Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Aug. 06, 2014 | |
Entity Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Jun-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
Trading Symbol | 'CRK | ' |
Entity Registrant Name | 'COMSTOCK RESOURCES INC | ' |
Entity Central Index Key | '0000023194 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 47,860,582 |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and Cash Equivalents | $3,813 | $2,967 |
Accounts Receivable: | ' | ' |
Oil and gas sales | 57,635 | 35,867 |
Joint interest operations | 23,032 | 15,534 |
Derivative Financial Instruments | ' | 970 |
Deferred Income Taxes | 2,972 | ' |
Other Current Assets | 2,745 | 1,796 |
Total current assets | 90,197 | 57,134 |
Property and Equipment: | ' | ' |
Unevaluated oil and gas properties | 178,384 | 134,350 |
Oil and gas properties, successful efforts method | 4,046,243 | 3,781,313 |
Other | 19,438 | 18,373 |
Accumulated depreciation, depletion and amortization | -2,050,567 | -1,867,301 |
Net property and equipment | 2,193,498 | 2,066,735 |
Other Assets | 16,564 | 15,529 |
Total Assets | 2,300,259 | 2,139,398 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ' | ' |
Accounts Payable | 128,938 | 101,872 |
Deferred Income Taxes | ' | 339 |
Current Taxes Payable | 102 | 1,487 |
Derivative Financial Instruments | 8,492 | ' |
Accrued Liabilities | 42,135 | 91,297 |
Total current liabilities | 179,667 | 194,995 |
Long-term Debt | 975,151 | 798,700 |
Deferred Income Taxes | 183,274 | 177,026 |
Reserve for Future Abandonment Costs | 15,630 | 14,534 |
Other Non-Current Liabilities | 1,803 | 2,138 |
Total liabilities | 1,355,525 | 1,187,393 |
Commitments and Contingencies | ' | ' |
Stockholders’ Equity: | ' | ' |
Common stock – $0.50 par, 75,000,000 shares authorized, 47,864,249 and 47,680,516 shares outstanding at June 30, 2014 and December 31, 2013, respectively | 23,932 | 23,840 |
Additional paid-in capital | 482,353 | 480,816 |
Retained earnings | 438,449 | 447,349 |
Total stockholders’ equity | 944,734 | 952,005 |
Total liabilities and stockholders' equity | $2,300,259 | $2,139,398 |
CONSOLIDATED_BALANCE_SHEETS_Un1
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Common stock, par value | $0.50 | $0.50 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares outstanding | 47,864,249 | 47,680,516 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Revenues: | ' | ' | ' | ' |
Oil sales | $111,071 | $55,073 | $201,384 | $100,813 |
Natural gas sales | 44,652 | 52,747 | 96,248 | 102,027 |
Gain on sale of oil and gas properties | ' | 81 | ' | 81 |
Total revenues | 155,723 | 107,901 | 297,632 | 202,921 |
Operating expenses: | ' | ' | ' | ' |
Production taxes | 6,467 | 3,883 | 12,068 | 6,004 |
Gathering and transportation | 3,138 | 4,354 | 6,914 | 8,556 |
Lease operating | 13,980 | 12,962 | 29,041 | 26,168 |
Exploration | ' | 9,754 | ' | 12,347 |
Depreciation, depletion and amortization | 94,539 | 85,244 | 183,413 | 170,211 |
Impairment of oil and gas properties | 256 | 652 | 256 | 652 |
General and administrative, net | 9,614 | 9,056 | 17,983 | 17,843 |
Total operating expenses | 127,994 | 125,905 | 249,675 | 241,781 |
Operating income (loss) | 27,729 | -18,004 | 47,957 | -38,860 |
Other income (expenses): | ' | ' | ' | ' |
Gain on sale of marketable securities | ' | ' | ' | 7,877 |
Gain (loss) from derivative financial instruments | -9,850 | 3,521 | -14,796 | -2,926 |
Other income | 39 | 196 | 290 | 441 |
Interest expense | -14,767 | -19,240 | -28,447 | -36,818 |
Total other income (expenses) | -24,578 | -15,523 | -42,953 | -31,426 |
Income (loss) before income taxes | 3,151 | -33,527 | 5,004 | -70,286 |
Benefit from (provision for) income taxes | -1,253 | 11,996 | -1,941 | 24,238 |
Income (loss) from continuing operations | 1,898 | -21,531 | 3,063 | -46,048 |
Income from discontinued operations, net of income taxes | ' | 151,236 | ' | 148,609 |
Net income | $1,898 | $129,705 | $3,063 | $102,561 |
Net income (loss) per share: | ' | ' | ' | ' |
Income (loss) from continuing operations, Basic | $0.04 | ($0.45) | $0.06 | ($0.95) |
Loss from discontinued operations, Basic | ' | $3.13 | ' | $3.07 |
Net income (loss), Basic | $0.04 | $2.68 | $0.06 | $2.12 |
Income (loss) from continuing operations, Diluted | $0.04 | ($0.45) | $0.06 | ($0.95) |
Loss from discontinued operations, Diluted | ' | $3.13 | ' | $3.07 |
Net income (loss), Diluted | $0.04 | $2.68 | $0.06 | $2.12 |
Dividends per share | $0.13 | $0.13 | $0.25 | $0.13 |
Weighted average shares outstanding: | ' | ' | ' | ' |
Basic | 46,651 | 46,754 | 46,616 | 46,742 |
Diluted | 47,004 | 46,754 | 46,941 | 46,742 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Net income | $1,898 | $129,705 | $3,063 | $102,561 |
Net change in unrealized gains and losses on marketable securities, net of a benefit from income taxes of $2,380 | 0 | 0 | 0 | -4,418 |
Comprehensive income | $1,898 | $129,705 | $3,063 | $98,143 |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) (USD $) | 6 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2013 |
Net change in unrealized gains and losses on marketable securities, income tax benefit | $2,380 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings |
In Thousands | ||||
Beginning Balance at Dec. 31, 2013 | $952,005 | $23,840 | $480,816 | $447,349 |
Beginning Balance, Shares at Dec. 31, 2013 | ' | 47,681 | ' | ' |
Stock-based compensation | 4,997 | 157 | 4,840 | ' |
Stock-based compensation, Shares | ' | 313 | ' | ' |
Restricted stock used for tax withholdings | -2,349 | -65 | -2,284 | ' |
Restricted stock used for tax withholdings, Shares | ' | -130 | ' | ' |
Excess income taxes from stock-based compensation | -1,019 | ' | -1,019 | ' |
Dividends paid | -11,963 | ' | ' | -11,963 |
Net income | 3,063 | ' | ' | 3,063 |
Ending Balance at Jun. 30, 2014 | $944,734 | $23,932 | $482,353 | $438,449 |
Ending Balance, Shares at Jun. 30, 2014 | ' | 47,864 | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income | $3,063 | $102,561 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Income from discontinued operations | ' | -148,609 |
Gain on sale of assets | ' | -7,958 |
Deferred income taxes | 1,904 | -24,238 |
Dry hole costs and lease impairments | ' | 11,908 |
Impairment of oil and gas properties | 256 | 652 |
Depreciation, depletion and amortization | 183,413 | 170,211 |
Loss on derivative financial instruments | 14,796 | 2,926 |
