Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 08, 2017 | |
Document And Entity Information [Line Items] | ||
Entity Registrant Name | Centennial Resource Development, Inc. | |
Entity Central Index Key | 1,658,566 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Class A | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 207,070,839 | |
Common Class B | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 | |
Common Class C | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 19,155,921 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 54,874 | $ 134,083 |
Accounts receivable, net | 23,322 | 14,734 |
Derivative instruments | 869 | 431 |
Prepaid and other current assets | 1,991 | 2,078 |
Total current assets | 81,056 | 151,326 |
Oil and natural gas properties, successful efforts method | ||
Unproved properties | 1,874,454 | 1,905,661 |
Proved properties | 734,283 | 605,853 |
Accumulated depreciation, depletion and amortization | (40,061) | (14,436) |
Total oil and natural gas properties, net | 2,568,676 | 2,497,078 |
Other property and equipment, net | 2,915 | 2,193 |
Total property and equipment, net | 2,571,591 | 2,499,271 |
Noncurrent assets | ||
Derivative instruments | 109 | 0 |
Other noncurrent assets | 1,000 | 1,045 |
Total assets | 2,653,756 | 2,651,642 |
Current liabilities | ||
Accounts payable and accrued expenses | 78,146 | 86,100 |
Derivative instruments | 1,773 | 5,361 |
Total current liabilities | 79,919 | 91,461 |
Noncurrent liabilities | ||
Revolving credit facility | 0 | 0 |
Asset retirement obligations | 7,585 | 7,226 |
Derivative instruments | 0 | 20 |
Total liabilities | 87,504 | 98,707 |
Common stock, $0.0001 par value, 620,000,000 shares authorized: | ||
Additional paid-in capital | 2,369,504 | 2,364,049 |
Retained earnings (accumulated deficit) | 894 | (8,929) |
Total shareholders’ equity | 2,370,421 | 2,355,142 |
Noncontrolling interest | 195,831 | 197,793 |
Total equity | 2,566,252 | 2,552,935 |
Total liabilities and shareholders’ equity | 2,653,756 | 2,651,642 |
Series A: 1 share issued and outstanding | ||
Preferred stock, $.0001 par value, 1,000,000 shares authorized: | ||
Preferred stock | 0 | 0 |
Series B: 104,400 shares issued and outstanding | ||
Preferred stock, $.0001 par value, 1,000,000 shares authorized: | ||
Preferred stock | 0 | 0 |
Class A: 207,593,439 shares issued and 207,068,375 shares outstanding at March 31, 2017 and 201,091,646 shares issued and 200,835,049 shares outstanding at December 31, 2016 | ||
Common stock, $0.0001 par value, 620,000,000 shares authorized: | ||
Common stock | 21 | 20 |
Class C: 19,155,921 shares issued and outstanding | ||
Common stock, $0.0001 par value, 620,000,000 shares authorized: | ||
Common stock | $ 2 | $ 2 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (shares) | 1,000,000 | 1,000,000 |
Common stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (shares) | 620,000,000 | 620,000,000 |
Series A Preferred Stock | ||
Preferred stock, shares issued (shares) | 1 | 1 |
Preferred stock, shares outstanding (shares) | 1 | 1 |
Series B Preferred Stock | ||
Preferred stock, shares issued (shares) | 104,400 | 104,400 |
Preferred stock, shares outstanding (shares) | 104,400 | 104,400 |
Common Class A | ||
Common stock, shares issued (shares) | 207,593,439 | 201,091,646 |
Common stock, shares outstanding (shares) | 207,068,375 | 200,835,049 |
Common Class C | ||
Common stock, shares issued (shares) | 19,155,921 | 19,155,921 |
Common stock, shares outstanding (shares) | 19,155,921 | 19,155,921 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Other income (expense) | ||
Net income (loss) | $ 10,707 | |
Successor | ||
Net revenues | ||
Oil sales | 46,681 | |
Natural gas sales | 8,241 | |
NGL sales | 6,175 | |
Total net revenues | 61,097 | |
Operating expenses | ||
Lease operating expenses | 7,278 | |
Severance and ad valorem taxes | 3,187 | |
Transportation, processing and gathering expenses | 5,244 | |
Depreciation, depletion and amortization | 26,160 | |
Abandonment expense and impairment of unproved properties | (29) | |
General and administrative expenses | 12,065 | |
Total operating expenses | 53,905 | |
Total operating income (loss) | 7,192 | |
Other income (expense) | ||
Gain (loss) on sale of oil and natural gas properties and other assets | 166 | |
Interest expense | (410) | |
Net gain on derivative instruments | 3,759 | |
Other income | 3,515 | |
Income (loss) before income taxes | 10,707 | |
Income tax expense (benefit) | 0 | |
Net income (loss) | 10,707 | |
Less: Net income attributable to noncontrolling interest | 884 | |
Net income (loss) attributable to Centennial Resource Development, Inc. | $ 9,823 | |
Income per share: | ||
Basic (USD per share) | $ 0.04 | |
Diluted (USD per share) | $ 0.04 | |
Predecessor | ||
Net revenues | ||
Oil sales | $ 13,226 | |
Natural gas sales | 1,313 | |
NGL sales | 582 | |
Total net revenues | 15,121 | |
Operating expenses | ||
Lease operating expenses | 4,042 | |
Severance and ad valorem taxes | 844 | |
Transportation, processing and gathering expenses | 1,130 | |
Depreciation, depletion and amortization | 21,303 | |
Abandonment expense and impairment of unproved properties | 0 | |
General and administrative expenses | 2,536 | |
Total operating expenses | 29,855 | |
Total operating income (loss) | (14,734) | |
Other income (expense) | ||
Gain (loss) on sale of oil and natural gas properties and other assets | (4) | |
Interest expense | (1,641) | |
Net gain on derivative instruments | 1,918 | |
Other income | 273 | |
Income (loss) before income taxes | (14,461) | |
Income tax expense (benefit) | 0 | |
Net income (loss) | (14,461) | |
Less: Net income attributable to noncontrolling interest | 0 | |
Net income (loss) attributable to Centennial Resource Development, Inc. | $ (14,461) |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholders’ Equity Statement - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands | Total | Common Class A | Common Class C | Series A Preferred Stock | Series B Preferred Stock | Total Shareholders’ Equity | Common StockCommon Class A | Common StockCommon Class C | Preferred StockSeries A Preferred Stock | Preferred StockSeries B Preferred Stock | Additional Paid-In Capital | (Accumulated Deficit) Retained Earnings | Noncontrolling Interest |
Common shares outstanding at beginning of period (shares) at Dec. 31, 2016 | 200,835,049 | 19,155,921 | 201,092,000 | 19,156,000 | |||||||||
Balance at beginning of period at Dec. 31, 2016 | $ 2,552,935 | $ 2,355,142 | $ 20 | $ 2 | $ 0 | $ 0 | $ 2,364,049 | $ (8,929) | $ 197,793 | ||||
Preferred shares outstanding at beginning of period (shares) at Dec. 31, 2016 | 1 | 104,400 | 0 | 104,000 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Warrants exercised (in shares) | 6,233,000 | ||||||||||||
Warrants exercised | $ 1 | (1) | |||||||||||
Restricted stock issued (in shares) | 268,000 | ||||||||||||
Equity based compensation | 2,610 | 2,610 | 2,610 | ||||||||||
Change in equity due to issuance of shares by Centennial Resource Production, LLC | 2,846 | 2,846 | (2,846) | ||||||||||
Net income (loss) | 10,707 | 9,823 | 9,823 | 884 | |||||||||
Common shares outstanding at end of period (shares) at Mar. 31, 2017 | 207,068,375 | 19,155,921 | 207,593,000 | 19,156,000 | |||||||||
Balance at end of period at Mar. 31, 2017 | $ 2,566,252 | $ 2,370,421 | $ 21 | $ 2 | $ 0 | $ 0 | $ 2,369,504 | $ 894 | $ 195,831 | ||||
Preferred shares outstanding at end of period (shares) at Mar. 31, 2017 | 1 | 104,400 | 0 | 104,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 10,707 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Accretion of asset retirement obligations | 114 | |
Cash flows from financing activities: | ||
Cash and cash equivalents, beginning of period | 134,083 | |
Cash and cash equivalents, end of period | 54,874 | |
Successor | ||
Cash flows from operating activities: | ||
Net income (loss) | 10,707 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Accretion of asset retirement obligations | 114 | |
Depreciation, depletion and amortization | 26,046 | |
Equity based compensation expense | 2,610 | |
(Gain) loss on sale of oil and natural gas properties | (166) | |
Net gain on derivative instruments | (3,759) | |
Net cash (paid) received for derivative settlements | (397) | |
Amortization of debt issuance costs | 93 | |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | (9,143) | |
(Increase) decrease in prepaid and other assets | (382) | |
(Decrease) increase in accounts payable and other liabilities | (6,475) | |
Net cash provided by operating activities | 19,248 | |
Cash flows from investing activities: | ||
Acquisition of oil and natural gas properties | (38,678) | |
Development of oil and natural gas properties | (62,121) | |
Purchases of other property and equipment | (1,139) | |
Proceeds from sales of oil and natural gas properties and other assets | 3,518 | |
Net cash used in investing activities | (98,420) | |
Cash flows from financing activities: | ||
Proceeds from revolving credit facility | 0 | |
Repayment of revolving credit facility | 0 | |
Financing obligation | 0 | |
Debt issuance costs | (37) | |
Net cash (used in) provided by financing activities | (37) | |
Net decrease in cash and cash equivalents | (79,209) | |
Cash and cash equivalents, beginning of period | 134,083 | |
Cash and cash equivalents, end of period | 54,874 | |
Supplemental cash flow information | ||
Cash paid for interest | 226 | |
Supplemental noncash activity | ||
Accrued capital expenditures included in accounts payable and accrued expenses | 63,978 | |
Asset retirement obligations incurred, including changes in estimate | $ 274 | |
Predecessor | ||
Cash flows from operating activities: | ||
Net income (loss) | $ (14,461) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Accretion of asset retirement obligations | 40 | |
Depreciation, depletion and amortization | 21,263 | |
Equity based compensation expense | 0 | |
(Gain) loss on sale of oil and natural gas properties | 4 | |
Net gain on derivative instruments | (1,918) | |
Net cash (paid) received for derivative settlements | 8,629 | |
