shares | 2,272,727 | |||||||||
Investments | $ 25,000 | |||||||||
Public Offering | SNMP | ||||||||||
Investments in marketable securities | ||||||||||
Investments (in shares or units) | shares | 6,500,000 | |||||||||
Investments | $ 5,400 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Oct. 02, 2015 | Dec. 31, 2017 | Dec. 31, 2018 | Mar. 01, 2017 | Dec. 31, 2016 | Nov. 22, 2016 |
Variable Interest Entity [Line Items] | ||||||
Maximum exposure to loss | $ 32,507 | $ 11,189 | ||||
Sale of investments | (12,527) | |||||
Equity in investments | 32,507 | $ 39,656 | ||||
SOII Facility | ||||||
Variable Interest Entity [Line Items] | ||||||
Ownership interest (as a percent) | 10.00% | |||||
GRHL | ||||||
Variable Interest Entity [Line Items] | ||||||
Maximum exposure to loss | 7,300 | 7,300 | ||||
SN Comanche Manager | Class A Units | ||||||
Variable Interest Entity [Line Items] | ||||||
Total units authorized for issuance | 100 | |||||
Common Stock | SNMP | ||||||
Variable Interest Entity [Line Items] | ||||||
Equity securities | $ 25,000 | |||||
Investments | $ 25,000 | |||||
Recurring basis | ||||||
Variable Interest Entity [Line Items] | ||||||
Investments | 25,200 | 3,900 | ||||
Recurring basis | SNMP | ||||||
Variable Interest Entity [Line Items] | ||||||
Investments | $ 25,227 | $ 3,909 |
Variable Interest Entities (Car
Variable Interest Entities (Carrying Amounts) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Variable Interest Entities | ||
Beginning Balance | $ 32,507 | $ 39,656 |
Initial investment in GRHL | 7,280 | |
Distributions from equity investments | (311) | |
Loss from change in fair value of investment in SNMP | (21,318) | (1,591) |
Sale of investments | (12,527) | |
Equity in investments | 32,507 | |
Maximum exposure to loss | $ 11,189 | $ 32,507 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events - USD ($) $ in Millions | Feb. 15, 2019 | Jan. 10, 2019 | Feb. 12, 2019 |
Series B Convertible Preferred Stock | |||
Subsequent Event [Line Items] | |||
Preferred stock, shares outstanding | 245,832 | ||
Convertible shares | 574,510 | ||
Series A Convertible Preferred Stock | |||
Subsequent Event [Line Items] | |||
Preferred stock, shares outstanding | 72,500 | ||
Convertible shares | 168,563 | ||
SN UnSub Credit Agreement | |||
Subsequent Event [Line Items] | |||
Repayment | $ 2.5 | ||
Borrowings | $ 165 | ||
Stand by letter of credit | Royal Bank of Canada | |||
Subsequent Event [Line Items] | |||
Repayment of Credit Agreement | $ 17.1 |