Settlements of derivative financial instruments | -5,334 | 5,201 |
Amortization of debt discount, premium and issuance costs | 2,183 | 3,218 |
Stock-based compensation | 4,997 | 6,440 |
Excess income taxes from stock-based compensation | 1,019 | 2,015 |
Increase in accounts receivable | -29,266 | -22,293 |
Increase in other current assets | -935 | -978 |
Increase in accounts payable and accrued liabilities | 29,199 | 14,671 |
Net cash provided by continuing operations | 205,295 | 115,727 |
Net cash used for discontinued operations | ' | -7,715 |
Net cash provided by operating activities | 205,295 | 108,012 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Capital expenditures | -362,351 | -132,826 |
Proceeds from sales of marketable securities | ' | 13,392 |
Investing activities of continuing operations | -362,351 | -119,434 |
Cash flow from investing activities of discontinued operations: | ' | ' |
Capital expenditures | ' | -101,037 |
Proceeds from sale of oil and gas properties | ' | 823,701 |
Net cash provided by investing activities of discontinued operations | ' | 722,664 |
Net cash provided by (used for) investing activities | -362,351 | 603,230 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Borrowings | 275,750 | 95,000 |
Principal payments on debt | -100,000 | -537,225 |
Debt issuance costs | -2,517 | -15 |
Tax withholdings related to restricted stock | -2,349 | -1,680 |
Excess income taxes from stock-based compensation | -1,019 | -2,015 |
Dividends paid | -11,963 | -6,041 |
Net cash provided by (used for) financing activities | 157,902 | -451,976 |
Net increase in cash and cash equivalents | 846 | 259,266 |
Cash and cash equivalents, beginning of period | 2,967 | 4,471 |
Cash and cash equivalents, end of period | $3,813 | $263,737 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||||||||||||||||
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – | |||||||||||||||||||||||||
Basis of Presentation | |||||||||||||||||||||||||
In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position of Comstock Resources, Inc. and subsidiaries (“Comstock” or the “Company”) as of June 30, 2014, the related results of operations and comprehensive income for the three months and six months ended June 30, 2014 and 2013, and cash flows for the six months ended June 30, 2014 and 2013. | |||||||||||||||||||||||||
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to those rules and regulations, although Comstock believes that the disclosures made are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in Comstock’s Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||||||||||||||||||
The results of operations for the three months and six months ended June 30, 2014 are not necessarily an indication of the results expected for the full year. | |||||||||||||||||||||||||
These unaudited consolidated financial statements include the accounts of Comstock and its wholly-owned and controlled subsidiaries. | |||||||||||||||||||||||||
Reclassifications | |||||||||||||||||||||||||
Certain reclassifications have been made to prior periods’ financial statements, consisting primarily of reclassifications to the presentation of the Company’s derivative financial instruments to conform to the current periods’ presentation. | |||||||||||||||||||||||||
Marketable Securities | |||||||||||||||||||||||||
During the six months ended June 30, 2013, the Company sold 600,000 shares of Stone Energy Corporation common stock and received $13.4 million in proceeds. These shares had a cost basis of $5.5 million. Comstock realized a gain before income taxes of $7.9 million on the sale which is included in other income in the consolidated statements of operations. The Company utilized the specific identification method to determine the cost of the securities that were sold. | |||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||
The Company follows the successful efforts method of accounting for its oil and gas properties. Costs incurred to acquire oil and gas leasehold are capitalized. | |||||||||||||||||||||||||
Unproved oil and gas properties are periodically assessed and any impairment in value is charged to exploration expense. The costs of unproved properties which are determined to be productive are transferred to oil and gas properties and amortized on an equivalent unit-of-production basis. For the three months and six months ended June 30, 2013, the Company recognized impairment charges in exploration expense of $9.5 million and $11.9 million, respectively, related to certain leases that were expected to expire prior to the Company conducting drilling operations. There were no unproved property impairments during the six months ended June 30, 2014. | |||||||||||||||||||||||||
The Company also assesses the need for an impairment of the costs capitalized for its oil and gas properties on a property basis. The Company recognized impairment charges of $0.3 million and $0.7 million for the three months and six months ended June 30, 2014 and June 30, 2013, respectively, related to its oil and gas properties. | |||||||||||||||||||||||||
Accrued Liabilities | |||||||||||||||||||||||||
Accrued liabilities at June 30, 2014 and December 31, 2013 consist of the following: | |||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Accrued oil and gas property acquisition costs | $ | — | $ | 40,128 | |||||||||||||||||||||
Accrued drilling costs | 22,027 | 34,914 | |||||||||||||||||||||||
Accrued interest | 9,003 | 7,051 | |||||||||||||||||||||||
Accrued ad valorem taxes | 3,000 | — | |||||||||||||||||||||||
Other accrued liabilities | 8,105 | 9,204 | |||||||||||||||||||||||
$ | 42,135 | $ | 91,297 | ||||||||||||||||||||||
Reserve for Future Abandonment Costs | |||||||||||||||||||||||||
Comstock’s asset retirement obligations relate to future plugging and abandonment expenses on its oil and gas properties and related facilities disposal. The following table summarizes the changes in Comstock’s total estimated liability during the six months ended June 30, 2014 and 2013: | |||||||||||||||||||||||||
Six Months Ended | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Future abandonment costs – beginning of period | $ | 14,534 | $ | 16,387 | |||||||||||||||||||||
Accretion expense | 402 | 494 | |||||||||||||||||||||||
New wells placed on production | 728 | 313 | |||||||||||||||||||||||
