Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 02, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Midstates Petroleum Company, Inc. | |
Entity Central Index Key | 1,533,924 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 10,888,883 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 166,783 | $ 11,557 |
Accounts receivable: | ||
Oil and gas sales | 44,785 | 69,161 |
Joint interest billing | 10,371 | 42,407 |
Other | 14,609 | 22,193 |
Commodity derivative contracts | 33,051 | 126,709 |
Other current assets | 1,559 | 1,098 |
Total current assets | 271,158 | 273,125 |
PROPERTY AND EQUIPMENT: | ||
Oil and gas properties, on the basis of full-cost accounting | 3,615,661 | 3,442,681 |
Other property and equipment | 15,065 | 13,454 |
Less accumulated depreciation, depletion, amortization and impairment | (2,651,068) | (1,333,019) |
Net property and equipment | 979,658 | 2,123,116 |
OTHER ASSETS: | ||
Deferred income taxes | 9,245 | 35,821 |
Other noncurrent assets | 38,000 | 43,731 |
Total other assets | 47,245 | 79,552 |
TOTAL | 1,298,061 | 2,475,793 |
CURRENT LIABILITIES: | ||
Accounts payable | 5,546 | 22,783 |
Accrued liabilities | 160,162 | 183,831 |
Deferred income taxes | 9,245 | 44,862 |
Total current liabilities | 174,953 | 251,476 |
LONG-TERM LIABILITIES: | ||
Asset retirement obligations | 18,152 | 21,599 |
Long-term debt | 1,916,021 | 1,735,150 |
Other long-term liabilities | 4,946 | 1,706 |
Total long-term liabilities | $ 1,939,119 | $ 1,758,455 |
COMMITMENTS AND CONTINGENCIES (Note 15) | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Preferred stock | ||
Common stock, $0.01 par value, 100,000,000 shares authorized; 10,985,783 shares issued and 10,891,270 shares outstanding at September 30, 2015 and 7,049,173 shares issued and 6,995,705 shares outstanding at December 31, 2014 | $ 110 | $ 70 |
Treasury stock | (3,068) | (2,592) |
Additional paid-in-capital | 887,424 | 882,528 |
Retained deficit | (1,700,477) | (414,147) |
Total stockholders' (deficit) equity | (816,011) | 465,862 |
TOTAL | $ 1,298,061 | 2,475,793 |
Series A Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Preferred stock | 3 | |
Total stockholders' (deficit) equity | $ 3 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2015 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 7,049,173 | 10,985,783 |
Common stock, shares outstanding | 6,995,705 | 10,891,270 |
Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 49,675,000 | 49,675,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series A Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | |
Preferred Stock, Liquidation Preference | $ 387,808 | |
Preferred stock, cumulative dividends (as a percent) | 8.00% | |
Preferred stock, shares issued | 325,000 | |
Preferred stock, shares outstanding | 325,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
REVENUES : | ||||
Oil sales | $ 50,684 | $ 125,430 | $ 177,439 | $ 372,925 |
Natural gas liquid sales | 8,498 | 22,989 | 29,747 | 71,528 |
Natural gas sales | 17,375 | 24,607 | 52,543 | 74,986 |
Gains (losses) on commodity derivative contracts - net | 33,368 | 50,978 | 35,447 | (3,162) |
Other | 438 | 757 | 1,106 | 1,136 |
Total revenues | 110,363 | 224,761 | 296,282 | 517,413 |
EXPENSES : | ||||
Lease operating and workover | 18,803 | 16,965 | 63,823 | 56,813 |
Gathering and transportation | 4,017 | 3,902 | 11,386 | 9,697 |
Severance and other taxes | 2,660 | 5,780 | 8,729 | 19,059 |
Asset retirement accretion | 382 | 406 | 1,217 | 1,335 |
Depreciation, depletion, and amortization | 44,714 | 73,109 | 158,397 | 211,084 |
Impairment in carrying value of oil and gas properties | 486,895 | 1,159,951 | 86,471 | |
General and administrative | 6,677 | 9,879 | 29,792 | 34,997 |
Acquisition and transaction costs | 5 | 1,283 | 256 | 3,894 |
Debt restructuring costs and advisory fees | 36,141 | |||
Other | 2,346 | 63 | 3,285 | |
Total expenses | 564,153 | 113,670 | 1,469,755 | 426,635 |
OPERATING INCOME (LOSS) | (453,790) | 111,091 | (1,173,473) | 90,778 |
OTHER INCOME (EXPENSE): | ||||
Interest income | 43 | 10 | 80 | 29 |
Interest expense - net of amounts capitalized | (40,595) | (34,288) | (121,978) | (102,048) |
Total other expense | (40,552) | (34,278) | (121,898) | (102,019) |
INCOME (LOSS) BEFORE TAXES | (494,342) | 76,813 | (1,295,371) | (11,241) |
Income tax (expense) benefit | (2,216) | 9,041 | 96 | |
NET INCOME (LOSS) | (494,342) | 74,597 | (1,286,330) | (11,145) |
Preferred stock dividend | (148) | (1,908) | (948) | (9,334) |
Participating securities - Series A Preferred Stock | (23,973) | |||
Participating securities - Non-vested Restricted Stock | (2,524) | |||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (494,490) | $ 46,192 | $ (1,287,278) | $ (20,479) |
Basic and diluted net income (loss) per share attributable to common shareholders | $ (72.34) | $ 6.94 | $ (189.90) | $ (3.09) |
Basic and diluted weighted average number of common shares outstanding | 6,835 | 6,659 | 6,779 | 6,634 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Series A Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in-Capital | Retained Deficit | Total |
Balance at Dec. 31, 2013 | $ 3 | $ 69 | $ (664) | $ 871,667 | $ (531,076) | $ 339,999 |
Increase (Decrease) in Stockholders' Equity | ||||||
Share-based compensation | 2 | 7,143 | 7,145 | |||
Acquisition of treasury stock | (1,722) | (1,722) | ||||
Net loss | (11,145) | (11,145) | ||||
Balance at Sep. 30, 2014 | 3 | 71 | (2,386) | 878,810 | (542,221) | 334,277 |
Balance at Dec. 31, 2014 | 3 | 70 | (2,592) | 882,528 | (414,147) | 465,862 |
Increase (Decrease) in Stockholders' Equity | ||||||
Share-based compensation | 3 | 4,930 | 4,933 | |||
Acquisition of treasury stock | (476) | (476) | ||||
Net loss | (1,286,330) | (1,286,330) | ||||
Conversion of preferred shares | $ (3) | 37 | (34) | |||
Balance at Sep. 30, 2015 | $ 110 | $ (3,068) | $ 887,424 | $ (1,700,477) | $ (816,011) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,286,330) | $ (11,145) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
(Gains) losses on commodity derivative contracts - net | (35,447) | 3,162 |
Net cash received (paid) for commodity derivative contracts not designated as hedging instruments | 129,105 | (39,213) |
Asset retirement accretion | 1,217 | 1,335 |
Depreciation, depletion, and amortization | 158,397 | 211,084 |
Impairment in carrying value of oil and gas properties | 1,159,951 | 86,471 |
Share-based compensation, net of amounts capitalized to oil and gas properties | 3,813 | 5,358 |
Deferred income taxes | (9,041) | (96) |
Amortization of deferred financing costs | 9,791 | 6,018 |
Paid-in-kind interest expense | 3,785 | |
Amortization of deferred gain on debt restructuring | (8,979) | |
Transaction costs for debt restructuring | 34,398 | |
Change in operating assets and liabilities: | ||
Accounts receivable - oil and gas sales | 18,183 | 5,179 |
Accounts receivable - JIB and other | 28,293 | 6,064 |
Other current and noncurrent assets | (287) | 1,815 |
Accounts payable | (3,448) | 503 |
Accrued liabilities | 33,036 | 30,921 |
Other | (545) | 124 |
Net cash provided by operating activities | 235,892 | 307,580 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Investment in property and equipment | (271,576) | (430,876) |
Proceeds from the sale of oil and gas properties | 40,168 | 150,530 |
Net cash used in investing activities | (231,408) | (280,346) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from long-term borrowings | 625,000 | |
Proceeds from revolving credit facility | 33,000 | 99,000 |
Repayment of revolving credit facility | (468,150) | (131,000) |
Deferred financing costs | (4,234) | (958) |
Transaction costs for debt restructuring | (34,398) | |
Acquisition of treasury stock | (476) | (1,722) |
Net cash provided by (used in) financing activities | 150,742 | (34,680) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 155,226 | (7,446) |
Cash and cash equivalents, beginning of period | 11,557 | 33,163 |
Cash and cash equivalents, end of period | 166,783 | 25,717 |
SUPPLEMENTAL INFORMATION: | ||
Non-cash investment in property and equipment | 36,373 | 98,000 |
Non-cash exchange of third lien notes for 2020 senior notes and 2021 senior notes | 524,121 | |
Cash paid for interest, net of capitalized interest of $2.9 million and $10.5 million, respectively | $ 70,711 | $ 63,583 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Capitalized interest | $ 2.9 | $ 10.5 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2015 | |
Organization and Business | |
Organization and Business | 1. Organization and Business Midstates Petroleum Company, Inc., through its wholly owned subsidiary Midstates Petroleum Company LLC, engages in the business of drilling for, and production of, oil, natural gas liquids (“NGLs”) and natural gas. Midstates Petroleum Company, Inc. was incorporated pursuant to the laws of the State of Delaware on October 25, 2011 to become a holding company for Midstates Petroleum Company LLC (“Midstates Sub”), which was previously a wholly owned subsidiary of Midstates Petroleum Holdings LLC (“Holdings LLC”). The terms “Company,” “we,” “us,” “our,” and similar terms refer to Midstates Petroleum Company, Inc. and its subsidiary, unless the context indicates otherwise. The Company has oil and gas operations and properties in Oklahoma, Texas and Louisiana. The Company operates a significant portion of its oil and natural gas properties and is engaged in the exploration, development and production of oil, NGLs and natural gas. The Company’s management evaluates performance based on one reportable segment as all our operations are located in the United States and therefore we maintain one cost center. |
Liquidity and Capital Resources
Liquidity and Capital Resources | 9 Months Ended |
Sep. 30, 2015 | |
Liquidity and Capital Resources | |
Liquidity and Capital Resources | 2. Liquidity and Capital Resources As a result of substantial declines in oil, NGL, and natural gas prices during the latter half of 2014 and continuing into 2015, we expect lower operating cash flows than previously experienced and if commodity prices continue to remain low, our liquidity will be impacted as current hedging contracts expire. During the three and nine months ended September 30, 2015, the Company received cash payments on settled derivative contracts of $34.3 million and $129.1 million, respectively. These cash payments on settled derivative contracts increased our operating cash flows by approximately 54.7% during the nine months ended September 30, 2015. The weighted average fixed price of the Company’s derivative contracts for the second half of 2015 is lower than the weighted average fixed price for the first half of 2015, and the Company currently has no derivative contracts for any period subsequent to 2015. As such, unless new hedging contracts are put in place, cash payments from settled derivative contracts will not be received in 2016 and future periods due to the expiration of our current hedging contracts. The interest payment obligations of the Company are substantial and the uncertainty associated with the Company’s future ability to meet commitments as they come due or to repay outstanding debt raises substantial doubt about the Company’s ability to continue as a going concern. The Company received a going concern qualification from its independent registered public accounting firm for the year ended December 31, 2014, but obtained a waiver to the reserve based revolving credit facility (the “Credit Facility”) waiving any default as a result of receiving such qualification. The accompanying financial statements do not include any adjustments that might result from the uncertainty associated with the Company’s ability to meet obligations as they come due. As a result of the commodity price decline and the Company’s substantial debt burden, the Company took steps to increase its liquidity and amend certain debt covenants. On April 21, 2015, the Company closed on the sale of certain of its oil and gas properties in Beauregard and Calcasieu Parishes, Louisiana (the “Dequincy Divestiture”), for approximately $44.0 million, before customary post-closing adjustments. The net proceeds from the Dequincy Divestiture were retained for general corporate purposes. On May 21, 2015, the Company sold $625.0 million of 10.0% Second Lien Senior Secured Notes due 2020 (the “Second Lien Notes”) and utilized the proceeds to repay the outstanding balance of the Credit Facility of approximately $468.2 million, with the remainder to be utilized for general corporate purposes. Further, the Company exchanged approximately $504.1 million of 12.0% Third Lien Senior Secured Notes due 2020 (the “Third Lien Notes”) for approximately $279.8 million of 10.75% Senior Unsecured Notes due 2020 (the “2020 Senior Notes”) and $350.3 million of 9.25% Senior Unsecured Notes due 2021 (the “2021 Senior Notes” together with the 2020 Senior Notes, the “Unsecured Notes”), representing an exchange at 80.0% of the exchanged Unsecured Notes’ par value. Additionally, on June 2, 2015, the Company exchanged approximately $20.0 million of Third Lien Notes for approximately $26.6 million of 2020 Senior Notes and $2.0 million of 2021 Senior Notes, representing an exchange at 70.0% of the exchanged Unsecured Notes’ par value. The Company also entered into a Seventh Amendment to the Credit Facility (“Seventh Amendment”) which provided that upon completion of the Second Lien Notes offering and Third Lien Notes exchange, the borrowing base of the Credit Facility would be reduced to $252.0 million. The Seventh Amendment also provided additional covenant flexibility. For further information regarding the