Amortization of debt issuance costs | 122 | |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | 4,234 | |
(Increase) decrease in prepaid and other assets | 9 | |
(Decrease) increase in accounts payable and other liabilities | 630 | |
Net cash provided by operating activities | 18,552 | |
Cash flows from investing activities: | ||
Acquisition of oil and natural gas properties | (6,180) | |
Development of oil and natural gas properties | (16,206) | |
Purchases of other property and equipment | (33) | |
Proceeds from sales of oil and natural gas properties and other assets | 0 | |
Net cash used in investing activities | (22,419) | |
Cash flows from financing activities: | ||
Proceeds from revolving credit facility | 5,000 | |
Repayment of revolving credit facility | (2,000) | |
Financing obligation | (803) | |
Debt issuance costs | 0 | |
Net cash (used in) provided by financing activities | 2,197 | |
Net decrease in cash and cash equivalents | (1,670) | |
Cash and cash equivalents, beginning of period | 1,768 | |
Cash and cash equivalents, end of period | 98 | |
Supplemental cash flow information | ||
Cash paid for interest | 1,478 | |
Supplemental noncash activity | ||
Accrued capital expenditures included in accounts payable and accrued expenses | 13,000 | |
Asset retirement obligations incurred, including changes in estimate | $ 142 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 1—Basis of Presentation and Summary of Significant Accounting Policies Description of Business Centennial Resource Development, Inc. (the “Company” or “Centennial”) was originally incorporated in Delaware on November 4, 2015 as a special purpose acquisition company under the name Silver Run Acquisition Corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses. On February 29, 2016, the Company consummated its initial public offering of Units each consisting of one share of Class A Common Stock and one-third of one Public Warrant. On October 11, 2016, the Company consummated the acquisition of approximately 89% of the outstanding membership interests in Centennial Resource Production, LLC, a Delaware limited liability company (“CRP” and such acquisition, the “Business Combination”). In connection with the closing of the Business Combination, the Company changed its name from "Silver Run Acquisition Corporation" to "Centennial Resource Development, Inc." CRP was formed in August 2012 by an affiliate of NGP Energy Capital Management, a family of energy-focused private equity investment funds, in connection with the acquisition of all of the oil and natural gas properties and certain other assets of Celero, which was formed in 2006 to focus on the development and acquisition of oil and natural gas properties in Texas and New Mexico, primarily in the Permian Basin in West Texas. Until the closing of the Business Combination, CRP operated as a privately-held independent oil and natural gas company. The Company’s Class A Common Stock trades on The NASDAQ Capital Market (“NASDAQ”) under the ticker symbol “CDEV.” The Units automatically separated into their component securities prior to or upon closing of the Business Combination and, as a result, no longer trade as a separate security. On March 1, 2017, the Company delivered a notice of redemption to holders of the Public Warrants announcing that any Public Warrants that remained unexercised and outstanding on March 31, 2017 (the "Redemption Date") would be redeemed for $0.01 per Public Warrant. Following the delivery of the notice of redemption, all of the Company’s Public Warrants were either exercised for shares of Class A Common Stock or, following the Redemption Date, redeemed for $0.01 per Public Warrant and, as a result, the Public Warrants no longer trade on NASDAQ. The consolidated financial statements include the accounts of the Company and CRP and its wholly-owned subsidiaries. Unless otherwise specified or the context otherwise requires, all references in these notes to “Centennial” or the “Company” are to Centennial Resource Development, Inc. and its consolidated subsidiaries. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. Accordingly, certain disclosures required by U.S. GAAP and normally included in an Annual Report on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies and footnotes included in our 2016 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of interim financial information, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. Certain prior period amounts have been reclassified to conform to the current presentation on the accompanying condensed consolidated financial statements. The Company has evaluated subsequent events through the date of this filing. As a result of the Business Combination, the Company is the acquirer for accounting purposes, and CRP is the acquiree and accounting Predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for CRP for periods prior to the Business Combination. The Company is the “Successor” for periods after the Business Combination, which includes consolidation of CRP subsequent to the Business Combination on October 11, 2016. The Merger was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. As a result of the application of the acquisition method of accounting as of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on a different basis of accounting. Principles of Consolidation The consolidated financial statements included herein have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and its majority owned subsidiary CRP, and CRP’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the Company’s consolidated and combined financial statements requires the Company’s management to make various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts previously established. The more significant areas requiring the use of assumptions, judgments and estimates include: (1) oil and natural gas reserves; (2) cash flow estimates used in impairment tests of long-lived assets; (3) depreciation, depletion and amortization; (4) asset retirement obligations; (5) determining fair value and allocating purchase price in connection with business combinations; (6) valuation of derivative instruments; and (7) accrued revenue and related receivables. Recently Issued Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . This update affects all reporting entities and the objective of the guidance is to assist with evaluation whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied prospectively on or after the effective date and disclosures are not required at transition. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company is currently evaluating the impact, if any, that the adoption of this update will have on its financial position, results of operations and liquidity. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments . This update applies to all entities that are required to present a statement of cash flows. This update provides guidance on eight specific cash flow issues: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. This update will be effective for financial statements issued for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years with early adoption permitted. This update should be applied using the retrospective transition method. Adoption of this standard will only affect the presentation of the Company’s cash flows and will not have a material impact on its consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing . This update clarifies two principles of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers : identifying performance obligations and the licensing implementation guidance. This standard has the same effective date as ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) , the revenue recognition standard discussed below. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation . This update applies to all entities that issue equity-based payment awards to their employees. Under this update, there were several areas that were simplified including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early adoption permitted. The Company elected to early adopt this guidance in October 2016 in conjunction with the issuance of its equity awards. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) . Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for annual and interim reporting periods beginning after December 15, 2017, with early application not permitted. This update allows for either full retrospective adoption, meaning this update is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning this update is applied only to the most current period presented. The Company is currently evaluating the impact, if any, that the adoption of this update will have on its financial position, results of operations and liquidity. In February 2016, the FASB issued ASU 2016-02, Leases . This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Although the Company is still in the process of evaluating the effect of adopting ASU 2016-02, the adoption is expected to result in the recognition of assets and liabilities on its consolidated balance sheet for current operating leases. As of December 31, 2016, the Company had approximately $17.0 million of contractual obligations related to its non-cancelable leases, and it will evaluate those contracts as well as other existing arrangements to determine if they qualify for lease accounting under ASU 2016-02. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and most industry-specific guidance. ASU 2014-09 provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. In addition, new qualitative and quantitative disclosure requirements aim to enable financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for one year to fiscal years beginning after December 15, 2017. In May 2016, the FASB issued ASU 2016-11, which rescinds guidance from the SEC on accounting for gas balancing arrangements and will eliminate the use of the entitlements method. The standards permit retrospective application using either of the following methodologies: (i) restatement of each prior reporting period presented or (ii) recognition of a cumulative-effect adjustment as of the date of initial application. The Company plans to adopt these ASUs effective January 1, 2018. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. |