Liabilities settled and assets disposed of | (34 | ) | (534 | ) | |||||||||||||||||||||
Future abandonment costs — end of period | $ | 15,630 | $ | 16,660 | |||||||||||||||||||||
Derivative Financial Instruments and Hedging Activities | |||||||||||||||||||||||||
Comstock periodically uses swaps, floors and collars to hedge oil and natural gas prices and interest rates. Swaps are settled monthly based on differences between the prices specified in the instruments and the settlement prices of futures contracts. Generally, when the applicable settlement price is less than the price specified in the contract, Comstock receives a settlement from the counterparty based on the difference multiplied by the volume or amounts hedged. Similarly, when the applicable settlement price exceeds the price specified in the contract, Comstock pays the counterparty based on the difference. Comstock generally receives a settlement from the counterparty for floors when the applicable settlement price is less than the price specified in the contract, which is based on the difference multiplied by the volumes hedged. For collars, generally Comstock receives a settlement from the counterparty when the settlement price is below the floor and pays a settlement to the counterparty when the settlement price exceeds the cap. No settlement occurs when the settlement price falls between the floor and cap. | |||||||||||||||||||||||||
As of June 30, 2014, the Company had the following outstanding commodity derivatives: | |||||||||||||||||||||||||
Commodity and Derivative Type | Weighted-Average | Volume | Contract Period | ||||||||||||||||||||||
Contract Price | (barrels) | ||||||||||||||||||||||||
Crude Oil Price Swap Agreements | $96.60 per Bbl. | 1,266,000 | July 2014 – | ||||||||||||||||||||||
December 2014 | |||||||||||||||||||||||||
All of the Company’s derivative financial instruments are used for risk management purposes and by policy none are held for trading or speculative purposes. Comstock minimizes credit risk to counterparties of its derivative financial instruments through formal credit policies, monitoring procedures, and diversification. All of Comstock’s derivative financial instruments are with parties that are lenders under its bank credit facility. The Company is not required to provide any credit support to its counterparties other than cross collateralization with the assets securing its bank credit facility. None of the Company’s derivative financial instruments involve payment or receipt of premiums. | |||||||||||||||||||||||||
None of the derivative contracts have been designated as cash flow hedges. The Company recognizes cash settlements and changes in the fair value of its derivative financial instruments as a single component of other income (expenses). The Company had losses of $9.9 million and gains of $3.5 million related to its oil swap agreements during the three months ended June 30, 2014 and 2013, respectively, and losses of $14.8 million and $2.9 million during the six months ended June 30, 2014 and 2013, respectively. Cash settlements on derivative financial instruments were payments of $4.0 million and receipts of $2.9 million for the three months ended June 30, 2014 and 2013, respectively, and payments of $5.3 million and receipts of $5.2 million during the six months ended June 30, 2014 and 2013, respectively. The estimated fair value and carrying value of the Company’s derivative financial instruments was a liability of $8.5 million and an asset of $1.0 million as of June 30, 2014 and December 31, 2013, respectively, which are reflected as current liabilities and current assets, respectively. | |||||||||||||||||||||||||
Stock-Based Compensation | |||||||||||||||||||||||||
Comstock accounts for employee stock-based compensation under the fair value method. Compensation cost is measured at the grant date based on the fair value of the award and is recognized over the award vesting period. During the three months ended June 30, 2014 and 2013, the Company recognized $2.7 million and $3.2 million, respectively, of stock-based compensation expense within general and administrative expenses related to awards of restricted stock and performance stock units to its employees and directors. For the six months ended June 30, 2014 and 2013, the Company recognized $5.0 million and $6.4 million, respectively, of stock-based compensation expense within general and administrative expenses. | |||||||||||||||||||||||||
During the six months ended June 30, 2014, the Company granted 235,524 shares of restricted stock with a grant date fair value of $4.8 million or $20.24 per share to its employees and non-employee directors. The fair value of each restricted share on the date of grant is equal to its market price. As of June 30, 2014, Comstock had 1,213,361 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $19.91 per share. Total unrecognized compensation cost related to unvested restricted stock grants of $10.7 million as of June 30, 2014 is expected to be recognized over a period of 1.6 years. | |||||||||||||||||||||||||
During the six months ended June 30, 2014, the Company granted 188,958 performance share units (“PSUs”) with a grant date fair value of $3.7 million or $19.81 per unit to its employees. As of June 30, 2014, Comstock had 362,161 PSUs outstanding at a weighted average grant date fair value of $20.48 per unit. The number of shares of common stock to be issued related to the PSUs is based on the Company’s stock price performance as compared to its peers which could result in the issuance of anywhere from zero to 848,567 shares of common stock. Total unrecognized compensation cost related to these grants of $4.3 million as of June 30, 2014 is expected to be recognized over a period of 1.4 years. | |||||||||||||||||||||||||
As of June 30, 2014, Comstock had outstanding options to purchase 115,150 shares of common stock at a weighted average exercise price of $32.90 per share. All of the stock options were exercisable and there were no unrecognized compensation costs related to the stock options as of June 30, 2014. No stock options were exercised during the three months or six months ended June 30, 2014 or 2013. | |||||||||||||||||||||||||
Income Taxes | |||||||||||||||||||||||||
The following is an analysis of consolidated income tax expense (benefit) from continuing operations: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Current provision (benefit) | $ | 23 | $ | (3 | ) | $ | 37 | $ | — | ||||||||||||||||