Second Lien Notes, Third Lien Notes and updates to the Company’s debt covenants, see “ — Note 10. Long-Term Debt.” The Dequincy Divestiture, the issuance of the Second Lien Notes and the exchange of the Third Lien Notes increased the Company’s cash balance, increased the amount of borrowings currently available under the Credit Facility, and as a result, increased the liquidity of the Company. Additionally, on October 14, 2015, the Company and Midstates Sub entered into the Ninth Amendment to the Credit Facility (the “Ninth Amendment”) which, among other items, reaffirmed the borrowing base at $252.0 million and provided flexibility for certain specified asset sales by confirming the amount of the reduction in the borrowing base if such sale occurs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of Presentation These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2014 included in the Company’s Registration Statements on Form S-4 as filed with the SEC on October 2, 2015. All intercompany transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position as of, and the results of operations for, all periods presented. In preparing the accompanying condensed consolidated financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. Reverse Stock Split On August 3, 2015, the Company completed a 1-for-10 reverse stock split of its outstanding common stock. To effect the reverse stock split, the Company filed a Certificate of Amendment to the Company’s Restated Certificate of Incorporation, which provides for the reverse stock split and for the corresponding reduction in the Company’s authorized capital stock to 100 million shares of common stock, $0.01 par value per share, following the reverse stock split. The condensed consolidated financial statements and notes to the condensed consolidated financial statements included in this document give retrospective effect to the reverse stock split for all prior periods presented. Recently Issued Standards Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 provides guidance concerning the recognition and measurement of revenue from contracts with customers. The objective of ASU 2014-09 is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues. ASU 2014-09 requires an entity to (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. ASU 2014-09 will be effective for the Company beginning on January 1, 2018, including interim periods within that reporting period, considering the one year deferral provided by ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.” The standard permits the use of either the retrospective or cumulative effect transition method and early adoption is permitted. The Company has not selected a transition method and is evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In April 2015, the FASB issued Accounting Standards Update 2015-03, “ Interest — Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs (Topic 835)” (“ASU 2015-03”). ASU 2015-03 requires debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is applied retrospectively and is effective for the Company beginning on January 1, 2016. The Company does not believe the adoption of ASU 2015-03 will have a material impact on its financial position, results of operations or cash flows. In August 2015, the FASB issued Accounting Standards Update 2015-15, “ Interest — Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Associated with Line-of-Credit Arrangements” (“ASU 2015-15”). ASU 2015-15 addresses debt issuance costs associated with line-of-credit arrangements by allowing an entity to defer and present such debt issuance costs as an asset regardless of whether there are any outstanding borrowings under the line-of-credit arrangement. ASU 2015-15 is applied retrospectively and is effective for the Company beginning on January 1, 2016. The Company does not believe the adoption of ASU 2015-15 will have a material impact on its financial position, results of operations or cash flows. In September 2015, the FASB issued Accounting Standards Update 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”). ASU 2015-16 simplifies measurement period adjustments associated with business combinations accounted for under FASB Accounting Standards Codification (“ASC”) 805, Business Combinations . ASU 2015-16 changes the accounting for measurement period adjustments by eliminating the requirement that such adjustments are made retrospectively. As a result, such measurement period adjustments will be recognized in the reporting period in which the adjustment was determined. ASU 2015-16 is applied prospectively to adjustments to provisional amounts that occur after the effective date. ASU 2015-16 is effective for the Company beginning on January 1, 2016. The Company does not believe the adoption of ASU 2015-16 will have a material impact on its financial position, results of operations or cash flows. Correction of Operating and Investing Cash Flows for the Nine Months Ended September 30, 2014 In the first quarter of 2015, the Company determined that it had incorrectly presented non-cash accrued capital expenditures in its Statements of Cash Flows since December 31, 2012. Management concluded the misstatement is immaterial to previously issued financial statements; however, the Company has corrected the cash flow presentation in the accompanying Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2014. The misstatement had no impact on the Condensed Consolidated Balance Sheet as of December 31, 2014, or on the Condensed Consolidated Statement of Operations for the three or nine months ended September 30, 2014. The impact of the correction is shown in the following table: For the Nine Months Ended September 30, 2014 Statement of Cash Flows As Previously Reported As Restated (in thousands) Change in operating assets and liabilities: Accounts receivable - JIB and other $ $ Net cash provided by operating activities Investment in property and equipment ) ) Net cash used in investing activities ) ) |
Fair Value Measurements of Fina
Fair Value Measurements of Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements of Financial Instruments | |
Fair Value Measurements of Financial Instruments | 4. Fair Value Measurements of Financial Instruments Assets and Liabilities Measured at Fair Value on a Recurring Basis Derivative Instruments Commodity derivative contracts reflected in the condensed consolidated balance sheets are recorded at estimated fair value. At September 30, 2015 and December 31, 2014, all of the Company’s commodity derivative contracts were with seven bank counterparties, and were classified as Level 2 in the fair value input hierarchy. Derivative instruments listed below are presented gross and consist of swaps that are carried at fair value. The Company records the net change in the fair value of these positions in “Gains (losses) on commodity derivative contracts — net” in the Company’s unaudited condensed consolidated statements of operations. See “ — Note 5. Risk Management and Derivative Instruments” for additional information on the Company’s derivative instruments and balance sheet presentation. Fair Value Measurements at September 30, 2015 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Assets: Commodity derivative oil swaps $ — $ $ — $ Commodity derivative gas swaps — — Total assets $ — $ $ — $ Liabilities: Commodity derivative oil swaps $ — $ — $ — $ — Commodity derivative gas swaps — — — — Total liabilities $ — $ — $ — $ — Fair Value Measurements at December 31, 2014 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Assets: Commodity derivative oil swaps $ — $ $ — $ Commodity derivative gas swaps — — Total assets $ — $ $ — $ Liabilities: Commodity derivative oil swaps $ — $ — $ — $ — Commodity derivative gas swaps — — — — Total liabilities $ — $ — $ — $ — |
Risk Management and Derivative
Risk Management and Derivative Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Risk Management and Derivative Instruments | |
Risk Management and Derivative Instruments | 5. Risk Management and Derivative Instruments The Company’s production is exposed to fluctuations in crude oil, NGL and natural gas prices. The Company believes it is prudent to manage the variability in cash flows by periodically entering into derivative financial instruments to economically hedge a portion of its crude oil, NGL and natural gas production. The Company utilizes various types of derivative financial instruments, including swaps and collars, to reduce fluctuations in cash flows resulting from changes in commodity prices. These derivative contracts are placed with major financial institutions that the Company believes are minimal credit risks. The oil, NGL and natural gas reference prices, upon which the commodity derivative contracts are based, reflect various market indices that management believes have a high degree of historical correlation with actual prices received by the Company for its crude oil, NGL and natural gas production. Although the Company has entered into derivative financial instruments in the past on an ongoing basis, as a result of the Company’s continued monitoring of commodity prices, the Company currently has no derivatives in place for any period subsequent to 2015. Inherent in the Company’s portfolio of commodity derivative contracts are certain business risks, including market risk and credit risk. Market risk is the risk that the price of the commodity will change, either favorably or unfavorably, in response to changing market conditions. Credit risk is the risk of loss from nonperformance by the Company’s counterparty to a contract. The Company does not require collateral from its counterparties but does attempt to minimize its credit risk associated with derivative instruments by entering into derivative instruments only with counterparties that are large financial institutions, which management believes present minimal credit risk. In addition, to mitigate its risk of loss due to default, the Company has entered into agreements with its counterparties on its derivative instruments that allow the Company to offset its asset position with its liability position in the event of default by the counterparty. At September 30, 2015, the Company had exposure of $33.1 million from counterparties failure to perform under existing commodity derivative contracts. Commodity Derivative Contracts As of September 30, 2015, the Company had the following open commodity derivative contract positions: Hedged Weighted-Average Volume Fixed Price Oil (Bbls): WTI Swaps — 2015 $ Natural Gas (MMBtu): Swaps — 2015(1) $ (1) Includes 1,550,000 MMBtus in natural gas swaps that priced during the period, but had not cash settled as of September 30, 2015. Balance Sheet Presentation The following table summarizes the gross fair values of derivative instruments by the appropriate balance sheet classification; however, the derivative instruments are subject to netting arrangements and qualify for net presentation in the Company’s unaudited condensed consolidated balance sheets at September 30, 2015 and December 31, 2014, respectively (in thousands): Type Balance Sheet Location (1) September 30, 2015 December 31, 2014 Oil Swaps Derivative financial instruments — Current Assets $ $ Gas Swaps Derivative financial instruments — Current Assets Total derivative fair value at period end $ $ (1) The fair values of commodity derivative instruments reported in the Company’s condensed consolidated balance sheets are subject to netting arrangements and qualify for net presentation. The following table summarizes the location and fair value amounts of all derivative instruments in the unaudited condensed consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the unaudited condensed consolidated balance sheets at September 30, 2015 and December 31, 2014, respectively (in thousands): September 30, 2015 Not Designated as ASC 815 Hedges: Balance Sheet Classification Gross Recognized Assets/ Liabilities Gross Amounts Offset Net Recognized Fair Value Assets/ Liabilities Derivative assets: Commodity contracts Derivative financial instruments - current $ $ — $ Commodity contracts Derivative financial instruments - noncurrent — — — $ $ — $ Derivative liabilities: Commodity contracts Derivative financial instruments - current $ — $ — $ — Commodity contracts Derivative financial instruments - noncurrent — — — $ — $ — $ — December 31, 2014 Not Designated as ASC 815 Hedges: Balance Sheet Classification Gross Recognized Assets/ Liabilities Gross Amounts Offset Net Recognized Fair Value Assets/ Liabilities Derivative assets: Commodity contracts Derivative financial instruments - current $ $ — $ Commodity contracts Derivative financial instruments - noncurrent — — — $ $ — $ Derivative liabilities: Commodity contracts Derivative financial instruments - current $ — $ — $ — Commodity contracts Derivative financial instruments - noncurrent — — — $ — $ — $ — Gains (Losses) on Commodity Derivative Contracts The Company does not designate its commodity derivative contracts as hedging instruments for financial reporting purposes. Accordingly, commodity derivative contracts are marked-to-market each quarter with the change in fair value during the periodic reporting period recognized currently as a gain or loss in “Gains (losses) on commodity derivative contracts — net” within revenues in the unaudited condensed consolidated statements of operations. The following table presents net cash received (paid) for commodity derivative contracts and unrealized net gains (losses) recorded by the Company related to the change in fair value of the derivative instruments in “Gains (losses) on commodity derivative contracts — net” for the periods presented: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) (in thousands) Net cash received (paid) for commodity derivative contracts $ $ ) $ $ ) Unrealized net gains (losses) ) ) Gains (losses) on commodity derivative contracts - net $ $ $ $ ) |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment | |
Property and Equipment | 6. Property and Equipment September 30, 2015 December 31, 2014 (in thousands) Oil and gas properties, on the basis of full-cost accounting: Proved properties $ $ Unevaluated properties Other property and equipment Less accumulated depreciation, depletion, amortization and impairment ) ) Net property and equipment $ $ Oil and Gas Properties The Company capitalizes internal costs directly related to exploration and development activities to oil and gas properties. During the three and nine months ended September 30, 2015 and 2014, the Company capitalized the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Internal costs capitalized to oil and gas properties (1) $ $ $ $ (1) Inclusive of $0.3 million and $0.6 million of qualifying share-based compensation expense for the three months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, inclusive of $1.1 million and $1.8 million, respectively, of qualifying share-based compensation expense. The Company accounts for its oil and gas properties under the full cost method. Under the full cost method, proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless a significant portion of the Company’s reserve quantities are sold such that it results in a significant alteration of the relationship between capitalized costs and remaining proved reserves, in which case a gain or loss is generally recognized in income. The Company performs a ceiling test on a quarterly basis. The test establishes a limit (ceiling) on the book value of oil and gas properties. The capitalized costs of oil and gas properties, net of accumulated DD&A and the related deferred income taxes, may not exceed this “ceiling.” The ceiling limitation is equal to the sum of: (i) the present value of estimated future net revenues from the projected production of proved oil and gas reserves, excluding future cash outflows associated with settling asset retirement obligations (“ARO”) accrued on the balance sheet, calculated using the average oil and natural gas sales price received by the Company as of the first trading day of each month over the preceding twelve months (such prices are held constant throughout the life of the properties) and a discount factor of 10%; (ii) the cost of unevaluated properties excluded from the costs being amortized; (iii) the lower of cost or estimated fair value of unproved properties included in the costs being amortized; and (iv) related income tax effects. If capitalized costs exceed this ceiling, the excess is charged to expense in the accompanying condensed consolidated statements of operations. For the three months ended September 30, 2015, capitalized costs exceeded the ceiling and the Company recorded an impairment of oil and gas properties of $486.9 million. During the nine months ended September 30, 2015 and 2014, the Company recorded impairments of oil and gas properties of $1.2 billion and $86.5 million, respectively. Impairments for the nine months ended September 30, 2015 were primarily due to continued low commodity prices, which resulted in a reduction of the discounted present value of the Company’s proved oil and natural gas reserves. Subsequent to September 30, 2015, commodity prices have not only continued to be suppressed, but in many instances have declined further. As a result, the simple average of oil and natural gas prices as of the first day of each month for the trailing 12-months will continue to decline throughout the remainder of fiscal 2015, which will continue to negatively impact the discounted present value of the Company’s proved oil and gas reserves. Holding all other factors constant, if the simple average of oil and natural gas prices as of the first day of each month for the trailing 12-month period ended September 30, 2015 decreased by 20.0%, the Company’s ceiling test limitation related to the net book value of the Company’s proved oil and natural gas properties would have been reduced by 44.5%. The impact of price is only a single variable in the estimation of the present value of estimated future net revenues from projected production of oil and gas reserves of the Company. Other factors, such as cost estimates, performance revisions, and changes in development plans, among others, have a significant impact on future reserves and the present value of future cash flows. Depreciation, depletion and amortization is calculated using the Units of Production Method (“UOP”). The UOP calculation multiplies the percentage of estimated proved reserves produced by the cost of those reserves. The result is to recognize expense at the same pace that the reservoirs are estimated to be depleting. The amortization base in the UOP calculation includes the sum of proved property costs net of accumulated depreciation, depletion, amortization and impairment, estimated future development costs (future costs to access and develop proved reserves) and asset retirement costs that are not already included in oil and gas property, less related salvage value. The following table presents depletion expense related to oil and gas properties for the three and nine months ended September 30, 2015 and 2014, respectively: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 2015 2014 2015 2014 (in thousands) (per Boe) (in thousands) (per Boe) Depletion expense $ $ $ $ $ $ $ $ Depreciation on other property Depreciation, depletion, and amortization $ $ $ $ $ $ $ Oil and gas unevaluated properties and properties under development include costs that are not being depleted or amortized. These costs represent investments in unproved properties. The Company excludes these costs until proved reserves are found, until it is determined that the costs are impaired or until major development projects are placed in service, at which time the costs are moved into oil and natural gas properties subject to amortization. All unproved property costs are reviewed at least quarterly to determine if impairment has occurred. Unevaluated property was $31.4 million and $44.5 million at September 30, 2015 and December 31, 2014, respectively. Other Property and Equipment Other property and equipment consists of vehicles, furniture and fixtures, and computer hardware and software and are carried at cost. Depreciation is calculated principally using the straight-line method over the estimated useful lives of the assets, which range from five to seven years. Maintenance and repairs are charged to expense as incurred, while renewals and betterments are capitalized. Sale of Dequincy Assets On April 21, 2015, the Company closed the Dequincy Divestiture for $44.0 million to Pintail Oil and Gas LLC. The net proceeds, inclusive of amounts placed in escrow, were approximately $42.4 million, which was net of customary closing adjustments. This amount was reflected as a reduction of oil and natural gas properties, with no gain or loss recognized. The proceeds from the sale were retained for general corporate purposes. |
Other Noncurrent Assets
Other Noncurrent Assets | 9 Months Ended |
Sep. 30, 2015 | |
Other Noncurrent Assets | |
Other Noncurrent Assets | 7. Other Noncurrent Assets At September 30, 2015 and December 31, 2014 other noncurrent assets consisted of the following: September 30, 2015 December 31, 2014 (in thousands) Deferred financing costs $ $ Field inventory Other Other noncurrent assets $ $ During the nine months ended September 30, 2015, approximately $4.6 million in deferred financing costs were impaired as a result of the Seventh Amendment to the Credit Facility. The Seventh Amendment is further discussed in “ — Note 10. Long-Term Debt.” |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | |
Accrued Liabilities | 8. Accrued Liabilities At September 30, 2015 and December 31, 2014 accrued liabilities consisted of the following: September 30, 2015 December 31, 2014 (in thousands) Accrued oil and gas capital expenditures $ $ Accrued revenue and royalty distributions Accrued lease operating and workover expense Accrued interest Accrued taxes Other Accrued liabilities $ $ |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Sep. 30, 2015 | |
Asset Retirement Obligations | |
Asset Retirement Obligations | 9. Asset Retirement Obligations Asset Retirement Obligations (“AROs”) represent the future abandonment costs of tangible assets, such as wells, service assets and other facilities. The fair value of the AROs at inception is capitalized as part of the carrying amount of the related long-lived assets. The following table reflects the changes in the Company’s AROs for the periods indicated: Nine Months Ended Nine Months Ended September 30, 2015 September 30, 2014 (in thousands) Asset retirement obligations — beginning of period $ $ Liabilities incurred Revisions — — Liabilities settled — ) Liabilities eliminated through asset sales ) ) Current period accretion expense Asset retirement obligations — end of period $ $ |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Long-Term Debt | |
Long-Term Debt | 10. Long-Term Debt The Company’s long-term debt as of September 30, 2015 and December 31, 2014 is as follows (in thousands): December 31, 2014 Carrying Value Borrowings Repayments Exchanges Deferred Gain on Forgiven Debt Amortization of Forgiven Debt September 30, 2015 Carrying Value Credit Facility $ $ $ ) $ — $ — $ — $ — 2020 Senior Notes — — ) ) — 2021 Senior Notes — — ) ) — Second Lien Notes — — — ) Third Lien Notes — — — ) Total debt $ $ $ ) $ — $ — $ ) $ Current maturities — — — — — — — Total long-term debt $ $ $ ) $ — $ — $ ) $ September 30, 2015 Carrying Value Unamortized Deferred Gain on Debt Forgiven September 30, 2015 Principle Balance Outstanding Credit Facility $ — $ — $ — 2020 Senior Notes — 2021 Senior Notes — Second Lien Notes ) Third Lien Notes ) Total debt $ $ ) $ Current maturities — — — Total long-term debt $ $ ) $ Debt Restructuring On May 21, 2015, the Company issued $625.0 million of Second Lien Notes and utilized the proceeds to repay the outstanding balance of the Credit Facility in an amount of approximately $468.2 million, with the remainder to be utilized for general corporate purposes. Further, the Company exchanged approximately $504.1 million of Third Lien Notes for approximately $279.8 million of 2020 Senior Notes and $350.3 million of 2021 Senior Notes, representing an exchange at 80.0% of the exchanged Unsecured Notes’ par value. Additionally, on June 2, 2015, the Company exchanged approximately $20.0 million of Third Lien Notes for approximately $26.6 million of 2020 Senior Notes and $2.0 million of 2021 Senior Notes, representing an exchange at 70.0% of the exchanged Unsecured Notes’ par value. Approximately $63.9 million of the principal amount of 2020 Senior Notes and $70.7 million of the principal amount of 2021 Senior Notes was extinguished. Additionally, the Company and Midstates Sub entered into the Seventh Amendment to the Credit Facility which provided that upon completion of the offering of the Second Lien Notes and exchange of Third Lien Notes, the borrowing base of the Credit Facility would be reduced to $252.0 million. The Seventh Amendment also provided additional covenant flexibility. Further discussion regarding the Second Lien Notes, Third Lien Notes and Seventh Amendment can be found below. The exchanges of Third Lien Notes for the Unsecured Notes as well as the issuance of the Second Lien Notes were accounted for as a troubled debt restructuring. As the future cash flows of the modified debt instruments were greater than the carrying amount of the previous debt instruments, no gain was recognized. The amount of extinguished debt will be amortized over the remaining life of the Second Lien Notes and Third Lien Notes using the effective interest method and recognized as a reduction of interest expense. As a result, the Company’s reported interest expense will be significantly less than the contractual interest payments throughout the term of the Second Lien Notes and Third Lien Notes. All costs incurred related to the May 21, 2015 and June 2, 2015 exchanges, including restructuring costs as well as the direct issuance costs of the Second Lien Notes and Third Lien Notes, were expensed and are included within debt restructuring costs and advisory fees in our condensed consolidated statements of operations. Reserve-based Credit Facility The Company maintains a $750.0 million Credit Facility with a current borrowing base of $252.0 million supported by the Company’s Mississippian Lime and Anadarko Basin oil and gas assets. At September 30, 2015, the Company had no amounts drawn on the Credit Facility and had outstanding letters of credit obligations totaling $2.1 million. The Credit Facility matures on May 31, 2018 and borrowings thereunder are secured by substantially all of the Company’s oil and natural gas properties and bear interest at LIBOR plus an applicable margin, depending upon the Company’s borrowing base utilization, between 2.00% and 3.00% per annum. In addition to interest expense, the Credit Facility requires the payment of a commitment fee each quarter. The commitment fee is computed at the rate of either 0.375% or 0.500% per annum based on the average daily amount by which the borrowing base exceeds the outstanding borrowings during each quarter. The borrowing base under the Credit Facility is subject to semiannual redeterminations in April and October and up to one