Property Acquisitions
Property Acquisitions | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Property Acquisitions | Note 2—Property Acquisitions 2016 Acquisition In December 2016, the Company acquired interests in 31 producing horizontal wells plus undeveloped acreage on approximately 35,500 net acres ( 43,500 gross acres) in Reeves County, Texas for an unadjusted purchase price of $855.0 million (“Silverback Acquisition”), which consisted of cash consideration paid by the Company and a $32.3 million payable at December 31, 2016 that was settled in 2017 when title issues relating to the purchased acreage were satisfied. The Company operates approximately 90% of, and has an approximate 90% working interest in, this acreage. The Wolfcamp A and Wolfcamp B are producing horizons on this acreage and the Company believes that this acreage may be prospective for the Wolfcamp C and Avalon and Bone Spring shale formations. The Silverback Acquisition was recorded using the acquisition method of accounting for business combinations. The allocation of the purchase price is based upon management’s estimates and assumptions related to the fair value of assets acquired and liabilities assumed on the acquisition date using currently available information. Transaction costs relating to this purchase were expensed as incurred. The initial accounting for the Silverback Acquisition is preliminary, and adjustments to provisional amounts (such as certain accrued liabilities) or recognition of additional assets acquired or liabilities assumed, may occur as additional information is obtained about facts and circumstances that existed as of the acquisition date. Since the acquisition date, the Company has recorded adjustments to provisional amounts totaling $0.3 million . These adjustments did not have a material impact on the Company’s previously reported consolidated financial statements, and therefore the Company has not retrospectively adjusted those financial statements. The table below summarizes the allocation of the $867.8 million adjusted purchase price, based on the acquisition date fair value of the assets acquired and the liabilities assumed as of March 31, 2017: (in thousands) Silverback Acquisition Purchase price $ 867,772 Allocation of purchase price: Unproved properties 753,763 Proved properties 116,700 Other property and equipment 56 Liabilities (2,747 ) Total $ 867,772 The pro forma effects of the Silverback Acquisition were insignificant to the Company’s 2016 results of operations. |
Accounts Receivable, Accounts P
Accounts Receivable, Accounts Payable and Accrued Expenses | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounts Receivable, Accounts Payable and Accrued Expenses | Note 3—Accounts Receivable, Accounts Payable and Accrued Expenses Accounts receivable are comprised of the following: (in thousands) March 31, 2017 December 31, 2016 Oil and natural gas sales $ 19,341 $ 11,596 Joint interest billings 2,692 2,942 Hedge settlements 128 194 Due from Silverback 1,156 — Other 5 2 Accounts receivable, net $ 23,322 $ 14,734 Accounts payable and accrued expenses are comprised of the following: (in thousands) March 31, 2017 December 31, 2016 Accounts payable $ 20,660 $ 11,210 Accrued capital expenditures 43,354 24,038 Revenues payable 5,539 3,815 Payable to Silverback 1,962 32,293 Accrued underwriting fees — 7,719 Other 6,631 7,025 Accounts payable and accrued expenses $ 78,146 $ 86,100 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 4—Long-Term Debt Credit Agreement As of March 31, 2017 , CRP's revolving credit facility had a borrowing base of $250.0 million , with a commitment level of $500.0 million and a sublimit for letters of credit of $15.0 million . The amount available to be borrowed under CRP's revolving credit facility is subject to a borrowing base that will be redetermined semiannually each April 1 and October 1 by the lenders in their sole discretion. CRP's credit agreement also allows for two optional borrowing base redeterminations on January 1 and July 1. The borrowing base depends on, among other things, the volumes of CRP's proved oil and natural gas reserves and estimated cash flows from these reserves and its commodity hedge positions. The borrowing base will automatically be decreased by an amount equal to 25% of the aggregate notional amount of issued permitted senior unsecured notes unless such decrease is waived by the lenders. Upon a redetermination of the borrowing base, if borrowings in excess of the revised borrowing capacity are outstanding, CRP could be required to immediately repay a portion of its debt outstanding under its credit agreement. In connection with the Spring 2017 semi-annual borrowing base redetermination, on April 28, 2017 , the Company entered into the fourth amendment to the restated credit agreement to increase the borrowing base from $250.0 million to $350.0 million . As of March 31, 2017 , there were no borrowings under the revolving credit facility. Outstanding letters of credit were $0.4 million , leaving $249.6 million in borrowing capacity under the revolving credit facility. The credit agreement also has customary covenants with which CRP was in compliance as of March 31, 2017 . |
Asset Retirement Obligations
Asset Retirement Obligations | 3 Months Ended |
Mar. 31, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Note 5—Asset Retirement Obligations The following table summarizes the changes in the Company’s asset retirement obligations for the three months ended March 31, 2017 : (in thousands) Three Months Ended March 31, 2017 Asset retirement obligations, beginning of period $ 7,226 Liabilities assumed — Liabilities incurred 274 Liabilities settled (29 ) Accretion expense 114 Revision of estimated liabilities — Asset retirement obligations, end of period $ 7,585 Asset retirement obligations (“AROs”) reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage and land restoration in accordance with applicable local, state and federal laws. Inherent in the fair value calculation of the AROs are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates and timing of settlement. To the extent future revisions to these assumptions impact the value of the existing ARO liability, a corresponding adjustment is made to the oil and natural gas property balance. |
Equity Based Compensation
Equity Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Based Compensation | Note 6—Equity Based Compensation The Company has recognized stock-based compensation cost as shown below. Historical amounts may not be representative of future amounts as the value of future awards may vary from historical amounts. (in thousands) Three Months Ended March 31, 2017 Restricted stock awards $ 856 Stock option awards 1,754 Total equity based compensation expense $ 2,610 Equity Incentive Plan On October 7, 2016, the stockholders of the Company approved the Centennial Resource Development, Inc. 2016 Long Term Incentive Plan (the “LTIP”). An aggregate of 16,500,000 shares of Class A Common Stock were authorized for issuance under the LTIP and, as of March 31, 2017, the Company had 11,844,936 shares of Class A Common Stock available for future grant. The LTIP provides for grant of stock options, including incentive stock options ("ISOs") and nonqualified stock options ("NSOs"), stock appreciation rights ("SARs"), restricted stock, dividend equivalents, restricted stock units ("RSUs") and other stock or cash based awards. Restricted Stock The following table provides information about restricted stock awards granted in the three months ended March 31, 2017 : Awards Weighted Average Grant-Date Fair Value Service-based stock awards: Outstanding as of December 31, 2016 256,597 $ 20.03 Vested — $ — Granted 268,467 $ 18.82 Canceled — $ — Outstanding as of March 31, 2017 525,064 $ 19.41 Compensation cost for the service-based vesting restricted shares is based upon the grant-date market value of the award. Such costs are recognized ratably over the applicable vesting period. Unrecognized compensation cost related to unvested restricted shares at March 31, 2017 was $8.9 million . The Company expects to recognize that cost over a weighted average period of 2.6 years. Stock Options Options that have been granted under the LTIP expire ten years from the grant date and have service-based vesting schedules of three years. The exercise price for an option under the LTIP is the closing price of the Company’s common stock as reported by NASDAQ on the date of grant. Compensation cost related to stock options is based on the grant-date fair value of the award, recognized ratably over the applicable vesting period. The Company estimates the fair value using the Black-Scholes option-pricing model. Expected volatilities are based on the re-levered asset volatility implied by a set of comparable companies. Expected term is based on the simplified method, and is estimated as the average of the weighted average vesting term and the time to expiration as of the grant date. The Company uses U.S. Treasury bond rates in effect at the grant date for its risk-free interest rates. The following summarizes the options granted and related information, and the assumptions used to determine the fair value of those options: Three Months Ended March 31, 2017 Options granted 1,429,500 Weighted average grant-date fair value $ 7.21 Weighted average exercise price $ 18.08 Total fair value (in thousands) $ 10,307 Expected term (in years) 6 Expected stock volatility 38.2 % Dividend yield — % Risk-free interest rate 2.0 % Information about outstanding stock options is summarized in the table below: Options Weighted Average Exercise Price Weighted Average Remaining Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2016 2,735,500 $ 14.67 5.8 $ 13,804 Exercised — $ — — $ — Granted 1,429,500 $ 18.08 5.9 $ 361 Forfeited (35,000 ) $ 14.52 5.6 $ 130 Outstanding as of March 31, 2017 4,130,000 $ 15.85 5.7 $ 9,999 Exercisable as of March 31, 2017 — $ — — $ — The following summary reflects the status of non-vested stock options as of March 31, 2017 : Options Weighted Average Grant-Date Fair Value Weighted Average Exercise Price Non-vested as of December 31, 2016 2,735,500 $ 5.93 $ 14.67 Vested — $ — $ — Granted 1,429,500 $ 7.21 $ 18.08 Forfeited (35,000 ) $ 5.86 $ 14.52 Non-vested as of March 31, 2017 4,130,000 $ 6.38 $ 15.85 As of March 31, 2017 , there was $23.6 million of unrecognized compensation cost related to non-vested stock options. The Company expects to recognize that cost on a pro rata basis over a weighted average period of 2.7 years. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Note 7—Derivative Instruments The Company is exposed to certain risks relating to its ongoing business operations, and it uses derivative instruments mainly to manage its commodity price risk. Commodity Derivative Contracts Historically, prices received for crude oil and natural gas production have been volatile because of supply and demand factors, worldwide political factors, general economic conditions and seasonal weather patterns. The Company periodically uses derivative instruments, such as costless collars and swaps, to mitigate its exposure to declines in commodity prices and to the corresponding negative impacts such declines can have on its cash flow available for reinvestment. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. The Company does not enter into derivative contracts for speculative or trading purposes. The following table summarizes the approximate volumes and average contract prices of swap contracts the Company had in place as of March 31, 2017 : Period Volume (Bbl) Weighted Average Fixed Price ($/Bbl) Crude oil swaps April 2017 - December 2017 508,750 $ 50.41 January 2018 - December 2018 36,500 $ 55.95 Crude oil basis swaps April 2017 - November 2017 85,750 $ (0.20 ) Period Volume (MMBtu) Weighted Average Fixed Price ($/MMBtu) Natural gas swaps April 2017 - December 2017 1,100,000 $ 2.94 Commodity Swap Contracts. In a typical commodity swap agreement, if the agreed upon published third-party index price (“index price”) is lower than the swap fixed price, the Company receives the difference between the index price and the agreed upon swap fixed price. If the index price is higher than the swap fixed price, the Company pays the difference. In addition, the Company has entered into basis swap contracts in order to hedge the difference between the NYMEX index price and a local index price. When the actual differential exceeds the fixed price provided by the basis swap contract, the Company receives the difference from the counterparty; when the differential is less than the fixed price provided by the basis swap contract, the Company pays the difference to the counterparty. Derivative Instrument Reporting. The Company’s oil and natural gas derivative instruments have not been designated as hedges for accounting purposes; therefore, all gains and losses are recognized in the Company’s condensed consolidated statements of operations. All derivative instruments are recorded at fair value in the condensed consolidated balance sheets, other than derivative instruments that meet the “normal purchase normal sale” exclusion, and any gains and losses are recognized in current period earnings. The following table presents gains and losses for derivative instruments not designated as hedges for accounting purposes for the periods presented: Successor Predecessor (in thousands) For the Three Months Ended March 31, 2017 For the Three Months Ended March 31, 2016 Net gain on derivative instruments $ 3,759 $ 1,918 Offsetting of Derivative Assets and Liabilities. The Company’s commodity derivatives are measured at fair value and are included in the accompanying condensed consolidated balance sheets as derivative assets and liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master netting agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The following tables summarize the location and fair value amounts of all the Company’s derivative instruments in the consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the condensed consolidated balance sheets: March 31, 2017 (in thousands) Balance Sheet Classification Gross Asset/Liability Amounts Gross Amounts Offset (1) Net Recognized Fair Value Assets/Liabilities Derivative Assets Derivative instruments Current assets $ 1,092 $ (223 ) $ 869 Derivative instruments Noncurrent assets 109 — 109 Total derivative assets $ 1,201 $ (223 ) $ 978 Derivative Liabilities Derivative instruments Current liabilities $ 1,996 $ (223 ) $ 1,773 Derivative instruments Noncurrent Liabilities — — — Total derivative liabilities $ 1,996 $ (223 ) $ 1,773 (1) The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements or contract termination. December 31, 2016 (in thousands) Balance Sheet Classification Gross Asset/Liability Amounts Gross Amounts Offset (1) Net Recognized Fair Value Assets/Liabilities Derivative Assets Derivative instruments Current assets $ 739 $ (308 ) $ 431 Derivative instruments Noncurrent assets — — — Total derivative assets $ 739 $ (308 ) $ 431 Derivative Liabilities Derivative instruments Current liabilities $ 5,669 $ (308 ) $ 5,361 Derivative instruments Noncurrent Liabilities 20 — 20 Total derivative liabilities $ 5,689 $ (308 ) $ 5,381 (1) The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements or contract termination. Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk-related contingent features. Counterparties to the Company’s financial derivative contracts are high credit-quality financial institutions that are lenders under CRP’s credit agreement. The Company uses only credit agreement participants to hedge with, since these institutions are secured equally with the holders of any CRP bank debt, which eliminates the potential need to post collateral when Centennial is in a derivative liability position. As a result, the Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations. In addition, the Company is exposed to credit risk associated with its derivative contracts from non-performance by its counterparties. The Company mitigates its exposure to any single counterparty by contracting with a number of financial institutions, each of which have a high credit ratings and is a member of CRP’s credit facility as referenced above. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 8—Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has categorized its assets and liabilities measured at fair value, based on the priority of inputs to the valuation technique, into a three-level fair value hierarchy. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability. The following table is a listing of the Company’s assets and liabilities that are measured at fair value and where they were classified within the fair value hierarchy as of March 31, 2017 and December 31, 2016 : (in thousands) Level 1 Level 2 Level 3 Commodity derivative liability March 31, 2017 $ — $ 795 $ — December 31, 2016 — 4,950 — Both financial and non-financial assets and liabilities are categorized within the above fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used by the Company as well as the general classification of such instruments pursuant to the above fair value hierarchy. There were no transfers between Level 1, Level 2 or Level 3 during any period presented. Derivatives The Company uses Level 2 inputs to measure the fair value of oil and natural gas commodity derivatives. The Company uses industry-standard models that consider various assumptions including current market and contractual prices for the underlying instruments, implied market volatility, time value, nonperformance risk, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the instrument and can be supported by observable data. The Company utilizes its counterparties’ valuations to assess the reasonableness of its own valuations. Nonrecurring Fair Value Measurements The fair value measurements of assets acquired and liabilities assumed are measured on a nonrecurring basis on the acquisition date using an income valuation technique based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs to the valuation of acquired oil and natural gas properties include estimates of: (i) reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices, including price differentials; (v) future cash flows; and (vi) a market participant-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation. Refer to Note 2—Property Acquisitions for additional information on the fair value of assets acquired during 2016 . Other Financial Instruments The carrying amounts of the Company’s cash, cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. The carrying values of the amounts outstanding under the credit agreement approximate fair value because the variable interest rates are reflective of current market conditions. |
Shareholders' Equity and Noncon