Deferred provision (benefit) | 1,230 | (11,993 | ) | 1,904 | (24,238 | ) | |||||||||||||||||||
Provision for (benefit from) income taxes | $ | 1,253 | $ | (11,996 | ) | $ | 1,941 | $ | (24,238 | ) | |||||||||||||||
Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates. The difference between the Company’s effective tax rate and the 35% federal statutory rate is mainly caused by non-deductible stock compensation and state taxes. The impact of these items varies based upon the Company’s projected full year income or loss and the jurisdictions that are expected to generate the projected income and/or losses. The difference between the Company’s customary rate of 35% and the effective tax rate on income before income taxes from continuing operations is due to the following: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Tax at statutory rate | 35 | % | 35 | % | 35 | % | 35 | % | |||||||||||||||||
Tax effect of: | |||||||||||||||||||||||||
Nondeductible stock-based compensation | 4.2 | 0.6 | 3.3 | (1.4 | ) | ||||||||||||||||||||
State income taxes, net of federal benefit | (0.4 | ) | 0.3 | (0.3 | ) | 1.1 | |||||||||||||||||||
Other | 1 | (0.1 | ) | 0.8 | (0.2 | ) | |||||||||||||||||||
Effective tax rate | 39.8 | % | 35.8 | % | 38.8 | % | 34.5 | % | |||||||||||||||||
The Company’s federal income tax returns for the years subsequent to December 31, 2009, remain subject to examination. The Company’s income tax returns in major state income tax jurisdictions remain subject to examination from various periods subsequent to December 31, 2008. State tax returns in one state jurisdiction are currently under review. The Company has evaluated the preliminary findings in this jurisdiction and believes it is more likely than not that the ultimate resolution of these matters will not have a material effect on the Company’s financial statements. The Company currently believes that all other significant filing positions are highly certain and that all of its other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions. | |||||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||||
The Company holds or has held certain items that are required to be measured at fair value. These include cash and cash equivalents held in bank accounts and derivative financial instruments in the form of oil price swap agreements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements: | |||||||||||||||||||||||||
Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. | |||||||||||||||||||||||||
Level 2 – Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. | |||||||||||||||||||||||||
Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. | |||||||||||||||||||||||||
The Company’s valuation of cash and cash equivalents is a Level 1 measurement. The Company’s oil price swap agreements are not traded on a public exchange, and their value is determined utilizing a discounted cash flow model based on inputs that are readily available in public markets and, accordingly, the valuation of these swap agreements is categorized as a Level 2 measurement. | |||||||||||||||||||||||||
The following table summarizes financial assets and liabilities accounted for at fair value as of June 30, 2014: | |||||||||||||||||||||||||
Carrying | Level 1 | Level 2 | |||||||||||||||||||||||
Value | |||||||||||||||||||||||||
Measured at | |||||||||||||||||||||||||
Fair Value at | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Assets measured at fair value on a recurring basis: | |||||||||||||||||||||||||
Cash and cash equivalents held in bank accounts | $ | 3,813 | $ | 3,813 | $ | — | |||||||||||||||||||
Total assets | $ | 3,813 | $ | 3,813 | $ | — | |||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | |||||||||||||||||||||||||
Derivative financial instruments | $ | 8,492 | $ | — | $ | 8,492 | |||||||||||||||||||
Total liabilities | $ | 8,492 | $ | — | $ | 8,492 | |||||||||||||||||||
The following table presents the carrying amounts and estimated fair value of the Company’s other financial instruments: | |||||||||||||||||||||||||
As of June 30, 2014 | |||||||||||||||||||||||||
Carrying | Fair | ||||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Fixed rate debt | $ | 695,151 | $ | 766,000 | |||||||||||||||||||||
Floating rate debt | $ | 280,000 | $ | 280,000 | |||||||||||||||||||||
The fair market value of the Company’s fixed rate debt was based on the market prices as of June 30, 2014, a Level 1 measurement. The fair value of the floating rate debt outstanding at June 30, 2014 approximated its carrying value, a Level 2 measurement. | |||||||||||||||||||||||||
Earnings Per Share | |||||||||||||||||||||||||
Basic earnings per share is determined without the effect of any outstanding potentially dilutive stock options or PSUs and diluted earnings per share is determined with the effect of outstanding stock options and PSUs that are potentially dilutive. Unvested share-based payment awards containing nonforfeitable rights to dividends are considered to be participatory securities and are included in the computation of basic and diluted earnings per share pursuant to the two-class method. PSUs represent the right to receive a number of shares of the Company’s common stock that may range from zero to up to three times the number of PSUs granted on the award date based on the achievement of certain performance measures during a performance period. The number of potentially dilutive shares related to PSUs is based on the number of shares, if any, which would be issuable at the end of the respective period, assuming that date was the end of the contingency period. The treasury stock method is used to measure the dilutive effect of PSUs. Basic and diluted earnings per share for the three months and six months ended June 30, 2014 and 2013 were determined as follows: | |||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Income | Shares | Per | Income | Shares | Per | ||||||||||||||||||||
Share | (Loss) | Share | |||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 1,898 | $ | (21,531 | ) | ||||||||||||||||||||
(Income) loss allocable to unvested restricted stock | (153 | ) | 697 | ||||||||||||||||||||||
Basic net income (loss) from continuing operations attributable to common stock | $ | 1,745 | 46,651 | $ | 0.04 | $ | (20,834 | ) | 46,754 | $ | (0.45 | ) | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | — | — | |||||||||||||||||||||