additional time per six month period following each scheduled borrowing base redetermination, as may be requested by the Company or the administrative agent acting on behalf of lenders holding at least two-thirds of the outstanding loans and other obligations. On October 14, 2015, the Company and Midstates Sub entered into the Ninth Amendment, which, among other items, reaffirmed the borrowing base at $252.0 million. The next borrowing base redetermination is scheduled for April 2016. Under the terms of the Credit Facility, the Company is required to repay any amount by which the principal balance of its outstanding loans and its letter of credit obligations exceeds its redetermined borrowing base or grant liens on additional property having sufficient value to eliminate such excess. The Company is permitted to make such repayment in six equal successive monthly payments commencing 30 days following the administrative agent’s notice regarding such borrowing base reduction. On March 24, 2015, the Company and Midstates Sub entered into a Sixth Amendment (the “Sixth Amendment”) to the Credit Facility. The Sixth Amendment amended the required ratio of net consolidated indebtedness to EBITDA under the Credit Agreement for each of the fiscal quarters in 2015 from 4.0:1.0 to 4.5:1.0. Additionally, the Sixth Amendment amended the mortgage requirements under the Credit Facility to provide for an increase from 80.0% to 90.0% for the percentage of properties included in the borrowing base that are required to be subject to mortgages for the benefit of the lenders. On May 21, 2015, the Company and Midstates Sub entered into a Seventh Amendment to the Credit Facility. The Seventh Amendment provided that, with the completion of the offering of the Second Lien Notes and exchange of the Third Lien Notes (both discussed below), the Company’s borrowing base was reduced to approximately $252.0 million. The Seventh Amendment also eliminated the required ratio of net consolidated indebtedness to EBITDA covenant and added a ratio of Total Senior Indebtedness (as defined therein) to EBITDA of not more than 1.0:1.0, which is further discussed below under “ — Debt Covenants.” On August 5, 2015, the Company and Midstates Sub entered into an Eighth Amendment (the “Eighth Amendment”) to the Credit Facility. The Eighth Amendment increased the limitation on certain leases and lease agreements into which Midstates and Midstates Sub may enter into during any period of twelve consecutive calendar months of the life of such leases from $2.0 million to $3.5 million. 2020 Senior Notes On October 1, 2012, the Company issued $600.0 million in aggregate principal amount of 2020 Senior Notes, conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). In October 2013, these notes were exchanged for an equal principal amount of identical registered notes. The 2020 Senior Notes rank pari passu in right of payment with the 2021 Senior Notes, the Second Lien Notes and Third Lien Notes. The 2020 Senior Notes were co-issued on a joint and several basis by the Company and its wholly owned subsidiary, Midstates Sub. The Company does not have any operations or independent assets other than its 100.0% ownership interest in Midstates Sub and there are no other subsidiaries of the Company. The indenture governing the 2020 Senior Notes (the “2020 Senior Notes Indenture”) does not create any restricted assets within Midstates Sub, nor does it impose any significant restrictions on the ability of Midstates Sub to pay dividends or make loans to the Company or limit the ability of the Company to advance loans to Midstates Sub. At any time before October 1, 2016, the Company may redeem all or a part of the 2020 Senior Notes at a redemption price equal to 100.0% of the principal amount of 2020 Senior Notes redeemed plus the Applicable Premium (as defined in the 2020 Senior Notes Indenture) at the redemption date, plus any accrued and unpaid interest, if any, up to the redemption date. On or after October 1, 2016, the Company may redeem all or a part of the 2020 Senior Notes at varying redemption prices (expressed as percentages of principal amount) set forth in the 2020 Senior Notes Indenture plus accrued and unpaid interest, if any, on the 2020 Senior Notes redeemed, up to the redemption date. As discussed above, on May 21, 2015 and June 2, 2015, a total of approximately $306.4 million aggregate principal amount of 2020 Senior Notes were exchanged for Third Lien Notes. Upon the occurrence of certain change of control events, as defined in the 2020 Senior Notes Indenture, each holder of the 2020 Senior Notes will have the right to require that the Company repurchase all or a portion of such holder’s 2020 Senior Notes in cash at a purchase price equal to 101.0% of the aggregate principal amount thereof plus any accrued and unpaid interest to the date of repurchase. The estimated fair value of the 2020 Senior Notes as of September 30, 2015 was $58.7 million (Level 2 in the fair value measurement hierarchy), based on quoted market prices for these same debt securities. The effective interest rate was 10.8% for the three and nine months ended September 30, 2015 and 11.1% for the three and nine months ended September 30, 2014. 2021 Senior Notes On May 31, 2013, the Company issued $700.0 million in aggregate principal amount of 2021 Senior Notes. In October 2013, these notes were exchanged for an equal principal amount of identical registered notes. The 2021 Senior Notes rank pari passu in right of payment with the 2020 Senior Notes, Second Lien Notes and Third Lien Notes. The 2021 Senior Notes were co-issued on a joint and several basis by the Company and its wholly owned subsidiary, Midstates Sub. The indenture governing the 2021 Senior Notes (the “2021 Senior Notes Indenture”) does not create any restricted assets within Midstates Sub, nor does it impose any significant restrictions on the ability of Midstates Sub to pay dividends or make loans to the Company or limit the ability of the Company to advance loans to Midstates Sub. Prior to June 1, 2016, the Company may, under certain circumstances, redeem up to 35.0% of the aggregate principal amount of the 2021 Senior Notes with the net proceeds of any equity offerings at a redemption price of 109.25% of the principal amount of the 2021 Senior Notes redeemed, plus any accrued and unpaid interest, if any, up to the redemption date. In addition, at any time before June 1, 2016, the Company may redeem all or a part of the 2021 Senior Notes at a redemption price equal to 100.0% of the principal amount of the 2021 Senior Notes redeemed plus the Applicable Premium (as defined in the 2021 Senior Notes Indenture) at the redemption date, plus any accrued and unpaid interest, if any, up to, the redemption date. On or after June 1, 2016, the Company may redeem all or a part of the 2021 Senior Notes at varying redemption prices (expressed as percentages of principal amount) set forth in the 2021 Senior Notes Indenture plus accrued and unpaid interest, if any, on the 2021 Senior Notes redeemed, up to, the redemption date. As discussed above, on May 21, 2015 and June 2, 2015, a total of approximately $352.3 million aggregate principal amount of 2021 Senior Notes were exchanged for Third Lien Notes. Upon the occurrence of certain change of control events, as defined in the 2021 Senior Notes Indenture, each holder of the 2021 Senior Notes will have the right to require that the Company repurchase all or a portion of such holder’s 2021 Senior Notes in cash at a purchase price equal to 101.0% of the aggregate principal amount thereof plus any accrued and unpaid interest to the date of repurchase. The estimated fair value as of September 30, 2015 of the 2021 Senior Notes was $67.8 million (Level 2 in the fair value measurement hierarchy), based on quoted market prices for these same debt securities. The effective interest rate was 9.3% for the three and nine months ended September 30, 2015 and 9.6% for the three and nine months ended September 30, 2014. Second Lien Notes On May 21, 2015, the Company and Midstates Sub issued and sold $625.0 million aggregate principal amount of Second Lien Notes, in a private placement conducted pursuant to Rule 144A under the Securities Act. The Second Lien Notes mature on the earlier of June 1, 2020 or 12 months after the maturity date of the Company’s Credit Facility (including any extension or refinancing of such facility). The Second Lien Notes have an interest rate of 10.0% and interest is payable semi-annually on June 1 and December 1 of each fiscal year. The Second Lien Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by each of the Company’s future restricted subsidiaries (the “Guarantors”) and will be initially secured by second-priority liens on substantially all of the Company’s and Guarantors’ assets that secure the Company’s Credit Facility. On May 21, 2015, in connection with the offering of Second Lien Notes, the Company and Midstates Sub entered into a registration rights agreement with the initial purchasers of the Second Lien Notes pursuant to which the Company and Midstates Sub are obligated, within 270 days after the issuance of the Second Lien Notes, to file with the Securities and Exchange Commission under the Securities Act a registration statement with respect to an offer to exchange the Second Lien Notes for substantially identical registered new notes. On October 16, 2015, the Company filed a prospectus pursuant to an effective registration statement and launched an exchange offer to exchange the Second Lien Notes for an equal principal amount of identical registered notes. The Company expects the exchange of the Second Lien Notes to be completed in November 2015. The Second Lien Notes are senior secured obligations of the Company and rank effectively junior to its obligations under the Credit Facility, effectively senior to its existing and future unsecured indebtedness, effectively senior to the Company’s Third Lien Notes and all future junior lien obligations, effectively junior to all existing and future secured indebtedness secured by assets not constituting collateral under the Second Lien Notes, pari passu with all of the Company’s existing and future senior debt, structurally subordinated to all existing and future indebtedness of any non-Guarantor subsidiaries and senior to any existing or future subordinated debt. Upon the occurrence of certain change of control events, as defined in the indenture governing the Second Lien Notes, each holder of the Second Lien Notes will have the right to require that the Company repurchase all or a portion of such holder’s 2020 Second Lien Notes in cash at a purchase price equal to 101.0% of the aggregate principal amount thereof plus any accrued and unpaid interest to the date of repurchase. The estimated fair value of the Second Lien Notes was $453.1 million as of September 30, 2015 (Level 2 in the fair value measurement hierarchy), based on quoted market prices for these same debt securities. The effective interest rate was 8.8% and 8.7% for the three months and nine months ended September 30, 2015, respectively. Third Lien Notes On May 21, 2015 and June 2, 2015, the Company issued approximately $504.1 million and $20.0 million, respectively, in aggregate principal amount of Third Lien Notes in a private placement and in exchange for an aggregate $306.4 million of the 2020 Senior Notes and $352.3 million of the 2021 Senior Notes. The Third Lien Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by each of the Guarantors. The Third Lien Notes are secured by third-priority liens on substantially all of the Company’s assets that secure the Credit Facility. The Third Lien Notes have an interest rate of 12.0%, consisting of cash interest of 10.0% and paid-in-kind interest of 2.0%, per annum and mature on the earlier of June 1, 2020 or 12 months after the maturity date of the Company’s Credit Facility (including any extension or refinancing of such facility). Cash interest is payable semi-annually on June 1 and December 1 of each fiscal year. Paid-in-kind interest, which is included in other long-term liabilities in our condensed consolidated balance sheets, increases the outstanding principal balance of the Third Lien Notes on June 1 and December 1 of each fiscal year. On May 21, 2015, in connection with the issuance of the Third Lien Notes, the Company and Midstates Sub entered into a registration rights agreement with the initial purchasers of the Third Lien Notes pursuant to which the Company and Midstates Sub is obligated, within 270 days after the issuance of the Third Lien Notes, to file with the Securities and Exchange Commission under the Securities Act a registration statement with respect to an offer to exchange the Third Lien Notes for substantially identical registered new notes. On October 16, 2015, the Company filed a prospectus pursuant to an effective registration statement and launched an exchange offer to exchange the Third Lien Notes for an equal principal amount of identical registered notes. The Company expects the exchange of the Third Lien Notes to be completed in November 2015. The Third Lien Notes are senior secured obligations of the Company and rank effectively junior to its obligations under the Credit Facility and Second Lien Notes to the extent of the value of the collateral securing such indebtedness, effectively senior to its existing and future unsecured indebtedness to the extent of the value of the collateral securing the Third Lien Notes, effectively senior to all future junior lien obligations that rank below a third-priority basis to the extent of the value of the collateral securing