Shareholders' Equity and Noncontrolling Interest | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Shareholders' Equity and Noncontrolling Interest | Note 9—Shareholders' Equity and Noncontrolling Interest Warrants On March 1, 2017, the Company delivered a notice of redemption to holders of the Public Warrants originally sold as part of the Units in the IPO announcing its intention to redeem any Public Warrants that remained unexercised and outstanding after March 31, 2017 for $0.01 per Public Warrant. As permitted under the warrant agreement that provides the terms of the Public Warrants, the notice of redemption required all holders exercising their Public Warrants prior to March 31, 2017 to do so on a “cashless basis” and surrender their Public Warrants for a number of shares of Class A Common Stock equal to the product of the quotient equal to (i) the difference between $11.50 and $18.44 (the average last sale price of the Class A Common Stock for the ten trading days ending on February 24, 2017) divided by (ii) $18.44 , or approximately 0.376 , multiplied by the number of Public Warrants held by such holder, rounded down to the nearest whole share. As of March 31, 2017 , 16,563,448 Public Warrants had been exercised, resulting in the issuance of 6,233,326 shares of Class A Common Stock. As of March 31, 2017 , 8,103,195 warrants, including 103,195 Public Warrants, were still outstanding. Subsequent to March 31, 2017, the remaining outstanding Public Warrants were either surrendered in exchange for the issuance of Class A Common Stock, if notice of exercise or guaranteed delivery of such Public Warrants was received on or prior to March 31, 2017, or redeemed. The 8,000,000 outstanding Private Placement Warrants are non-redeemable so long as they are held by the Company’s Sponsor or its permitted transferees. Noncontrolling Interest For the three months ended March 31, 2017 , the Company’s noncontrolling interest was 7.8% , which represents the membership interest in CRP held by holders other than the Company. As of March 31, 2017 , as a result of the redemption of the Company’s Public Warrants, the noncontrolling interest percentage decreased from 7.8% to 7.6% . The Company has consolidated the financial position and results of operations of CRP and reflected that portion retained by the other holders as a noncontrolling interest. The following table summarizes the noncontrolling interest income: Successor Predecessor (in thousands) For the Three Months Ended March 31, 2017 For the Three Months Ended March 31, 2016 Net income attributable to noncontrolling interest $ 884 $ — |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10—Income Taxes CRP is treated as a partnership for U.S. federal and most applicable state and local income tax purposes, and Centennial consolidates the financial results of CRP. As a partnership, CRP is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by CRP is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of CRP, as well as any stand-alone income or loss generated by the Company. Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. During the three months ended March 31, 2017 (Successor) and March 31, 2016 (Predecessor) , the Company recognized no income tax expense or benefit. The Company's provision for income taxes for the three months ended March 31, 2017 differed from the amount that would be provided by applying the statutory U.S. federal income tax rate of 35% to pre-tax income because the Company released $3.5 million of its deferred tax asset valuation allowance in the first quarter of 2017, such that income tax expense of $3.5 million for the three months ended March 31, 2017 was fully offset by the tax benefit associated with the portion of the valuation allowance released. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. However, no uncertain tax positions were identified as of any date on or before March 31, 2017 . |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 11—Earnings Per Share The two-class method of computing earnings per share is required for entities that have participating securities. The two-class method is an earnings allocation formula that determines earnings per share for participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is calculated by dividing earnings available to common shareholders by the weighted average shares-basic during each period. The Company’s shares of Series B Preferred Stock have a non-forfeitable right to participate in distributions with common stockholders on a pro rata, as-converted basis and as such are considered participating securities. Shares of the Company’s unvested restricted stock are eligible to receive dividends; however, dividend rights will be forfeited if the award does not vest. Accordingly, these shares are not considered participating securities. Shares of the Company’s Class C Common Stock and warrants do not share in the earnings or losses and are therefore not participating securities. The Company uses the "if-converted" method to determine the potential dilutive effect of exchanges of outstanding CRP Common Units and corresponding shares of its outstanding Class C Common Stock, and the treasury stock method to determine the potential dilutive effect of its outstanding stock options, restricted stock and warrants. The following table reflects the allocation of net income to common stockholders and EPS computations for the periods indicated based on a weighted average number of common stock outstanding for the period: (in thousands, except per share data) For the Three Months Ended March 31, 2017 Net income $ 9,823 Less: Income allocable to participating securities 1,125 Net income available for common shareholders $ 8,698 Basic net income per share $ 0.04 Diluted net income per share $ 0.04 Basic weighted average share outstanding 201,776 Add: Dilutive effects of stock options, restricted stock, and warrants 3,166 Diluted weighted average shares outstanding 204,942 |
Transactions With Related Parti
Transactions With Related Parties | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Note 12—Transactions with Related Parties Customer and Supplier Relationships Riverstone Affiliated Companies. From time to time, the Company obtains services related to its drilling and completion activities from affiliates of Riverstone. In particular, the Company has paid the following amounts to the following affiliates of Riverstone for such services: (i) approximately $12.5 million during the three months ended March 31, 2017 (Successor) to Liberty Oilfield Services, LLC; and (ii) approximately $1.1 million during the three months ended March 31, 2017 (Successor) to Permian Tank and Manufacturing, Inc. (“Permian”). At March 31, 2017 , included in Accounts payable and accrued expenses was $0.6 million due to Permian. Other Affiliated Companies. Mark G. Papa, our President, Chief Executive Officer and Chairman of the Board, serves as a director and Chairman of the Board of Oil States International, Inc., an energy services company publicly traded on the New York Stock Exchange (“Oil States”). From time to time, the Company obtains services related to drilling and completion activities from Oil States. During the three months ended March 31, 2017 , the Company paid approximately $0.7 million to Oil States. At March 31, 2017 , included in Accounts payable and accrued expenses was $1.3 million due to Oil States. NGP Affiliated Companies. Beginning December 28, 2016, NGP and entities affiliated with NGP were no longer considered related parties of the Company and any expenses incurred on or after December 28, 2016 with NGP and entities affiliated with NGP are no longer classified as related party expenses. However, expenses incurred before December 28, 2016 with NGP and entities affiliated with NGP were classified as related party expenses and are detailed below. In May 2016, the Company acquired acreage in close proximity to its operating area in Reeves County, Texas and wellbore only rights in an uncompleted horizontal wellbore for approximately $9.8 million from Caird DB, LLC, an affiliate of NGP. From time to time, the Company obtains services related to its drilling and completion activities from affiliates of NGP. In particular, the Company paid $1.2 million to RockPile Energy Services, LLC during the three months ended March 31, 2016 (Predecessor). The Company is party to a 15 -year natural gas gathering agreement with PennTex Permian, LLC (“PennTex”), an NGP affiliated company, which terminates on April 1, 2029 and is subject to one -year extensions at either party’s election. Under the agreement, PennTex gathers and processes the Company’s natural gas. PennTex purchases the extracted natural gas liquids from the Company, net of gathering fees and an agreed percentage of the actual proceeds from the sale of the residue natural gas and natural gas liquids. Net payments received from PennTex for the three months ended March 31, 2016 (Predecessor) was $0.1 million . In the third quarter of 2016, PennTex sold its assets related to this agreement to an unrelated third party. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13—Commitments and Contingencies Commitments There have been no material changes in commitments during the three months ended March 31, 2017 . Please refer to Note 13 — Commitment and Contingencies included in Part II, Item 8. in our 2016 Annual Report. Contingencies In the ordinary course of business, the Company may at times be subject to claims and legal actions. Management believes it is remote that the impact of such matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. Management is unaware of any pending litigation brought against the Company requiring the reserve of a contingent liability as of the date of these condensed consolidated financial statements. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14—Subsequent Events Credit Facility Amendment In connection with the Spring 2017 semi-annual redetermination, on April 28, 2017 , the Company entered into the fourth amendment to the restated credit agreement to increase the borrowing base from $250.0 million to $350.0 million . GMT Acquisition In April 2017, the Company entered into a definitive agreement to acquire certain undeveloped acreage and producing oil and natural gas properties in the core of the Northern Delaware Basin from GMT Exploration Company LLC (“GMT”) for total consideration of approximately $350.0 million , subject to purchase price adjustments and customary closing conditions, which is expected to close on or about June 8, 2017. The assets acquired include 36 operated producing horizontal wells and approximately 11,860 net acres in Lea County, New Mexico. In connection with the GMT Acquisition, in May 2017, the Company issued and sold in a private placement 23,500,000 shares of its Class A Common Stock to certain other investors, resulting in gross proceeds of approximately $341.0 million . Concurrent with closing, the Company intends to use 100% of the proceeds from the private placements to fund the cash consideration for the GMT Acquisition. |
Basis of Presentation and Sum21