Performance share units | — | 353 | — | — | |||||||||||||||||||||
Diluted net income (loss) from continuing operations attributable to common stock | $ | 1,745 | 47,004 | $ | 0.04 | $ | (20,834 | ) | 46,754 | $ | (0.45 | ) | |||||||||||||
$ | 151,236 | ||||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
Income allocable to unvested restricted stock | (4,893 | ) | |||||||||||||||||||||||
Basic net income from discontinued operations attributable to common stock | $ | 146,343 | 46,754 | $ | 3.13 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | |||||||||||||||||||||||
Performance share units | — | — | |||||||||||||||||||||||
Diluted net income from discontinued operations attributable to common stock | $ | 146,343 | 46,754 | $ | 3.13 | ||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Income | Shares | Per | Income | Shares | Per | ||||||||||||||||||||
Share | (Loss) | Share | |||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 3,063 | $ | (46,048 | ) | ||||||||||||||||||||
(Income) loss allocable to unvested restricted stock | (292 | ) | 1,495 | ||||||||||||||||||||||
Basic net income (loss) from continuing operations attributable to common stock | $ | 2,771 | 46,616 | $ | 0.06 | $ | (44,553 | ) | 46,742 | $ | (0.95 | ) | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | — | — | |||||||||||||||||||||
Performance share units | — | 325 | — | — | |||||||||||||||||||||
Diluted net income (loss) from continuing operations attributable to common stock | $ | 2,771 | 46,941 | $ | 0.06 | $ | (44,553 | ) | 46,742 | $ | (0.95 | ) | |||||||||||||
$ | 148,609 | ||||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
Income allocable to unvested restricted stock | (4,825 | ) | |||||||||||||||||||||||
Basic net income from discontinued operations attributable to common stock | $ | 143,784 | 46,742 | $ | 3.07 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | |||||||||||||||||||||||
Performance share units | — | — | |||||||||||||||||||||||
Diluted net income from discontinued operations attributable to common stock | $ | 143,784 | 46,742 | $ | 3.07 | ||||||||||||||||||||
At June 30, 2014 and December 31, 2013, 1,213,361 and 1,515,889 shares of restricted stock, respectively, are included in common stock outstanding as such shares have a nonforfeitable right to participate in any dividends that might be declared and have the right to vote on matters submitted to the Company’s stockholders. Weighted average shares of unvested restricted stock outstanding during the three months and six months ended June 30, 2014 and 2013 were as follows: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Unvested restricted stock | 1,222 | 1,563 | 1,168 | 1,568 | |||||||||||||||||||||
Options to purchase common stock and PSUs that were outstanding and that were excluded as anti-dilutive from the determination of diluted earnings per share are as follows: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands except per share/unit data) | |||||||||||||||||||||||||
Weighted average anti-dilutive stock options | 115 | 134 | 115 | 145 | |||||||||||||||||||||
Weighted average exercise price per share | $ | 32.9 | $ | 32.9 | $ | 32.9 | $ | 32.9 | |||||||||||||||||
Weighted average performance share units | — | 254 | — | 254 | |||||||||||||||||||||
Weighted average grant date fair value per unit | $ | — | $ | 21.14 | $ | — | $ | 21.14 | |||||||||||||||||
For the three months and six months ended June 30, 2014, the excluded options that were anti-dilutive were at exercise prices in excess of the average stock price for that period. All stock options, unvested restricted stock and unvested PSUs were anti-dilutive to earnings and excluded from weighted average shares used in the computation of earnings per share in the three months and six months ended June 30, 2013 due to the net loss in the periods. | |||||||||||||||||||||||||
Supplementary Information With Respect to the Consolidated Statements of Cash Flows | |||||||||||||||||||||||||
For the purpose of the consolidated statements of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At June 30, 2014 and December 31, 2013, the Company’s cash investments consisted of cash held in bank accounts. | |||||||||||||||||||||||||
The following is a summary of cash payments made for interest and income taxes: | |||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Cash Payments: | |||||||||||||||||||||||||
Interest payments | $ | 28,907 | $ | 43,738 | |||||||||||||||||||||
Income tax payments | $ | 1,408 | $ | 2 | |||||||||||||||||||||
The Company capitalizes interest on its unevaluated oil and gas property costs during periods when it is conducting exploration activity on this acreage. The Company capitalized interest capitalized interest of $2.6 million and $0.7 million for the three months ended June 30, 2014 and 2013, respectively, and $4.8 million and $1.7 million for the six months ended June 30, 2014 and 2013, respectively, which reduced interest expense. | |||||||||||||||||||||||||
Comprehensive Income | |||||||||||||||||||||||||
Comprehensive income consists of the following: | |||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Net income | $ | 1,898 | $ | 129,705 | $ | 3,063 | $ | 102,561 | |||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||
Realized gains on marketable securities reclassified | — | — | — | (5,120 | ) | ||||||||||||||||||||
to gain on sale of marketable securities, net of | |||||||||||||||||||||||||
a benefit from income taxes of $2,757 | |||||||||||||||||||||||||
Unrealized gains on marketable securities, net of | — | — | — | 702 | |||||||||||||||||||||
provision for income taxes of $377 | |||||||||||||||||||||||||
Total comprehensive income | $ | 1,898 | $ | 129,705 | $ | 3,063 | $ | 98,143 | |||||||||||||||||
Discontinued Operations | |||||||||||||||||||||||||
On March 14, 2013, the Company entered into an agreement to sell its oil and gas properties located in Reeves and Gaines counties in West Texas to a third party. The sale closed on May 14, 2013 with an effective date of January 1, 2013. Income from discontinued operations for the three months and six months ended June 30, 2013 is comprised of the following: | |||||||||||||||||||||||||
Three Months | Six Months | ||||||||||||||||||||||||