the Third Lien Notes, effectively junior to all existing and future secured indebtedness secured by assets not constituting collateral under the Third Lien Notes, pari passu to all of the Company’s existing and future senior debt, structurally subordinated to all existing and future indebtedness of any non-Guarantor subsidiaries and senior in right of payment to any existing or future subordinated debt. Upon the occurrence of certain change of control events, as defined in the indenture governing the Third Lien Notes, each holder of the Third Lien Notes will have the right to require that the Company repurchase all or a portion of such holder’s Third Lien Notes in cash at a purchase price equal to 101.0% of the aggregate principal amount thereof plus any accrued and unpaid interest to the date of repurchase. The estimated fair value of the Third Lien Notes was $188.7 million as of September 30, 2015 (Level 2 in the fair value measurement hierarchy), based on quoted market prices for these same debt securities. The effective interest rate was 8.8% and 8.9% for the three and nine months ended September 30, 2015, respectively. Debt Covenants The indentures governing the 2020 Senior Notes, 2021 Senior Notes, Second Lien Notes and Third Lien Notes contain covenants that, among other things, restrict the Company’s ability to: (i) incur additional indebtedness, guarantee indebtedness or issue certain preferred shares; (ii) make loans, investments and other restricted payments; (iii) pay dividends on or make other distributions in respect of, or repurchase or redeem, capital stock; (iv) create or incur certain liens; (v) sell, transfer or otherwise dispose of certain assets; (vi) enter into certain types of transactions with the Company’s affiliates; (vii) consolidate, merge or sell substantially all of the Company’s assets; (viii) prepay, redeem or repurchase certain debt; (ix) alter the business the Company conducts; and (x) enter into agreements restricting the ability of the Company’s current and any future subsidiaries to pay dividends. Additionally, the Credit Facility, as amended, contains, among other standard affirmative and negative covenants, financial covenants including a maximum ratio of Total Senior Indebtedness to EBITDA (as defined therein) of not more than 1.0:1.0 and a minimum current ratio (as defined therein) of not less than 1.0 to 1.0. The Credit Facility also limits the Company’s ability to make any dividends, distributions or redemptions. The Company was in compliance with all debt covenants at September 30, 2015. Cross Default Provisions The Company’s debt facilities contain significant cross default and/or cross acceleration provisions where a default under the Credit Facility or one of the indentures could enable the lenders of the other debt to also declare events of default and accelerate repayment of the obligations under those debt instruments. In general, these cross default/cross acceleration provisions are as follows: · The Credit Facility allows the lenders to declare an event of default if there is an event of default on other indebtedness and that default: (i) is the result of the failure to make any payment when due in respect of other indebtedness having an aggregate principal amount of at least 5.0% of the then effective borrowing base and such failure continues after the applicable grace or notice period; or (ii) is the result of a failure to perform any condition, covenant or other event and such failure permits the holders of such other indebtedness to cause the acceleration of the repayment of such other indebtedness. · The indentures governing the 2020 Senior Notes, 2021 Senior Notes, Second Lien Notes and Third Lien Notes allow the lenders to declare an event of default if there is an event of default on other indebtedness and that default: (i) is caused by a failure to make any payment of principal prior to the expiration of the grace period following the final maturity date of such indebtedness; or (ii) results in the acceleration of the repayment of such indebtedness prior to its stated maturity, and, in each case, the principal amount of any such indebtedness, together with the principal amount of any other indebtedness with respect to which an event described herein has occurred, aggregates $50.0 million or more. |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2015 | |
Preferred Stock. | |
Preferred Stock | 11. Preferred Stock Series A Preferred Stock On October 1, 2012, the Company issued 325,000 shares of Series A Mandatorily Convertible Preferred Stock (“Series A Preferred Stock”) with an initial liquidation preference of $1,000 per share and an 8.0% per annum dividend, payable semiannually at the Company’s option in cash or through an increase in the liquidation preference. On March 30, 2015 and September 30, 2015, the Company elected to pay semi-annual dividends due of $15.2 million and $15.8 million, respectively, through an increase in the Series A Preferred Stock liquidation preference. The Series A Preferred Shares were mandatorily convertible at September 30, 2015 into shares of the Company’s common stock at a conversion price of $110.00 per share, which was automatically adjusted to reflect the reverse stock split. Based on the liquidation preference at September 30, 2015, each Series A Preferred Share converted into approximately 11.5 shares of the Company’s common stock pursuant to the Certificate of Designation, which governed the Series A Preferred Stock. As a result, the Company issued 3,738,424 additional shares of common stock upon conversion of the Series A Preferred Stock. |
Equity and Share-Based Compensa
Equity and Share-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Equity and Share-Based Compensation | |
Equity and Share-Based Compensation | 12. Equity and Share-Based Compensation Share Activity The following table summarizes changes in the number of outstanding shares since December 31, 2014: Number of Shares Common Stock Treasury Stock Share count as of December 31, 2014 ) Grants of restricted stock — Forfeitures of restricted stock ) — Acquisition of treasury stock — ) Fractional share adjustment ) — Issuance of common stock for Series A Preferred Stock conversion — Share count as of September 30, 2015 ) The Company’s 2012 Long Term Incentive Plan (the “2012 LTIP”) allows for the recipients of restricted stock to surrender a portion of their shares upon vesting to satisfy Federal Income Tax (“FIT”) withholding requirements. The Company then remits to the IRS the cash equivalent of the FIT withholding liability. Shares surrendered to the Company in this fashion have been treated as treasury shares acquired at a cost equivalent to the related tax liability. These shares are available for future issuance by the Company. Share-based Compensation 2012 Long Term Incentive Plan The 2012 LTIP provides for the granting of Options (incentive and other), Restricted Stock Awards, Restricted Stock Units, Stock Appreciation Rights, Dividend Equivalents, Bonus Stock, Other Stock-Based Awards, Annual Incentive Awards, Performance Awards, or any combination of the foregoing (the “Awards”). Subject to certain limitations as defined in the 2012 LTIP, the terms of each Award are as determined by the Compensation Committee of the Board of Directors. As of September 30, 2015 a total of 863,843 common share Awards are authorized for issuance and shares of stock subject to an Award that expire, or are canceled, forfeited, exchanged, settled in cash or otherwise terminated, will again be available for future Awards under the 2012 LTIP. Non-vested Stock Awards At September 30, 2015, the Company had 356,438 non-vested shares of restricted common stock to directors, management and employees outstanding pursuant to the 2012 LTIP. Shares granted under the LTIP generally vest ratably over a period of three years (one-third on each anniversary of the grant); however, beginning in 2013, shares granted under the 2012 LTIP to directors are subject to one-year cliff vesting. The fair value of restricted stock grants is based on the value of the Company’s common stock on the date of grant. Compensation expense is recognized ratably over the requisite service period. The following table summarizes the Company’s non-vested share award activity for the nine months ended September 30, 2015: Shares Weighted Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2014 $ Granted $ Vested ) $ Forfeited ) $ Non-vested shares outstanding at September 30, 2015 $ Unrecognized expense, adjusted for estimated forfeitures, as of September 30, 2015 for all outstanding restricted stock awards was $5.0 million and will be recognized over a weighted average period of 1.7 years. At September 30, 2015, 179,910 shares remain available for issuance under the terms of the 2012 LTIP. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Income Taxes | 13. Income Taxes The Company has recorded a tax benefit on its year-to-date pre-tax loss. The Company believes this methodology to be more appropriate at this time due to uncertainty in forecasting the annual effective tax rate (or benefit) on 2015 income (or loss) due to previously recorded property impairments and the effects of federal and state valuation allowance adjustments. For the nine months ended September 30, 2015, the Company’s effective tax rate was a benefit of approximately 0.7%. The Company’s effective tax rate differs from the federal statutory rate of 35.0% due to the effect of state income taxes and changes in the valuation allowance. This year, the Company recorded $507.7 million in additional valuation allowance in light of the impairment of oil and gas properties, bringing the total valuation allowance to $511.6 million at September 30, 2015. A valuation allowance has been recorded as management does not believe that it is more-likely-than-not that the net operating loss (“NOL”) carryforwards are realizable except to the extent of future taxable income primarily related to the excess of book carrying value of properties over their respective tax bases. No other sources of future taxable income were considered in this judgment. The Company expects to incur a tax loss in the current year due to the flexibility in deducting or capitalizing current year intangible drilling costs; thus no current income taxes are anticipated to be paid. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | 14. Net Income (Loss) Per Share Prior to conversion on September 30, 2015, the Company’s Series A Preferred Stock had the non-forfeitable right to participate on an as converted basis at the conversion rate then in effect in any common stock dividends declared and as such, was considered a participating security. The Company’s non-vested stock awards, which are granted as part of the 2012 LTIP, contain non-forfeitable rights to dividends and as such, are considered to be participating securities and, together with the Series A Preferred Stock, are included in the computation of basic and diluted income (loss) per share, pursuant to the two-class method. In the calculation of basic income (loss) per share attributable to common shareholders, participating securities are allocated earnings based on actual dividend distributions received plus a proportionate share of undistributed net income attributable to common shareholders, if any, after recognizing distributed earnings. The Company’s participating securities do not participate in undistributed net losses as such participating securities are not contractually obligated to do so. The computation of diluted income (loss) per share attributable to common shareholders reflects the potential dilution that could occur if securities or other contracts to issue common shares that are dilutive were exercised or converted into common shares (or resulted in the issuance of common shares) and would then share in the earnings of the Company. During the periods in which the Company records a loss from continuing operations attributable to common shareholders, securities would not be dilutive to net loss per share and conversion into common shares is assumed to not occur. Diluted net income per share attributable to common shareholders is calculated under both the two-class method and the treasury stock method; the more dilutive of the two calculations is presented below. The following table (in thousands, except per share amounts) provides a reconciliation of net income (loss) to preferred shareholders, common shareholders, and non-vested restricted shareholders for purposes of computing net income (loss) per share for the three and nine months ended September 30, 2015 and 2014, respectively: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ ) $ $ ) $ ) Preferred dividend (1) ) ) ) ) Net income (loss) attributable to shareholders $ ) $ $ ) $ ) Participating securities - Series A Preferred Stock (2) — ) — — Participating securities - Non-vested Restricted Stock (2) — ) — — Net income (loss) attributable to common shareholders $ ) $ $ ) $ ) Weighted average shares outstanding Net income (loss) per share $ ) $ $ ) $ ) (1) The Series A Preferred Stock converted into 3,738,424 common shares on September 30, 2015. For further information on the Series A Preferred Stock conversion and the calculation of the preferred stock dividend please see “ — Note 11. Preferred Stock.” (2) The Company’s participating securities participate in earnings but are not required to participate in losses of the Company. As such, this calculation does not allocate any loss to the non-vested restricted stockholders or Series A Preferred stockholders. The aggregate number of common shares outstanding at September 30, 2015 was 10,891,270 of which 356,438 were non-vested restricted shares. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 15. Commitments and Contingencies Litigation The Company is involved in various matters incidental to its operations and business that might give rise to a loss contingency. These matters may include legal and regulatory proceedings, commercial disputes, claims from royalty, working interest and surface owners, property damage and personal injury claims and environmental authorities or other matters. In addition, the Company may be subject to customary audits by governmental authorities regarding the payment and reporting of various taxes, governmental royalties and fees as well as compliance with unclaimed property (escheatment) requirements and other laws. Further, other parties with an interest in wells operated by the Company have the ability under various contractual agreements to perform audits of its joint interest billing practices. The Company vigorously defends itself in these matters. If the Company determines that an unfavorable outcome or loss of a particular matter is probable and the amount of the loss can be reasonably estimated, it accrues a liability for the contingent obligation. As new information becomes available or as a result of legal or administrative rulings in similar matters or a change in applicable law, the Company’s conclusions regarding the probability of outcomes and the amount of estimated loss, if any, may change. The impact of subsequent changes to the Company’s accruals could have a material effect on its results of operations. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2014 included in the Company’s Registration Statements on Form S-4 as filed with the SEC on October 2, 2015. All intercompany transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position as of, and the results of operations for, all periods presented. In preparing the accompanying condensed consolidated financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. |