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. Accordingly, certain disclosures required by U.S. GAAP and normally included in an Annual Report on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies and footnotes included in our 2016 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of interim financial information, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. Certain prior period amounts have been reclassified to conform to the current presentation on the accompanying condensed consolidated financial statements. The Company has evaluated subsequent events through the date of this filing. As a result of the Business Combination, the Company is the acquirer for accounting purposes, and CRP is the acquiree and accounting Predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for CRP for periods prior to the Business Combination. The Company is the “Successor” for periods after the Business Combination, which includes consolidation of CRP subsequent to the Business Combination on October 11, 2016. The Merger was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. As a result of the application of the acquisition method of accounting as of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on a different basis of accounting. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements included herein have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and its majority owned subsidiary CRP, and CRP’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated and combined financial statements requires the Company’s management to make various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts previously established. The more significant areas requiring the use of assumptions, judgments and estimates include: (1) oil and natural gas reserves; (2) cash flow estimates used in impairment tests of long-lived assets; (3) depreciation, depletion and amortization; (4) asset retirement obligations; (5) determining fair value and allocating purchase price in connection with business combinations; (6) valuation of derivative instruments; and (7) accrued revenue and related receivables. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . This update affects all reporting entities and the objective of the guidance is to assist with evaluation whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied prospectively on or after the effective date and disclosures are not required at transition. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company is currently evaluating the impact, if any, that the adoption of this update will have on its financial position, results of operations and liquidity. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments . This update applies to all entities that are required to present a statement of cash flows. This update provides guidance on eight specific cash flow issues: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. This update will be effective for financial statements issued for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years with early adoption permitted. This update should be applied using the retrospective transition method. Adoption of this standard will only affect the presentation of the Company’s cash flows and will not have a material impact on its consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing . This update clarifies two principles of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers : identifying performance obligations and the licensing implementation guidance. This standard has the same effective date as ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) , the revenue recognition standard discussed below. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation . This update applies to all entities that issue equity-based payment awards to their employees. Under this update, there were several areas that were simplified including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early adoption permitted. The Company elected to early adopt this guidance in October 2016 in conjunction with the issuance of its equity awards. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) . Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for annual and interim reporting periods beginning after December 15, 2017, with early application not permitted. This update allows for either full retrospective adoption, meaning this update is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning this update is applied only to the most current period presented. The Company is currently evaluating the impact, if any, that the adoption of this update will have on its financial position, results of operations and liquidity. In February 2016, the FASB issued ASU 2016-02, Leases . This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Although the Company is still in the process of evaluating the effect of adopting ASU 2016-02, the adoption is expected to result in the recognition of assets and liabilities on its consolidated balance sheet for current operating leases. As of December 31, 2016, the Company had approximately $17.0 million of contractual obligations related to its non-cancelable leases, and it will evaluate those contracts as well as other existing arrangements to determine if they qualify for lease accounting under ASU 2016-02. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and most industry-specific guidance. ASU 2014-09 provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. In addition, new qualitative and quantitative disclosure requirements aim to enable financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for one year to fiscal years beginning after December 15, 2017. In May 2016, the FASB issued ASU 2016-11, which rescinds guidance from the SEC on accounting for gas balancing arrangements and will eliminate the use of the entitlements method. The standards permit retrospective application using either of the following methodologies: (i) restatement of each prior reporting period presented or (ii) recognition of a cumulative-effect adjustment as of the date of initial application. The Company plans to adopt these ASUs effective January 1, 2018. Although the Company is still in the process of assessing its contracts with customers and evaluating the effect of adopting these standards, as well as the transition method to be applied, the adoption is not expected to have a significant impact on the Company’s consolidated financial statements other than additional disclosures. |
Property Acquisitions (Tables)
Property Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price Allocation | The table below summarizes the allocation of the $867.8 million adjusted purchase price, based on the acquisition date fair value of the assets acquired and the liabilities assumed as of March 31, 2017: (in thousands) Silverback Acquisition Purchase price $ 867,772 Allocation of purchase price: Unproved properties 753,763 Proved properties 116,700 Other property and equipment 56 Liabilities (2,747 ) Total $ 867,772 |
Accounts Receivable, Accounts23
Accounts Receivable, Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable are comprised of the following: (in thousands) March 31, 2017 December 31, 2016 Oil and natural gas sales $ 19,341 $ 11,596 Joint interest billings 2,692 2,942 Hedge settlements 128 194 Due from Silverback 1,156 — Other 5 2 Accounts receivable, net $ 23,322 $ 14,734 |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued expenses are comprised of the following: (in thousands) March 31, 2017 December 31, 2016 Accounts payable $ 20,660 $ 11,210 Accrued capital expenditures 43,354 24,038 Revenues payable 5,539 3,815 Payable to Silverback 1,962 32,293 Accrued underwriting fees — 7,719 Other 6,631 7,025 Accounts payable and accrued expenses $ 78,146 $ 86,100 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Asset Retirement Obligations | The following table summarizes the changes in the Company’s asset retirement obligations for the three months ended March 31, 2017 : (in thousands) Three Months Ended March 31, 2017 Asset retirement obligations, beginning of period $ 7,226 Liabilities assumed — Liabilities incurred 274 Liabilities settled (29 ) Accretion expense 114 Revision of estimated liabilities — Asset retirement obligations, end of period $ 7,585 |
Equity Based Compensation (Tabl
Equity Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Compensation Expense | The Company has recognized stock-based compensation cost as shown below. Historical amounts may not be representative of future amounts as the value of future awards may vary from historical amounts. (in thousands) Three Months Ended March 31, 2017 Restricted stock awards $ 856 Stock option awards 1,754 Total equity based compensation expense $ 2,610 |
Nonvested Restricted Stock Shares Activity | The following table provides information about restricted stock awards granted in the three months ended March 31, 2017 : Awards Weighted Average Grant-Date Fair Value Service-based stock awards: Outstanding as of December 31, 2016 256,597 $ 20.03 Vested — $ — Granted 268,467 $ 18.82 Canceled — $ — Outstanding as of March 31, 2017 525,064 $ 19.41 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following summarizes the options granted and related information, and the assumptions used to determine the fair value of those options: Three Months Ended March 31, 2017 Options granted 1,429,500 Weighted average grant-date fair value $ 7.21 Weighted average exercise price $ 18.08 Total fair value (in thousands) $ 10,307 Expected term (in years) 6 Expected stock volatility 38.2 % Dividend yield — % Risk-free interest rate 2.0 % |
Schedule of Share-based Compensation, Stock Options, Activity | Information about outstanding stock options is summarized in the table below: Options Weighted Average Exercise Price Weighted Average Remaining Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2016 2,735,500 $ 14.67 5.8 $ 13,804 Exercised — $ — — $ — Granted 1,429,500 $ 18.08 5.9 $ 361 Forfeited (35,000 ) $ 14.52 5.6 $ 130 Outstanding as of March 31, 2017 4,130,000 $ 15.85 5.7 $ 9,999 Exercisable as of March 31, 2017 — $ — — $ — The following summary reflects the status of non-vested stock options as of March 31, 2017 : Options Weighted Average Grant-Date Fair Value Weighted Average Exercise Price Non-vested as of December 31, 2016 2,735,500 $ 5.93 $ 14.67 Vested — $ — $ — Granted 1,429,500 $ 7.21 $ 18.08 Forfeited (35,000 ) $ 5.86 $ 14.52 Non-vested as of March 31, 2017 4,130,000 $ 6.38 $ 15.85 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table summarizes the approximate volumes and average contract prices of swap contracts the Company had in place as of March 31, 2017 : Period Volume (Bbl) Weighted Average Fixed Price ($/Bbl) Crude oil swaps April 2017 - December 2017 508,750 $ 50.41 January 2018 - December 2018 36,500 $ 55.95 Crude oil basis swaps April 2017 - November 2017 85,750 $ (0.20 ) Period Volume (MMBtu) Weighted Average Fixed Price ($/MMBtu) Natural gas swaps April 2017 - December 2017 1,100,000 $ 2.94 |