Ended | Ended | ||||||||||||||||||||||||
June 30, 2013 | June 30, 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Oil and gas sales | $ | 8,826 | $ | 25,125 | |||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||
Production taxes | 427 | 1,120 | |||||||||||||||||||||||
Gathering and transportation | 170 | 501 | |||||||||||||||||||||||
Lease operating | 3,545 | 9,853 | |||||||||||||||||||||||
Depletion, depreciation and amortization | — | 8,649 | |||||||||||||||||||||||
Interest expense(1) | 2,847 | 6,346 | |||||||||||||||||||||||
Total costs and expenses | 6,989 | 26,469 | |||||||||||||||||||||||
Gain on sale of discontinued operations | 230,637 | 230,637 | |||||||||||||||||||||||
Income from discontinued operations before income taxes | 232,474 | 229,293 | |||||||||||||||||||||||
Income tax expense: | |||||||||||||||||||||||||
Current | (637 | ) | (637 | ) | |||||||||||||||||||||
Deferred | (80,601 | ) | (80,047 | ) | |||||||||||||||||||||
Total income tax expense | (81,238 | ) | (80,684 | ) | |||||||||||||||||||||
$ | 151,236 | $ | 148,609 | ||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
-1 | Interest expense was allocated to discontinued operations based on the ratio of the net assets of discontinued operations to our consolidated net assets plus long-term debt. Interest expense is net of capitalized interest of $— and $2,010 for the three months and six months ended June 30, 2013, respectively. |
Stockholders_Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2014 | |
Stockholders' Equity | ' |
(2) STOCKHOLDERS’ EQUITY – | |
On February 20 and May 21, 2014, Comstock’s Board of Directors declared a dividend of 12.5¢ per share on the Company’s common stock to stockholders of record at the close of business on March 7 and June 6, 2014, respectively. Dividends of $12.0 million and $6.0 million were paid during the six months ended June 30, 2014 and June 30, 2013, respectively. In 2013, the Board of Directors approved an open market share repurchase plan which permits the Company to repurchase up to $100.0 million of its common stock on the open market. The Company did not make any purchases under this plan during the six months ended June 30, 2014 or June 30, 2013, and repurchases of up to $90.8 million remain available under this plan in future periods as of June 30, 2014. |
Longterm_Debt
Long-term Debt | 6 Months Ended | |||
Jun. 30, 2014 | ||||
Long-term Debt | ' | |||
(3) LONG-TERM DEBT – | ||||
At June 30, 2014, long-term debt was comprised of: | ||||
(In thousands) | ||||
Bank credit facility | $ | 280,000 | ||
73⁄4 % Senior Notes due 2019 | 405,571 | |||
91⁄2% Senior Notes due 2020 | 289,580 | |||
$ | 975,151 | |||
Comstock has a $1.0 billion bank credit facility with Bank of Montreal, as the administrative agent. The bank credit facility is a five year revolving credit commitment that matures on November 22, 2018. Indebtedness under the bank credit facility is secured by all of Comstock’s assets and is guaranteed by all of its wholly owned subsidiaries. The credit facility is subject to borrowing base availability, which is redetermined semiannually based on the banks’ estimates of the Company’s future net cash flows of oil and natural gas properties. As of June 30, 2014, the borrowing base was $700.0 million, of which $420.0 million was available. The borrowing base may be affected by the performance of Comstock’s properties and changes in oil and natural gas prices. The determination of the borrowing base is at the sole discretion of the administrative agent and the bank group. Borrowings under the bank credit facility bear interest, based on the utilization of the borrowing base, at Comstock’s option at either (1) LIBOR plus 1.5% to 2.5% or (2) the base rate (which is the higher of the administrative agent’s prime rate, the federal funds rate plus 0.5% or 30 day LIBOR plus 1.0%) plus 0.5% to 1.5%. A commitment fee of 0.375% to 0.5%, based on the utilization of the borrowing base, is payable annually on the unused borrowing base. The bank credit facility contains covenants that, among other things, restrict the payment of cash dividends and repurchases of common stock in excess of $120.0 million per year, limit the amount of consolidated debt that Comstock may incur and limit the Company’s ability to make certain loans and investments. The only financial covenants are the maintenance of a leverage ratio and the maintenance of an interest coverage ratio. The Company was in compliance with these covenants as of June 30, 2014. | ||||
Comstock has $400.0 million of 7¾% senior notes (the “2019 Notes”) outstanding which are due on April 1, 2019 and bear interest which is payable semi-annually on each April 1 and October 1. Comstock also has $300.0 million of 9½% senior notes (the “2020 Notes”) which are due on June 15, 2020 and bear interest which is payable semi-annually on each June 15 and December 15. During the three months ended June 30, 2014 the Company issued $100.0 million of the 2019 Notes in a public offering. Net proceeds from the issuance of the additional 2019 Notes of $103.3 million were used to pay down borrowings under the Company’s bank credit facility. The 2019 Notes and 2020 Notes are unsecured obligations of Comstock and are guaranteed by all of Comstock’s material subsidiaries. Such subsidiary guarantors are 100% owned and all of the guarantees are full and unconditional and joint and several obligations. As of June 30, 2014, Comstock had no material assets or operations which are independent of its subsidiaries. There are no restrictions on the ability of Comstock to obtain funds from its subsidiaries through dividends or loans. |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2014 | |
Commitments and Contingencies | ' |
(4) Commitments and Contingencies – | |
From time to time, Comstock is involved in certain litigation that arises in the normal course of its operations. The Company records a loss contingency for these matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company does not believe the resolution of these matters will have a material effect on the Company’s financial position or results of operations. | |
In connection with its exploration and development activities, the Company contracts for drilling rigs under terms of up to two years. As of June 30, 2014, the Company had commitments for contracted drilling services of $28.8 million. | |