Reverse Stock Split | Reverse Stock Split On August 3, 2015, the Company completed a 1-for-10 reverse stock split of its outstanding common stock. To effect the reverse stock split, the Company filed a Certificate of Amendment to the Company’s Restated Certificate of Incorporation, which provides for the reverse stock split and for the corresponding reduction in the Company’s authorized capital stock to 100 million shares of common stock, $0.01 par value per share, following the reverse stock split. The condensed consolidated financial statements and notes to the condensed consolidated financial statements included in this document give retrospective effect to the reverse stock split for all prior periods presented. |
Recently Issued Standards Not Yet Adopted | Recently Issued Standards Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 provides guidance concerning the recognition and measurement of revenue from contracts with customers. The objective of ASU 2014-09 is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues. ASU 2014-09 requires an entity to (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. ASU 2014-09 will be effective for the Company beginning on January 1, 2018, including interim periods within that reporting period, considering the one year deferral provided by ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.” The standard permits the use of either the retrospective or cumulative effect transition method and early adoption is permitted. The Company has not selected a transition method and is evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In April 2015, the FASB issued Accounting Standards Update 2015-03, “ Interest — Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs (Topic 835)” (“ASU 2015-03”). ASU 2015-03 requires debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is applied retrospectively and is effective for the Company beginning on January 1, 2016. The Company does not believe the adoption of ASU 2015-03 will have a material impact on its financial position, results of operations or cash flows. In August 2015, the FASB issued Accounting Standards Update 2015-15, “ Interest — Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Associated with Line-of-Credit Arrangements” (“ASU 2015-15”). ASU 2015-15 addresses debt issuance costs associated with line-of-credit arrangements by allowing an entity to defer and present such debt issuance costs as an asset regardless of whether there are any outstanding borrowings under the line-of-credit arrangement. ASU 2015-15 is applied retrospectively and is effective for the Company beginning on January 1, 2016. The Company does not believe the adoption of ASU 2015-15 will have a material impact on its financial position, results of operations or cash flows. In September 2015, the FASB issued Accounting Standards Update 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”). ASU 2015-16 simplifies measurement period adjustments associated with business combinations accounted for under FASB Accounting Standards Codification (“ASC”) 805, Business Combinations . ASU 2015-16 changes the accounting for measurement period adjustments by eliminating the requirement that such adjustments are made retrospectively. As a result, such measurement period adjustments will be recognized in the reporting period in which the adjustment was determined. ASU 2015-16 is applied prospectively to adjustments to provisional amounts that occur after the effective date. ASU 2015-16 is effective for the Company beginning on January 1, 2016. The Company does not believe the adoption of ASU 2015-16 will have a material impact on its financial position, results of operations or cash flows. |
Correction of Operating and Investing Cash Flows | Correction of Operating and Investing Cash Flows for the Nine Months Ended September 30, 2014 In the first quarter of 2015, the Company determined that it had incorrectly presented non-cash accrued capital expenditures in its Statements of Cash Flows since December 31, 2012. Management concluded the misstatement is immaterial to previously issued financial statements; however, the Company has corrected the cash flow presentation in the accompanying Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2014. The misstatement had no impact on the Condensed Consolidated Balance Sheet as of December 31, 2014, or on the Condensed Consolidated Statement of Operations for the three or nine months ended September 30, 2014. The impact of the correction is shown in the following table: For the Nine Months Ended September 30, 2014 Statement of Cash Flows As Previously Reported As Restated (in thousands) Change in operating assets and liabilities: Accounts receivable - JIB and other $ $ Net cash provided by operating activities Investment in property and equipment ) ) Net cash used in investing activities ) ) |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of the impact of correction | For the Nine Months Ended September 30, 2014 Statement of Cash Flows As Previously Reported As Restated (in thousands) Change in operating assets and liabilities: Accounts receivable - JIB and other $ $ Net cash provided by operating activities Investment in property and equipment ) ) Net cash used in investing activities ) ) |
Fair Value Measurements of Fi25
Fair Value Measurements of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements of Financial Instruments | |
Schedule of commodity derivative contracts in the condensed consolidated balance sheets are recorded at estimated fair value | Fair Value Measurements at September 30, 2015 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Assets: Commodity derivative oil swaps $ — $ $ — $ Commodity derivative gas swaps — — Total assets $ — $ $ — $ Liabilities: Commodity derivative oil swaps $ — $ — $ — $ — Commodity derivative gas swaps — — — — Total liabilities $ — $ — $ — $ — Fair Value Measurements at December 31, 2014 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Assets: Commodity derivative oil swaps $ — $ $ — $ Commodity derivative gas swaps — — Total assets $ — $ $ — $ Liabilities: Commodity derivative oil swaps $ — $ — $ — $ — Commodity derivative gas swaps — — — — Total liabilities $ — $ — $ — $ — |
Risk Management and Derivativ26
Risk Management and Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Risk Management and Derivative Instruments | |
Schedule of the entity's open commodity derivative contract positions | As of September 30, 2015, the Company had the following open commodity derivative contract positions: Hedged Weighted-Average Volume Fixed Price Oil (Bbls): WTI Swaps — 2015 $ Natural Gas (MMBtu): Swaps — 2015(1) $ (1) Includes 1,550,000 MMBtus in natural gas swaps that priced during the period, but had not cash settled as of September 30, 2015. |
Summary of location and fair values amounts of all derivative instruments as well as the gross recognized derivative assets, liabilities and amounts offset in the unaudited condensed consolidated balance sheets | The following table summarizes the gross fair values of derivative instruments by the appropriate balance sheet classification; however, the derivative instruments are subject to netting arrangements and qualify for net presentation in the Company’s unaudited condensed consolidated balance sheets at September 30, 2015 and December 31, 2014, respectively (in thousands): Type Balance Sheet Location (1) September 30, 2015 December 31, 2014 Oil Swaps Derivative financial instruments — Current Assets $ $ Gas Swaps Derivative financial instruments — Current Assets Total derivative fair value at period end $ $ (1) The fair values of commodity derivative instruments reported in the Company’s condensed consolidated balance sheets are subject to netting arrangements and qualify for net presentation. The following table summarizes the location and fair value amounts of all derivative instruments in the unaudited condensed consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the unaudited condensed consolidated balance sheets at September 30, 2015 and December 31, 2014, respectively (in thousands): September 30, 2015 Not Designated as ASC 815 Hedges: Balance Sheet Classification Gross Recognized Assets/ Liabilities Gross Amounts Offset Net Recognized Fair Value Assets/ Liabilities Derivative assets: Commodity contracts Derivative financial instruments - current $ $ — $ Commodity contracts Derivative financial instruments - noncurrent — — — $ $ — $ Derivative liabilities: Commodity contracts Derivative financial instruments - current $ — $ — $ — Commodity contracts Derivative financial instruments - noncurrent — — — $ — $ — $ — December 31, 2014 Not Designated as ASC 815 Hedges: Balance Sheet Classification Gross Recognized Assets/ Liabilities Gross Amounts Offset Net Recognized Fair Value Assets/ Liabilities Derivative assets: Commodity contracts Derivative financial instruments - current $ $ — $ Commodity contracts Derivative financial instruments - noncurrent — — — $ $ — $ Derivative liabilities: Commodity contracts Derivative financial instruments - current $ — $ — $ — Commodity contracts Derivative financial instruments - noncurrent — — — $ — $ — $ — |
Schedule of "Gains (losses) on commodity derivative contracts - net" for the periods | For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) (in thousands) Net cash received (paid) for commodity derivative contracts $ $ ) $ $ ) Unrealized net gains (losses) ) ) Gains (losses) on commodity derivative contracts - net $ $ $ $ ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment | |
Schedule of property and equipment | September 30, 2015 December 31, 2014 (in thousands) Oil and gas properties, on the basis of full-cost accounting: Proved properties $ $ Unevaluated properties Other property and equipment Less accumulated depreciation, depletion, amortization and impairment ) ) Net property and equipment $ $ |
Schedule of internal costs capitalized | During the three and nine months ended September 30, 2015 and 2014, the Company capitalized the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Internal costs capitalized to oil and gas properties (1) $ $ $ $ (1) Inclusive of $0.3 million and $0.6 million of qualifying share-based compensation expense for the three months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, inclusive of $1.1 million and $1.8 million, respectively, of qualifying share-based compensation expense. |
Schedule of depletion expense related to oil and gas properties | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 2015 2014 2015 2014 (in thousands) (per Boe) (in thousands) (per Boe) Depletion expense $ $ $ $ $ $ $ $ Depreciation on other property Depreciation, depletion, and amortization $ $ $ $ $ $ $ |
Other Noncurrent Assets (Tables
Other Noncurrent Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Noncurrent Assets | |
Schedule of other noncurrent assets | September 30, 2015 December 31, 2014 (in thousands) Deferred financing costs $ $ Field inventory Other Other noncurrent assets $ $ |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | |
Schedule of accrued liabilities | September 30, 2015 December 31, 2014 (in thousands) Accrued oil and gas capital expenditures $ $ Accrued revenue and royalty distributions Accrued lease operating and workover expense Accrued interest Accrued taxes Other Accrued liabilities $ $ |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Asset Retirement Obligations | |