Derivative Instruments, Gain (Loss) | The following table presents gains and losses for derivative instruments not designated as hedges for accounting purposes for the periods presented: Successor Predecessor (in thousands) For the Three Months Ended March 31, 2017 For the Three Months Ended March 31, 2016 Net gain on derivative instruments $ 3,759 $ 1,918 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following tables summarize the location and fair value amounts of all the Company’s derivative instruments in the consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the condensed consolidated balance sheets: March 31, 2017 (in thousands) Balance Sheet Classification Gross Asset/Liability Amounts Gross Amounts Offset (1) Net Recognized Fair Value Assets/Liabilities Derivative Assets Derivative instruments Current assets $ 1,092 $ (223 ) $ 869 Derivative instruments Noncurrent assets 109 — 109 Total derivative assets $ 1,201 $ (223 ) $ 978 Derivative Liabilities Derivative instruments Current liabilities $ 1,996 $ (223 ) $ 1,773 Derivative instruments Noncurrent Liabilities — — — Total derivative liabilities $ 1,996 $ (223 ) $ 1,773 (1) The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements or contract termination. December 31, 2016 (in thousands) Balance Sheet Classification Gross Asset/Liability Amounts Gross Amounts Offset (1) Net Recognized Fair Value Assets/Liabilities Derivative Assets Derivative instruments Current assets $ 739 $ (308 ) $ 431 Derivative instruments Noncurrent assets — — — Total derivative assets $ 739 $ (308 ) $ 431 Derivative Liabilities Derivative instruments Current liabilities $ 5,669 $ (308 ) $ 5,361 Derivative instruments Noncurrent Liabilities 20 — 20 Total derivative liabilities $ 5,689 $ (308 ) $ 5,381 (1) The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements or contract termination. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Liabilities Measured on Recurring Basis | The following table is a listing of the Company’s assets and liabilities that are measured at fair value and where they were classified within the fair value hierarchy as of March 31, 2017 and December 31, 2016 : (in thousands) Level 1 Level 2 Level 3 Commodity derivative liability March 31, 2017 $ — $ 795 $ — December 31, 2016 — 4,950 — |
Shareholders' Equity and Nonc28
Shareholders' Equity and Noncontrolling Interest (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Noncontrolling Interest | The following table summarizes the noncontrolling interest income: Successor Predecessor (in thousands) For the Three Months Ended March 31, 2017 For the Three Months Ended March 31, 2016 Net income attributable to noncontrolling interest $ 884 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reflects the allocation of net income to common stockholders and EPS computations for the periods indicated based on a weighted average number of common stock outstanding for the period: (in thousands, except per share data) For the Three Months Ended March 31, 2017 Net income $ 9,823 Less: Income allocable to participating securities 1,125 Net income available for common shareholders $ 8,698 Basic net income per share $ 0.04 Diluted net income per share $ 0.04 Basic weighted average share outstanding 201,776 Add: Dilutive effects of stock options, restricted stock, and warrants 3,166 Diluted weighted average shares outstanding 204,942 |
Basis of Presentation and Sum30
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 29, 2016 | Mar. 01, 2017 | Dec. 31, 2016 | Oct. 11, 2016 |
Entity Information [Line Items] | ||||
Contractual obligation | $ 17 | |||
Predecessor | Common Class A | IPO | ||||
Entity Information [Line Items] | ||||
Shares issued in transaction (in shares) | 1 | |||
Centennial Resource Production, LLC | ||||
Entity Information [Line Items] | ||||
Ownership interest acquired | 89.00% | |||
Public Warrants | ||||
Entity Information [Line Items] | ||||
Warrant exercise price (in dollars per share) | $ 0.01 |
Property Acquisitions - Additio
Property Acquisitions - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended |
Dec. 31, 2016USD ($)aWells | Mar. 31, 2017USD ($) | |
Business Acquisition [Line Items] | ||
Payable to Silverback | $ 32,293 | $ 1,962 |
Undeveloped Acreage and Oil and Gas Producing Properties From Silverback Exploration, LLC | ||
Business Acquisition [Line Items] | ||
Number of horizontal wells acquired (in wells) | Wells | 31 | |
Gas and oil area, area offset by existing acreage (in acres) | a | 35,500 | |
Gas and oil area, gross offset existing acreage (in acres) | a | 43,500 | |
Consideration transferred | $ 855,000 | 867,772 |
Payable to Silverback | $ 32,300 | |
Gas and oil area, operated by company, percent | 90.00% | |
Gas and oil area, working interest, percent | 90.00% | |
Consideration transferred provisional adjustments | $ 300 |
Property Acquisitions - Schedul
Property Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - Undeveloped Acreage and Oil and Gas Producing Properties From Silverback Exploration, LLC - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Dec. 31, 2016 | Mar. 31, 2017 | |
Business Acquisition [Line Items] | ||
Consideration transferred | $ 855,000 | $ 867,772 |
Unproved properties | 753,763 | |
Proved properties | 116,700 | |
Other property and equipment | 56 | |
Liabilities | (2,747) | |
Consideration transferred | $ 855,000 | $ 867,772 |
Accounts Receivable, Accounts33
Accounts Receivable, Accounts Payable and Accrued Expenses - Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Oil and natural gas sales | $ 19,341 | $ 11,596 |
Joint interest billings | 2,692 | 2,942 |
Hedge settlements | 128 | 194 |
Other | 5 | 2 |
Accounts receivable, net | 23,322 | 14,734 |
Silverback Exploration, LLC | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Other | $ 1,156 | $ 0 |
Accounts Receivable, Accounts34
Accounts Receivable, Accounts Payable and Accrued Expenses - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable | $ 20,660 | $ 11,210 |
Accrued capital expenditures | 43,354 | 24,038 |
Revenues payable | 5,539 | 3,815 |
Payable to Silverback | 1,962 | 32,293 |
Accrued underwriting fees | 0 | 7,719 |
Other | 6,631 | 7,025 |
Accounts payable and accrued expenses | $ 78,146 | $ 86,100 |
Long-Term Debt (Details)
Long-Term Debt (Details) - Line of Credit - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Apr. 28, 2017 | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Commitment amount | $ 500,000,000 | |
Automatic decrease in borrowing base | 25.00% | |
Current borrowing capacity | $ 250,000,000 | |
Remaining borrowing capacity | 249,600,000 | |
Revolving Credit Facility | Subsequent Event | ||
Debt Instrument [Line Items] | ||
Current borrowing capacity | $ 350,000,000 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Commitment amount | 15,000,000 | |
Letters of credit outstanding | $ 400,000 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |
Asset retirement obligations, beginning of period | $ 7,226 |
Liabilities assumed | 0 |
Liabilities incurred | 274 |
Liabilities settled | (29) |
Accretion expense | 114 |
Revision of estimated liabilities | 0 |
Asset retirement obligations, end of period | $ 7,585 |
Equity Based Compensation - Com
Equity Based Compensation - Compensation Expense (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Equity based compensation expense | $ 2,610 |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Equity based compensation expense | 856 |
Stock option awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Equity based compensation expense | $ 1,754 |
Equity Based Compensation - Res
Equity Based Compensation - Restricted Stock (Details) - Restricted stock awards $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Awards | |
Outstanding, beginning of period (in shares) | shares | 256,597 |
Vested (in shares) | shares | 0 |
Granted (in shares) | shares | 268,467 |
Canceled (in shares) | shares | 0 |
Outstanding, end of period (in shares) | shares | 525,064 |
Weighted Average Grant-Date Fair Value | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 20.03 |
Vested (in dollars per share) | $ / shares | 0 |
Granted (in dollars per share) | $ / shares | 18.82 |
Canceled (in dollar per share) | $ / shares | 0 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 19.41 |
Unrecognized compensation costs | $ | $ 8.9 |
Unrecognized compensation costs, period for recognition | 2 years 6 months 26 days |
Equity Based Compensation - Nar
Equity Based Compensation - Narrative (Details) - 2016 Long Term Incentive Plan - shares | 3 Months Ended | |
Mar. 31, 2017 | Oct. 07, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for issuance under LTIP (in shares) | 16,500,000 | |
Shares available for future grant under LTIP (in shares) | 11,844,936 | |
Stock option awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Option expiration period | 10 years | |
Vesting period | 3 years |
Equity Based Compensation - Ass
Equity Based Compensation - Assumptions Used (Details) - Stock option awards $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options granted (in shares) | shares | 1,429,500 |
Weighted average grant date fair value (in dollars per share) | $ 7.21 |
Weighted average exercise price (in dollars per share) | $ 18.08 |
Total fair value | $ | $ 10,307 |
Expected term | 6 years |
Expected stock volatility | 38.20% |
Dividend yield | 0.00% |
Risk-free interest rate | 2.00% |
Equity Based Compensation - Opt
Equity Based Compensation - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2016 | Mar. 31, 2017 |
Nonvested Options, Weighted Average Exercise Price | ||
Unrecognized compensation costs | $ 23,600 | |