The Company has entered into natural gas transportation and treating agreements through July 2019. Maximum commitments under these transportation agreements as of June 30, 2014 totaled $15.4 million. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||||||||||
Basis of Presentation | |||||||||||||||||||||||||
In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position of Comstock Resources, Inc. and subsidiaries (“Comstock” or the “Company”) as of June 30, 2014, the related results of operations and comprehensive income for the three months and six months ended June 30, 2014 and 2013, and cash flows for the six months ended June 30, 2014 and 2013. | |||||||||||||||||||||||||
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to those rules and regulations, although Comstock believes that the disclosures made are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in Comstock’s Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||||||||||||||||||
The results of operations for the three months and six months ended June 30, 2014 are not necessarily an indication of the results expected for the full year. | |||||||||||||||||||||||||
These unaudited consolidated financial statements include the accounts of Comstock and its wholly-owned and controlled subsidiaries. | |||||||||||||||||||||||||
Reclassifications | ' | ||||||||||||||||||||||||
Reclassifications | |||||||||||||||||||||||||
Certain reclassifications have been made to prior periods’ financial statements, consisting primarily of reclassifications to the presentation of the Company’s derivative financial instruments to conform to the current periods’ presentation. | |||||||||||||||||||||||||
Marketable Securities | ' | ||||||||||||||||||||||||
Marketable Securities | |||||||||||||||||||||||||
During the six months ended June 30, 2013, the Company sold 600,000 shares of Stone Energy Corporation common stock and received $13.4 million in proceeds. These shares had a cost basis of $5.5 million. Comstock realized a gain before income taxes of $7.9 million on the sale which is included in other income in the consolidated statements of operations. The Company utilized the specific identification method to determine the cost of the securities that were sold. | |||||||||||||||||||||||||
Property and Equipment | ' | ||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||
The Company follows the successful efforts method of accounting for its oil and gas properties. Costs incurred to acquire oil and gas leasehold are capitalized. | |||||||||||||||||||||||||
Unproved oil and gas properties are periodically assessed and any impairment in value is charged to exploration expense. The costs of unproved properties which are determined to be productive are transferred to oil and gas properties and amortized on an equivalent unit-of-production basis. For the three months and six months ended June 30, 2013, the Company recognized impairment charges in exploration expense of $9.5 million and $11.9 million, respectively, related to certain leases that were expected to expire prior to the Company conducting drilling operations. There were no unproved property impairments during the six months ended June 30, 2014. | |||||||||||||||||||||||||
The Company also assesses the need for an impairment of the costs capitalized for its oil and gas properties on a property basis. The Company recognized impairment charges of $0.3 million and $0.7 million for the three months and six months ended June 30, 2014 and June 30, 2013, respectively, related to its oil and gas properties. | |||||||||||||||||||||||||
Accrued Liabilities | ' | ||||||||||||||||||||||||
Accrued Liabilities | |||||||||||||||||||||||||
Accrued liabilities at June 30, 2014 and December 31, 2013 consist of the following: | |||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Accrued oil and gas property acquisition costs | $ | — | $ | 40,128 | |||||||||||||||||||||
Accrued drilling costs | 22,027 | 34,914 | |||||||||||||||||||||||
Accrued interest | 9,003 | 7,051 | |||||||||||||||||||||||
Accrued ad valorem taxes | 3,000 | — | |||||||||||||||||||||||
Other accrued liabilities | 8,105 | 9,204 | |||||||||||||||||||||||
$ | 42,135 | $ | 91,297 | ||||||||||||||||||||||
Reserve for Future Abandonment Costs | ' | ||||||||||||||||||||||||
Reserve for Future Abandonment Costs | |||||||||||||||||||||||||
Comstock’s asset retirement obligations relate to future plugging and abandonment expenses on its oil and gas properties and related facilities disposal. The following table summarizes the changes in Comstock’s total estimated liability during the six months ended June 30, 2014 and 2013: | |||||||||||||||||||||||||
Six Months Ended | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Future abandonment costs – beginning of period | $ | 14,534 | $ | 16,387 | |||||||||||||||||||||
Accretion expense | 402 | 494 | |||||||||||||||||||||||
New wells placed on production | 728 | 313 | |||||||||||||||||||||||
Liabilities settled and assets disposed of | (34 | ) | (534 | ) | |||||||||||||||||||||
Future abandonment costs — end of period | $ | 15,630 | $ | 16,660 | |||||||||||||||||||||
Derivative Financial Instruments and Hedging Activities | ' | ||||||||||||||||||||||||
Derivative Financial Instruments and Hedging Activities | |||||||||||||||||||||||||
Comstock periodically uses swaps, floors and collars to hedge oil and natural gas prices and interest rates. Swaps are settled monthly based on differences between the prices specified in the instruments and the settlement prices of futures contracts. Generally, when the applicable settlement price is less than the price specified in the contract, Comstock receives a settlement from the counterparty based on the difference multiplied by the volume or amounts hedged. Similarly, when the applicable settlement price exceeds the price specified in the contract, Comstock pays the counterparty based on the difference. Comstock generally receives a settlement from the counterparty for floors when the applicable settlement price is less than the price specified in the contract, which is based on the difference multiplied by the volumes hedged. For collars, generally Comstock receives a settlement from the counterparty when the settlement price is below the floor and pays a settlement to the counterparty when the settlement price exceeds the cap. No settlement occurs when the settlement price falls between the floor and cap. | |||||||||||||||||||||||||