Schedule of changes in the Company's ARO's | Nine Months Ended Nine Months Ended September 30, 2015 September 30, 2014 (in thousands) Asset retirement obligations — beginning of period $ $ Liabilities incurred Revisions — — Liabilities settled — ) Liabilities eliminated through asset sales ) ) Current period accretion expense Asset retirement obligations — end of period $ $ |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Long-Term Debt | |
Schedule of the company's long-term debt | The Company’s long-term debt as of September 30, 2015 and December 31, 2014 is as follows (in thousands): December 31, 2014 Carrying Value Borrowings Repayments Exchanges Deferred Gain on Forgiven Debt Amortization of Forgiven Debt September 30, 2015 Carrying Value Credit Facility $ $ $ ) $ — $ — $ — $ — 2020 Senior Notes — — ) ) — 2021 Senior Notes — — ) ) — Second Lien Notes — — — ) Third Lien Notes — — — ) Total debt $ $ $ ) $ — $ — $ ) $ Current maturities — — — — — — — Total long-term debt $ $ $ ) $ — $ — $ ) $ September 30, 2015 Carrying Value Unamortized Deferred Gain on Debt Forgiven September 30, 2015 Principle Balance Outstanding Credit Facility $ — $ — $ — 2020 Senior Notes — 2021 Senior Notes — Second Lien Notes ) Third Lien Notes ) Total debt $ $ ) $ Current maturities — — — Total long-term debt $ $ ) $ |
Equity and Share-Based Compen32
Equity and Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity and Share-Based Compensation | |
Summary of changes in the number of outstanding shares | Number of Shares Common Stock Treasury Stock Share count as of December 31, 2014 ) Grants of restricted stock — Forfeitures of restricted stock ) — Acquisition of treasury stock — ) Fractional share adjustment ) — Issuance of common stock for Series A Preferred Stock conversion — Share count as of September 30, 2015 ) |
Summary of Company's non-vested share award activity | Shares Weighted Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2014 $ Granted $ Vested ) $ Forfeited ) $ Non-vested shares outstanding at September 30, 2015 $ |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Net Income (Loss) Per Share | |
Schedule of reconciliation of net income (loss) to preferred shareholders, common shareholders, and non-vested restricted shareholders for purposes of computing net income (loss) per share | The following table (in thousands, except per share amounts) provides a reconciliation of net income (loss) to preferred shareholders, common shareholders, and non-vested restricted shareholders for purposes of computing net income (loss) per share for the three and nine months ended September 30, 2015 and 2014, respectively: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ ) $ $ ) $ ) Preferred dividend (1) ) ) ) ) Net income (loss) attributable to shareholders $ ) $ $ ) $ ) Participating securities - Series A Preferred Stock (2) — ) — — Participating securities - Non-vested Restricted Stock (2) — ) — — Net income (loss) attributable to common shareholders $ ) $ $ ) $ ) Weighted average shares outstanding Net income (loss) per share $ ) $ $ ) $ ) (1) The Series A Preferred Stock converted into 3,738,424 common shares on September 30, 2015. For further information on the Series A Preferred Stock conversion and the calculation of the preferred stock dividend please see “ — Note 11. Preferred Stock.” (2) The Company’s participating securities participate in earnings but are not required to participate in losses of the Company. As such, this calculation does not allocate any loss to the non-vested restricted stockholders or Series A Preferred stockholders. |
Organization and Business (Deta
Organization and Business (Details) | 9 Months Ended |
Sep. 30, 2015item | |
Segment information | |
Number of reportable segments | 1 |
Liquidity and Capital Resourc35
Liquidity and Capital Resources (Details) $ in Thousands | Jun. 02, 2015USD ($) | Jun. 02, 2015USD ($) | May. 21, 2015USD ($) | Apr. 21, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2015derivative | May. 31, 2013USD ($) | Oct. 01, 2012USD ($) |
Cash payment on derivative contract settlement | $ 129,105 | $ (39,213) | |||||||
Percentage of increase in operating cash flows | 54.70% | ||||||||
Purchase price of subject to standard post-closing adjustments received in cash | $ 40,168 | 150,530 | |||||||
Principle Balance Outstanding | 1,790,398 | ||||||||
Repayment of outstanding facility balance | 468,150 | $ 131,000 | |||||||
Dequincy assets | |||||||||
Purchase price of subject to standard post-closing adjustments received in cash | $ 44,000 | ||||||||
Senior Revolving Credit Facility, due 2018 | |||||||||
Repayment of outstanding facility balance | $ (468,200) | 468,150 | |||||||
Borrowing base | $ 252,000 | $ 252,000 | |||||||
Second Lien Notes | |||||||||
Principle Balance Outstanding | $ 625,000 | $ 625,000 | |||||||
Interest rate (as a percent) | 10.00% | 10.00% | |||||||
Third Lien Notes | |||||||||
Principle Balance Outstanding | 20,000 | 20,000 | $ 504,100 | $ 524,121 | |||||
Interest rate (as a percent) | 12.00% | ||||||||
Par value of debt exchanged for | 524,121 | ||||||||
2020 Senior Notes | |||||||||
Principle Balance Outstanding | 293,625 | $ 600,000 | |||||||
Interest rate (as a percent) | 10.75% | ||||||||
Par value of debt exchanged for | 26,600 | (306,400) | $ 279,800 | (242,445) | |||||
2021 Senior Notes | |||||||||
Principle Balance Outstanding | 347,652 | $ 700,000 | |||||||
Interest rate (as a percent) | 9.25% | ||||||||
Par value of debt exchanged for | $ 2,000 | $ 352,300 | $ 350,300 | $ (281,676) | |||||
Unsecured Notes | |||||||||
Percentage of exchanged debt's par value | 70.00% | 80.00% | 80.00% | ||||||
Forecast | |||||||||
Number of derivatives held | derivative | 0 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Details) $ / shares in Units, $ in Thousands | Aug. 03, 2015$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Dec. 31, 2014$ / sharesshares |
Correction of Operating and Investing Cash Flows for the Three Months Ended March 31, 2014 | ||||
Stock split ratio | 0.10 | |||
Common stock, shares authorized | shares | 100,000,000 | 100,000,000 | 100,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |
Change in operating assets and liabilities: | ||||
Accounts receivable - JIB and other | $ 28,293 | $ 6,064 | ||
Net cash provided by operating activities | 235,892 | 307,580 | ||
Investment in property and equipment | (271,576) | (430,876) | ||
Net cash used in investing activities | $ (231,408) | (280,346) | ||
As Previously Reported | ||||
Change in operating assets and liabilities: | ||||
Accounts receivable - JIB and other | 10,551 | |||
Net cash provided by operating activities | 312,067 | |||
Investment in property and equipment | (435,363) | |||
Net cash used in investing activities | $ (284,833) |
Fair Value Measurements of Fi37
Fair Value Measurements of Financial Instruments (Details) - Recurring - Commodity Derivatives $ in Thousands | Sep. 30, 2015USD ($)item | Dec. 31, 2014USD ($)item |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements of Financial Instruments | ||
Number of bank counterparties for company's commodity derivative contracts | item | 7 | 7 |
Assets: | ||
Total assets | $ 33,051 | $ 126,709 |
Significant Other Observable Inputs (Level 2) | Swaps | NGL | ||
Assets: | ||
Total assets | 28,440 | 106,450 |
Significant Other Observable Inputs (Level 2) | Swaps | Gas | ||
Assets: | ||
Total assets | 4,611 | 20,259 |
Total | ||
Assets: | ||
Total assets | 33,051 | 126,709 |
Total | Swaps | NGL | ||
Assets: | ||
Total assets | 28,440 | 106,450 |
Total | Swaps | Gas | ||
Assets: | ||
Total assets | $ 4,611 | $ 20,259 |
Risk Management and Derivativ38
Risk Management and Derivative Instruments (Details) - Not designated as Hedging Instrument - Commodity Derivatives $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($)MMBTU$ / bbl$ / MMBTUbbl | |
Risk Management and Derivative Instruments | |
Exposure under commodity derivative contracts on failure of the entity's counterparty's performance | $ | $ 33.1 |
Oil | WTI | Swaps | 2015 | |
Risk Management and Derivative Instruments | |
Weighted-Average Fixed Price | $ / bbl | 71.56 |
Hedged Volume | bbl | 1,104,000 |
Gas | Swaps | 2015 | |
Risk Management and Derivative Instruments | |
Weighted-Average Fixed Price | $ / MMBTU | 4.13 |
Hedged Volume | 4,600,000 |
Hedged Volume, not settled in cash | 1,550,000 |
Risk Management and Derivativ39
Risk Management and Derivative Instruments (Details 2) - Not designated as Hedging Instrument - Commodity Derivatives - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Risk Management and Derivative Instruments | ||
Total derivative fair value at period end | $ 33,051 | $ 126,709 |
Derivative assets: | ||
Gross Recognized Assets | 33,051 | 126,709 |
Net Recognized Fair Value Assets | 33,051 | 126,709 |
Current Assets | ||
Derivative assets: | ||
Gross Recognized Assets | 33,051 | 126,709 |
Net Recognized Fair Value Assets | 33,051 | 126,709 |
Swaps | Current Assets | Oil | ||
Derivative assets: | ||
Gross Recognized Assets | 28,440 | 106,450 |
Swaps | Current Assets | Gas | ||
Derivative assets: | ||
Gross Recognized Assets | $ 4,611 | $ 20,259 |
Risk Management and Derivativ40
Risk Management and Derivative Instruments (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Gains (losses) on Commodity Derivative Contracts | ||||
Derivative, Cash Received on Hedge | $ (129,105) | $ 39,213 | ||
Gains (losses) on commodity derivative contracts - net | $ 33,368 | $ 50,978 | 35,447 | (3,162) |
Not designated as Hedging Instrument | ||||
Gains (losses) on Commodity Derivative Contracts | ||||
Derivative, Cash Received on Hedge | 34,307 | (7,265) | 129,105 | (39,213) |
Unrealized net gains (losses) | (939) | 58,243 | (93,658) | 36,051 |
Gains (losses) on commodity derivative contracts - net | $ 33,368 | $ 50,978 | $ 35,447 | $ (3,162) |
Property and Equipment (Details
Property and Equipment (Details) | Apr. 21, 2015USD ($) | Sep. 30, 2015USD ($)$ / Boe | Sep. 30, 2014USD ($)$ / Boe | Sep. 30, 2015USD ($)$ / Boe | Sep. 30, 2014USD ($)$ / Boe | Dec. 31, 2014USD ($) |
Property and Equipment | ||||||
Proved properties | $ 3,584,259,000 | $ 3,584,259,000 | $ 3,398,146,000 | |||
Unevaluated properties | 31,402,000 | 31,402,000 | 44,535,000 | |||
Other property and equipment | 15,065,000 | 15,065,000 | 13,454,000 | |||
Less accumulated depreciation, depletion, amortization and impairment | (2,651,068,000) | (2,651,068,000) | (1,333,019,000) | |||
Net property and equipment | 979,658,000 | 979,658,000 | $ 2,123,116,000 | |||
Other information | ||||||
Impairment in carrying value of oil and gas properties | 486,895,000 | 1,159,951,000 | $ 86,471,000 | |||
Depreciation, depletion, and amortization | $ 44,714,000 | $ 73,109,000 | 158,397,000 | 211,084,000 | ||
Purchase price of subject to standard post-closing adjustments received in cash | $ 40,168,000 | 150,530,000 | ||||
Ceiling limit of capitalized cost for determining impairment to oil and gas properties (as a percent) | 20.00% | 20.00% | ||||
Reduction in book value (as a percent) | 44.50% | 44.50% | ||||
Oil and Gas Properties | ||||||
Other information | ||||||
Internal costs capitalized to oil and gas properties( | $ 1,632,000 | 2,771,000 | $ 6,547,000 | 9,159,000 | ||
Capitalized qualifying share-based compensation expense | 300,000 | 600,000 | 1,100,000 | 1,800,000 | ||
Impairment | 486,900,000 | |||||
Impairment in carrying value of oil and gas properties | 1,200,000,000 | 86,500,000 | ||||
Depletion expense | 43,814,000 | 72,337,000 | 155,778,000 | 208,864,000 | ||
Depreciation on other property | 900,000 | 772,000 | 2,619,000 | 2,220,000 | ||
Depreciation, depletion, and amortization | $ 44,714,000 | $ 73,109,000 | $ 158,397,000 | $ 211,084,000 | ||
Depletion expense (per Boe) | $ / Boe | 14.60 | 23.27 | 17.01 | 24.22 | ||
Depreciation on other property (per BOE) | $ / Boe | 0.30 | 0.25 | 0.29 | 0.26 | ||
Depreciation, depletion, and amortization (per BOE) | $ / Boe | 14.90 | 23.52 | 17.30 | 24.48 | ||
Other Property and Equipment | Minimum | ||||||
Other information | ||||||
Estimated useful lives | 5 years | |||||
Other Property and Equipment | Maximum | ||||||
Other information | ||||||
Estimated useful lives | 7 years | |||||
Dequincy assets | ||||||
Other information | ||||||
Purchase price of subject to standard post-closing adjustments received in cash | $ 44,000,000 | |||||
Net proceeds | 42,400,000 | |||||
Gain (Loss) on reduction of oil and natural gas properties | $ 0 |
Other Noncurrent Assets (Detail
Other Noncurrent Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Other Noncurrent Assets | ||
Deferred financing costs | $ 32,251 | $ 37,807 |
Field inventory | 5,583 | 5,713 |
Other | 166 | 211 |
Other noncurrent assets | 38,000 | $ 43,731 |
Impairment of deferred financing cost | $ 4,600 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accrued Liabilities | ||
Accrued oil and gas capital expenditures | $ 31,936 | $ 76,398 |
Accrued revenue and royalty distributions | 33,498 | 51,292 |
Accrued lease operating and workover expense | 12,062 | 10,113 |
Accrued interest | 67,997 | 21,521 |
Accrued taxes | 5,219 | 4,226 |
Other | 9,450 | 20,281 |
Accrued liabilities | $ 160,162 | $ 183,831 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Asset Retirement Obligations | ||||
Asset retirement obligations | $ 18,152 | $ 20,935 | $ 21,599 | $ 26,308 |
Changes in Company's asset retirement obligations | ||||
Asset retirement obligations - beginning of period | 21,599 | 26,308 | ||
Liabilities incurred | 35 | 991 | ||
Liabilities settled | (47) | |||
Liabilities eliminated through asset sales | (4,699) | (7,652) | ||
Current period accretion expense | 382 | 406 | 1,217 | 1,335 |