Stock option awards | ||
Options | ||
Outstanding, beginning of period (in shares) | 2,735,500 | |
Exercised (in shares) | 0 | |
Granted (in shares) | 1,429,500 | |
Forfeited (in shares) | (35,000) | |
Outstanding, end of period (in shares) | 2,735,500 | 4,130,000 |
Exercisable (in shares) | 0 | |
Weighted Average Exercise Price | ||
Outstanding, beginning of period (In dollars per share) | $ 14.67 | |
Exercised (in dollars per share) | 0 | |
Granted (in dollars per share) | 18.08 | |
Forfeited (in dollars per share) | 14.52 | |
Outstanding, end of period (In dollars per share) | $ 14.67 | 15.85 |
Exercisable (in dollars per share) | $ 0 | |
Granted, weighted average remaining term | 5 years 10 months 14 days | |
Forfeited, weighted average remaining term | 5 years 6 months 27 days | |
Outstanding, weighted average remaining term | 5 years 9 months 18 days | 5 years 8 months 5 days |
Granted, aggregate intrinsic value | $ 361 | |
Forfeited, aggregate intrinsic value | 130 | |
Outstanding, aggregate intrinsic value | $ 13,804 | 9,999 |
Exercisable, aggregate intrinsic value | $ 0 | |
Nonvested Options | ||
Non-vested, beginning of period (in shares) | 2,735,500 | |
Vested (in shares) | 0 | |
Granted (in shares) | 1,429,500 | |
Forfeited (in shares) | (35,000) | |
Non-vested, end of period (in shares) | 2,735,500 | 4,130,000 |
Nonvested Options, Weighted Average Grant Date Fair Value | ||
Non-vested, beginning of period (in dollars per share) | $ 5.93 | |
Vested (in dollars per share) | 0 | |
Granted (in dollars per share) | 7.21 | |
Forfeited (in dollars per share) | 5.86 | |
Non-vested, end of period (in dollars per share) | $ 5.93 | 6.38 |
Nonvested Options, Weighted Average Exercise Price | ||
Non-vested, beginning of period (in dollar per share) | 14.67 | |
Vested (in dollars per share) | 0 | |
Granted (in dollars per share) | 18.08 | |
Forfeited (in dollars per share) | 14.52 | |
Non-vested, end of period (in dollars per share) | $ 14.67 | $ 15.85 |
Unrecognized compensation costs, period for recognition | 2 years 8 months 5 days |
Derivative Instruments (Details
Derivative Instruments (Details) - Not Designated as Hedging Instrument | 3 Months Ended |
Mar. 31, 2017MMBTU$ / MMBTU$ / bblbbl | |
Crude Oil Swap - Oil Remainder of Current Year | |
Derivative [Line Items] | |
Volume (Bbl) | bbl | 508,750 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / bbl | 50.41 |
Crude Oil Swap - Oil Next Year | |
Derivative [Line Items] | |
Volume (Bbl) | bbl | 36,500 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / bbl | 55.95 |
Crude Oil Basis Swap - Oil Remainder of Current Year | |
Derivative [Line Items] | |
Volume (Bbl) | bbl | 85,750 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / bbl | 0.20 |
Natural Gas Swap - Remainder of Current Year | |
Derivative [Line Items] | |
Volume (MMBtu) | MMBTU | 1,100,000 |
Weighted Average Fixed Price ($/Bbl or $/MMBtu) | $ / MMBTU | 2.94 |
Derivative Instruments - Gain (
Derivative Instruments - Gain (Loss) On Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Successor | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net gain on derivative instruments | $ 3,759 | |
Predecessor | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net gain on derivative instruments | $ 1,918 |
Derivative Instruments - Fair V
Derivative Instruments - Fair Value of Derivative Instruments Balance Sheet Classification (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Derivative Assets | ||
Gross Asset/Liability Amounts | $ 1,201 | $ 739 |
Netting Adjustments | (223) | (308) |
Net Recognized Fair Value Assets/Liabilities | 978 | 431 |
Derivative Liabilities | ||
Gross Asset/Liability Amounts | 1,996 | 5,689 |
Netting Adjustments | (223) | (308) |
Net Recognized Fair Value Assets/Liabilities | 1,773 | 5,381 |
Current assets | ||
Derivative Assets | ||
Gross Asset/Liability Amounts | 1,092 | 739 |
Netting Adjustments | (223) | (308) |
Net Recognized Fair Value Assets/Liabilities | 869 | 431 |
Noncurrent assets | ||
Derivative Assets | ||
Gross Asset/Liability Amounts | 109 | 0 |
Netting Adjustments | 0 | 0 |
Net Recognized Fair Value Assets/Liabilities | 109 | 0 |
Current liabilities | ||
Derivative Liabilities | ||
Gross Asset/Liability Amounts | 1,996 | 5,669 |
Netting Adjustments | (223) | (308) |
Net Recognized Fair Value Assets/Liabilities | 1,773 | 5,361 |
Noncurrent Liabilities | ||
Derivative Liabilities | ||
Gross Asset/Liability Amounts | 0 | 20 |
Netting Adjustments | 0 | 0 |
Net Recognized Fair Value Assets/Liabilities | $ 0 | $ 20 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset (liability), net | $ 0 | $ 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset (liability), net | 795 | 4,950 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset (liability), net | $ 0 | $ 0 |
Shareholders' Equity and Nonc46
Shareholders' Equity and Noncontrolling Interest - Warrants (Details) - $ / shares | Mar. 01, 2017 | Mar. 31, 2017 |
Class of Warrant or Right [Line Items] | ||
Warrants redeemed | 16,563,448 | |
Warrants outstanding (in shares) | 8,103,195 | |
Common Class A | ||
Class of Warrant or Right [Line Items] | ||
Common stock, shares outstanding upon exercise of warrants (in shares) | 6,233,326 | |
Public Warrants | ||
Class of Warrant or Right [Line Items] | ||
Warrant exercise price (in dollars per share) | $ 0.01 | |
Warrants, cashless exercise, common stock issues as percent of warrants | 37.60% | |
Warrants outstanding (in shares) | 103,195 | |
Public Warrants | Minimum | ||
Class of Warrant or Right [Line Items] | ||
Warrant, cashless exercise, average common stock price per share (in dollars per share) | $ 11.50 | |
Public Warrants | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Warrant, cashless exercise, average common stock price per share (in dollars per share) | $ 18.44 | |
Warrants To Purchase Class A Common Stock, Private Placement | ||
Class of Warrant or Right [Line Items] | ||
Warrants outstanding (in shares) | 8,000,000 |
Shareholders' Equity and Nonc47
Shareholders' Equity and Noncontrolling Interest - Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 30, 2017 | |
Successor | |||
Noncontrolling Interest [Line Items] | |||
Net income attributable to noncontrolling interest | $ 884 | ||
Predecessor | |||
Noncontrolling Interest [Line Items] | |||
Net income attributable to noncontrolling interest | $ 0 | ||
Centennial Resource Production, LLC | |||
Noncontrolling Interest [Line Items] | |||
Ownership interest of non-controlling interest | 7.60% | 7.80% |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Federal statutory rate | 35.00% |
Deferred tax asset valuation allowance released | $ 3.5 |
Tax expense (benefit) offset by change in valuation allowance | $ 3.5 |
Earnings Per Share (Details)
Earnings Per Share (Details) - Successor $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Entity Information [Line Items] | |
Net income (loss) | $ | $ 9,823 |
Less: Income allocable to participating securities | $ | 1,125 |
Net income available for common shareholders | $ | $ 8,698 |
Basic net income per share (USD per share) | $ / shares | $ 0.04 |
Diluted net income per share (USD per share) | $ / shares | $ 0.04 |
Basic weighted average share outstanding (in shares) | shares | 201,776 |
Add: Dilutive effects of stock options and RSUs (in shares) | shares | 3,166 |
Diluted weighted average shares outstanding (in shares) | shares | 204,942 |
Transactions With Related Par50
Transactions With Related Parties (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
May 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Predecessor | |||
Related Party Transaction [Line Items] | |||
Acquisition of oil and natural gas properties | $ 6,180,000 | ||
Predecessor | Caird DB, LLC | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Acquisition of oil and natural gas properties | $ 9,800,000 | ||
Predecessor | RockPile Energy Services, LLC | Affiliated Entity | Drilling and Completion Activities | |||
Related Party Transaction [Line Items] | |||
Expenses to related party | 1,200,000 | ||
Predecessor | PennTex Permian, LLC | Affiliated Entity | Gas Gathering Agreement | |||
Related Party Transaction [Line Items] | |||
Net revenue from gas gathering agreement | $ 100,000 | ||
Successor | |||
Related Party Transaction [Line Items] | |||
Acquisition of oil and natural gas properties | $ 38,678,000 | ||
Successor | Liberty Oilfield Services, LLC | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Expenses to related party | 12,500,000 | ||
Successor | Permian Tank And Manufacturing, Inc | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Expenses to related party | 1,100,000 | ||
Accounts payable, related party | 600,000 | ||
Successor | Oil States Energy Services, LLC | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Expenses to related party | 700,000 | ||
Accounts payable, related party | $ 1,300,000 | ||
Successor | PennTex Permian, LLC | Affiliated Entity | Gas Gathering Agreement | |||
Related Party Transaction [Line Items] | |||
Term of gas gathering agreement | 15 years | ||
Term of extension option for gas gathering agreement | 1 year |
Subsequent Events (Details)
Subsequent Events (Details) shares in Millions, $ in Millions | 1 Months Ended | ||
Apr. 30, 2017USD ($)aWellsshares | Apr. 28, 2017USD ($) | Mar. 31, 2017USD ($) | |
Line of Credit | Revolving Credit Facility | |||
Subsequent Event [Line Items] | |||
Current borrowing capacity | $ 250 | ||
Subsequent Event | Common Class A | |||
Subsequent Event [Line Items] | |||
Shares issued in transaction (in shares) | shares | 23.5 | ||
Proceeds sale of stock | $ 341 | ||
Subsequent Event | Line of Credit | Revolving Credit Facility | |||
Subsequent Event [Line Items] | |||
Current borrowing capacity | $ 350 | ||
Subsequent Event | Oil and Gas Properties, Northern Delaware Basin | |||
Subsequent Event [Line Items] | |||
Consideration transferred | $ 350 | ||
Number of horizontal wells acquired (in wells) | Wells | 36 | ||
Subsequent Event | Oil and Gas Properties, Northern Delaware Basin | Lea County, New Mexico | |||
Subsequent Event [Line Items] | |||
Area of land acquired | a | 11,860 |