Asset retirement obligations - end of period | $ 18,152 | $ 20,935 | $ 18,152 | $ 20,935 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Thousands | Jun. 02, 2015USD ($) | Jun. 02, 2015USD ($) | May. 21, 2015USD ($) | Mar. 24, 2015 | Mar. 23, 2015 | Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Oct. 14, 2015USD ($) | Aug. 05, 2015USD ($) | Aug. 04, 2015USD ($) | Mar. 21, 2015USD ($) | Dec. 31, 2014USD ($) | May. 31, 2013USD ($) | Oct. 01, 2012USD ($) |
Long-Term Debt | |||||||||||||||
Borrowings | $ 658,000 | ||||||||||||||
Repayments | 468,150 | $ 131,000 | |||||||||||||
Amortization of Forgiven Debt | (8,979) | ||||||||||||||
Long-term debt | $ 1,916,021 | 1,916,021 | $ 1,735,150 | ||||||||||||
Total debt | 1,916,021 | 1,916,021 | $ 1,735,150 | ||||||||||||
Unamortized Deferred Gain on Debt Forgiven | (125,623) | ||||||||||||||
Principle Balance Outstanding | $ 1,790,398 | 1,790,398 | |||||||||||||
Drawdowns during the period | 33,000 | 99,000 | |||||||||||||
Repayment of outstanding facility balance | $ 468,150 | $ 131,000 | |||||||||||||
Midstates Sub | |||||||||||||||
Long-Term Debt | |||||||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||||||
Any time before October 1, 2016 | |||||||||||||||
Long-Term Debt | |||||||||||||||
Redemption price (as a percentage) | 100.00% | ||||||||||||||
Sixth Amendment | Fiscal quarter ending December 31, 2015 | |||||||||||||||
Long-Term Debt | |||||||||||||||
Leverage ratio | 4.5 | ||||||||||||||
Eighth Amendment | Midstates Sub | |||||||||||||||
Long-Term Debt | |||||||||||||||
Operating lease basket | $ 3,500 | $ 2,000 | |||||||||||||
Minimum | |||||||||||||||
Long-Term Debt | |||||||||||||||
Actual Debt to EBITDA | 1 | 1 | |||||||||||||
Maximum | |||||||||||||||
Long-Term Debt | |||||||||||||||
Leverage ratio | 1 | 1 | |||||||||||||
Senior Revolving Credit Facility, due 2018 | |||||||||||||||
Long-Term Debt | |||||||||||||||
Carrying Value, beginning balance | $ 435,150 | ||||||||||||||
Borrowings | 33,000 | ||||||||||||||
Repayments | $ (468,200) | 468,150 | |||||||||||||
Maximum borrowing capacity | $ 750,000 | 750,000 | |||||||||||||
Borrowing base | 252,000 | 252,000 | $ 252,000 | ||||||||||||
Drawdowns during the period | 0 | ||||||||||||||
Outstanding letters of credit amount | 2,100 | $ 2,100 | |||||||||||||
Commitment fee, option one (as a percent) | 0.375% | ||||||||||||||
Commitment fee, option two (as a percent) | 0.50% | ||||||||||||||
Period during which Company may request additional redetermination of borrowing base | 6 months | ||||||||||||||
Number of equal successive monthly payments to make repayment on reduction of borrowing base | item | 6 | ||||||||||||||
Period for commencement of repayment of equal successive monthly payments following the administrative agent's notice regarding borrowing base reduction | 30 days | ||||||||||||||
Mortgage requirement- percentage of properties included in the borrowing base that are required to be subject to mortgages for the benefit of the lenders | 80.00% | ||||||||||||||
Repayment of outstanding facility balance | $ (468,200) | $ 468,150 | |||||||||||||
Increase in borrowing capacity under the credit agreement | $ 252,000 | $ 252,000 | |||||||||||||
Senior Revolving Credit Facility, due 2018 | Fiscal quarter ending December 31, 2015 | |||||||||||||||
Long-Term Debt | |||||||||||||||
Current ratio | 4 | ||||||||||||||
Senior Revolving Credit Facility, due 2018 | Sixth Amendment | |||||||||||||||
Long-Term Debt | |||||||||||||||
Mortgage requirement- percentage of properties included in the borrowing base that are required to be subject to mortgages for the benefit of the lenders | 90.00% | ||||||||||||||
Senior Revolving Credit Facility, due 2018 | Seventh Amendment | |||||||||||||||
Long-Term Debt | |||||||||||||||
Total Senior Indebtedness (as defined) to EBITDA | 1 | ||||||||||||||
Senior Revolving Credit Facility, due 2018 | Seventh Amendment | Midstates Sub | |||||||||||||||
Long-Term Debt | |||||||||||||||
Increase in borrowing capacity under the credit agreement | $ 252,000 | ||||||||||||||
Senior Revolving Credit Facility, due 2018 | Minimum | |||||||||||||||
Long-Term Debt | |||||||||||||||
Percentage of outstanding loans and other obligations held by lenders, on whose behalf the administrative agent may request for redetermination of borrowing base | 67.00% | ||||||||||||||
Minimum aggregate principal amount as a percentage of the then effective borrowing base as default provision | 5.00% | ||||||||||||||
Senior Revolving Credit Facility, due 2018 | Minimum | LIBOR Loans | |||||||||||||||
Long-Term Debt | |||||||||||||||
Interest rate added to base rate (as a percent) | 2.00% | ||||||||||||||
Senior Revolving Credit Facility, due 2018 | Maximum | |||||||||||||||
Long-Term Debt | |||||||||||||||
Additional borrowing base redeterminations at company request per 6 month period following each scheduled borrowing base redetermination | item | 1 | ||||||||||||||
Senior Revolving Credit Facility, due 2018 | Maximum | LIBOR Loans | |||||||||||||||
Long-Term Debt | |||||||||||||||
Interest rate added to base rate (as a percent) | 3.00% | ||||||||||||||
2020 Senior Notes, 2021 Senior Notes, Second Lien Notes and Third Lien Notes | Minimum | |||||||||||||||
Long-Term Debt | |||||||||||||||
Principal amount- debt default provision | 50,000 | $ 50,000 | |||||||||||||
Unsecured Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Percentage of exchanged debt's par value | 70.00% | 80.00% | 80.00% | ||||||||||||
2020 Senior Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Carrying Value, beginning balance | $ 600,000 | ||||||||||||||
Exchanges | $ 26,600 | (306,400) | $ 279,800 | (242,445) | |||||||||||
Deferred Gain on Forgiven Debt | (63,930) | (63,930) | |||||||||||||
Carrying Value, ending balance | 293,625 | 293,625 | |||||||||||||
Principle Balance Outstanding | 293,625 | $ 293,625 | $ 600,000 | ||||||||||||
Stated Interest Rate (as a percent) | 10.75% | ||||||||||||||
Principal amount extinguished | 63,900 | ||||||||||||||
Redemption price, upon the occurrence of certain change of control events (as a percentage) | 101.00% | ||||||||||||||
Estimated fair value of the Notes | $ 58,700 | $ 58,700 | |||||||||||||
Effective interest rate (as a percent) | 10.80% | 10.80% | 11.10% | ||||||||||||
2020 Senior Notes | Any time prior to October 1, 2015 | |||||||||||||||
Long-Term Debt | |||||||||||||||
Redemption period, start date | Oct. 1, 2012 | ||||||||||||||
2021 Senior Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Carrying Value, beginning balance | $ 700,000 | ||||||||||||||
Exchanges | 2,000 | 352,300 | $ 350,300 | (281,676) | |||||||||||
Deferred Gain on Forgiven Debt | $ (70,672) | (70,672) | |||||||||||||
Carrying Value, ending balance | 347,652 | 347,652 | |||||||||||||
Principle Balance Outstanding | 347,652 | $ 347,652 | $ 700,000 | ||||||||||||
Stated Interest Rate (as a percent) | 9.25% | ||||||||||||||
Principal amount extinguished | 70,700 | ||||||||||||||
Redemption price, upon the occurrence of certain change of control events (as a percentage) | 101.00% | ||||||||||||||
Estimated fair value of the Notes | $ 67,800 | $ 67,800 | |||||||||||||
Effective interest rate (as a percent) | 9.30% | 9.30% | 9.60% | ||||||||||||
2021 Senior Notes | Prior to June 1, 2016 | |||||||||||||||
Long-Term Debt | |||||||||||||||
Redemption period, start date | May 31, 2013 | ||||||||||||||
Redemption price, with net proceeds from equity offering (as a percentage) | 109.25% | ||||||||||||||
Redemption price (as a percentage) | 100.00% | ||||||||||||||
2021 Senior Notes | Maximum | Prior to June 1, 2016 | |||||||||||||||
Long-Term Debt | |||||||||||||||
Percentage of aggregate principal amount can be redeemed with net proceeds of equity offering | 35.00% | ||||||||||||||
Second Lien Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Borrowings | $ 625,000 | ||||||||||||||
Deferred Gain on Forgiven Debt | $ 47,082 | 47,082 | |||||||||||||
Amortization of Forgiven Debt | (2,899) | ||||||||||||||
Carrying Value, ending balance | 669,183 | 669,183 | |||||||||||||
Unamortized Deferred Gain on Debt Forgiven | (44,183) | ||||||||||||||
Principle Balance Outstanding | $ 625,000 | $ 625,000 | $ 625,000 | ||||||||||||
Stated Interest Rate (as a percent) | 10.00% | 10.00% | 10.00% | ||||||||||||
Estimated fair value of the Notes | $ 453,100 | $ 453,100 | |||||||||||||
Effective annual interest rate (as a percent) | 8.80% | 8.70% | |||||||||||||
Debt Instrument, Number of Days To File Registration Statement | 270 days | ||||||||||||||
Third Lien Notes | |||||||||||||||
Long-Term Debt | |||||||||||||||
Exchanges | $ 524,121 | ||||||||||||||
Deferred Gain on Forgiven Debt | $ 87,520 | 87,520 | |||||||||||||
Amortization of Forgiven Debt | (6,080) | ||||||||||||||
Carrying Value, ending balance | 605,561 | 605,561 | |||||||||||||
Unamortized Deferred Gain on Debt Forgiven | (81,440) | ||||||||||||||
Principle Balance Outstanding | $ 20,000 | $ 20,000 | $ 504,100 | $ 524,121 | $ 524,121 | ||||||||||
Stated Interest Rate (as a percent) | 12.00% | ||||||||||||||
PIK Interest | 2.00% | 2.00% | |||||||||||||
Redemption price, upon the occurrence of certain change of control events (as a percentage) | 101.00% | ||||||||||||||
Estimated fair value of the Notes | $ 188,700 | $ 188,700 | |||||||||||||
Effective interest rate (as a percent) | 12.00% | 12.00% | |||||||||||||
Effective annual interest rate (as a percent) | 8.80% | 8.90% | |||||||||||||
Debt Instrument, Number of Days To File Registration Statement | 270 days | ||||||||||||||
Cash interest rate | 10.00% | 10.00% |
Preferred Stock (Details)
Preferred Stock (Details) - Mandatorily redeemable convertible preferred units - USD ($) $ / shares in Units, $ in Millions | Sep. 30, 2015 | Oct. 01, 2012 | Sep. 30, 2015 | Mar. 30, 2015 |
Series A Preferred Stock | ||||
Preferred stock, shares issued | 325,000 | |||
Liquidation value (in dollars per share) | $ 1,000 | |||
Rate of dividend for preferred stock (as a percent) | 8.00% | |||
Dividends payable | $ 15.8 | $ 15.8 | $ 15.2 | |
Conversion rate for preferred stock (in dollars per share) | $ 110 | |||
Additional shares of common stock to be issued upon conversion | 3,738,424 | 3,738,424 |
Equity and Share-Based Compen47
Equity and Share-Based Compensation (Details) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Common Stock | |
Changes in number of outstanding shares | |
Share count at the beginning of the period (in shares) | 7,049,173 |
Grants of restricted stock (in shares) | 268,677 |
Forfeitures of restricted stock (in shares) | (70,481) |
Fractional share adjustment | $ | $ (10) |
Issuance of common stock | 3,738,424 |
Share count at the end of the period (in shares) | 10,985,783 |
Treasury Stock | |
Changes in number of outstanding shares | |
Share count at the beginning of the period (in shares) | 53,467 |
Acquisition of treasury stock (in shares) | (41,046) |
Share count at the end of the period (in shares) | 94,513 |
Equity and Share-Based Compen48
Equity and Share-Based Compensation (Details 2) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Restricted stock awards | |
Shares | |
Non-vested shares outstanding at the beginning of the period | 306,201 |
Granted (in shares) | 268,677 |
Vested (in shares) | (147,959) |
Forfeited (in shares) | (70,481) |
Non-vested shares outstanding at the end of the period | 356,438 |
Weighted Average Grant Date Fair Value | |
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 52.76 |
Granted (in dollars per share) | $ / shares | 12.29 |
Vested (in dollars per share) | $ / shares | 56.87 |
Forfeited (in dollars per share) | $ / shares | 42.47 |
Non-vested shares outstanding at the end of the period (in dollars per share) | $ / shares | $ 21.99 |
Additional information | |
Unrecognized expense, adjusted for estimated forfeitures (in dollars) | $ | $ 5 |
Weighted-average period for over which unrecognized expense will be recognized | 1 year 8 months 12 days |
2012 LTIP | |
Restricted Stock Awards | |
Number of shares authorized | 863,843 |
Additional information | |
Shares available for issuance | 179,910 |
2012 LTIP | Restricted stock awards | |
Restricted Stock Awards | |
Vesting period | 3 years |
Percentage of awards vesting on each anniversary of the grant | 33.33% |
2012 LTIP | Restricted stock awards | Directors | |
Restricted Stock Awards | |
Vesting period | 1 year |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Income Taxes | |
Effective annual tax rate (as a percent) | 0.70% |
Federal statutory rate | 35.00% |
Valuation allowance in light of the impairment of oil and gas properties | $ 507.7 |
Valuation allowance | 511.6 |
Current income taxes | $ 0 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Net Income (Loss) Per Share | ||||||
Net income (loss) | $ (494,342) | $ 74,597 | $ (1,286,330) | $ (11,145) | ||
Preferred Dividend | (148) | (1,908) | (948) | (9,334) | ||
Net income (loss) attributable to shareholders | (494,490) | 72,689 | (1,287,278) | (20,479) | ||
Participating securities - Series A Preferred Stock | (23,973) | |||||
Participating securities - Non-vested Restricted Stock | (2,524) | |||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (494,490) | $ 46,192 | $ (1,287,278) | $ (20,479) | ||
Weighted average shares outstanding | 6,835,000 | 6,659,000 | 6,779,000 | 6,634,000 | ||
Net income (loss) per share | $ (72.34) | $ 6.94 | $ (189.90) | $ (3.09) | ||
Aggregate number of common shares outstanding | 10,891,270 | 10,891,270 | 10,891,270 | 6,995,705 | ||
Mandatorily redeemable convertible preferred units | ||||||
Net Income (Loss) Per Share | ||||||
Additional shares of common stock to be issued upon conversion | 3,738,424 | 3,738,424 | ||||
Restricted stock awards | ||||||
Net Income (Loss) Per Share | ||||||
Aggregate number of common shares outstanding | 356,438 | 356,438 | 356,438 |