As of June 30, 2014, the Company had the following outstanding commodity derivatives: | |||||||||||||||||||||||||
Commodity and Derivative Type | Weighted-Average | Volume | Contract Period | ||||||||||||||||||||||
Contract Price | (barrels) | ||||||||||||||||||||||||
Crude Oil Price Swap Agreements | $96.60 per Bbl. | 1,266,000 | July 2014 – | ||||||||||||||||||||||
December 2014 | |||||||||||||||||||||||||
All of the Company’s derivative financial instruments are used for risk management purposes and by policy none are held for trading or speculative purposes. Comstock minimizes credit risk to counterparties of its derivative financial instruments through formal credit policies, monitoring procedures, and diversification. All of Comstock’s derivative financial instruments are with parties that are lenders under its bank credit facility. The Company is not required to provide any credit support to its counterparties other than cross collateralization with the assets securing its bank credit facility. None of the Company’s derivative financial instruments involve payment or receipt of premiums. | |||||||||||||||||||||||||
None of the derivative contracts have been designated as cash flow hedges. The Company recognizes cash settlements and changes in the fair value of its derivative financial instruments as a single component of other income (expenses). The Company had losses of $9.9 million and gains of $3.5 million related to its oil swap agreements during the three months ended June 30, 2014 and 2013, respectively, and losses of $14.8 million and $2.9 million during the six months ended June 30, 2014 and 2013, respectively. Cash settlements on derivative financial instruments were payments of $4.0 million and receipts of $2.9 million for the three months ended June 30, 2014 and 2013, respectively, and payments of $5.3 million and receipts of $5.2 million during the six months ended June 30, 2014 and 2013, respectively. The estimated fair value and carrying value of the Company’s derivative financial instruments was a liability of $8.5 million and an asset of $1.0 million as of June 30, 2014 and December 31, 2013, respectively, which are reflected as current liabilities and current assets, respectively. | |||||||||||||||||||||||||
Stock-Based Compensation | ' | ||||||||||||||||||||||||
Stock-Based Compensation | |||||||||||||||||||||||||
Comstock accounts for employee stock-based compensation under the fair value method. Compensation cost is measured at the grant date based on the fair value of the award and is recognized over the award vesting period. During the three months ended June 30, 2014 and 2013, the Company recognized $2.7 million and $3.2 million, respectively, of stock-based compensation expense within general and administrative expenses related to awards of restricted stock and performance stock units to its employees and directors. For the six months ended June 30, 2014 and 2013, the Company recognized $5.0 million and $6.4 million, respectively, of stock-based compensation expense within general and administrative expenses. | |||||||||||||||||||||||||
During the six months ended June 30, 2014, the Company granted 235,524 shares of restricted stock with a grant date fair value of $4.8 million or $20.24 per share to its employees and non-employee directors. The fair value of each restricted share on the date of grant is equal to its market price. As of June 30, 2014, Comstock had 1,213,361 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $19.91 per share. Total unrecognized compensation cost related to unvested restricted stock grants of $10.7 million as of June 30, 2014 is expected to be recognized over a period of 1.6 years. | |||||||||||||||||||||||||
During the six months ended June 30, 2014, the Company granted 188,958 performance share units (“PSUs”) with a grant date fair value of $3.7 million or $19.81 per unit to its employees. As of June 30, 2014, Comstock had 362,161 PSUs outstanding at a weighted average grant date fair value of $20.48 per unit. The number of shares of common stock to be issued related to the PSUs is based on the Company’s stock price performance as compared to its peers which could result in the issuance of anywhere from zero to 848,567 shares of common stock. Total unrecognized compensation cost related to these grants of $4.3 million as of June 30, 2014 is expected to be recognized over a period of 1.4 years. | |||||||||||||||||||||||||
As of June 30, 2014, Comstock had outstanding options to purchase 115,150 shares of common stock at a weighted average exercise price of $32.90 per share. All of the stock options were exercisable and there were no unrecognized compensation costs related to the stock options as of June 30, 2014. No stock options were exercised during the three months or six months ended June 30, 2014 or 2013. | |||||||||||||||||||||||||
Income Taxes | ' | ||||||||||||||||||||||||
Income Taxes | |||||||||||||||||||||||||
The following is an analysis of consolidated income tax expense (benefit) from continuing operations: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Current provision (benefit) | $ | 23 | $ | (3 | ) | $ | 37 | $ | — | ||||||||||||||||
Deferred provision (benefit) | 1,230 | (11,993 | ) | 1,904 | (24,238 | ) | |||||||||||||||||||
Provision for (benefit from) income taxes | $ | 1,253 | $ | (11,996 | ) | $ | 1,941 | $ | (24,238 | ) | |||||||||||||||
Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates. The difference between the Company’s effective tax rate and the 35% federal statutory rate is mainly caused by non-deductible stock compensation and state taxes. The impact of these items varies based upon the Company’s projected full year income or loss and the jurisdictions that are expected to generate the projected income and/or losses. The difference between the Company’s customary rate of 35% and the effective tax rate on income before income taxes from continuing operations is due to the following: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Tax at statutory rate | 35 | % | 35 | % | 35 | % | 35 | % | |||||||||||||||||
Tax effect of: | |||||||||||||||||||||||||
Nondeductible stock-based compensation | 4.2 | 0.6 | 3.3 | (1.4 | ) | ||||||||||||||||||||
State income taxes, net of federal benefit | (0.4 | ) | 0.3 | (0.3 | ) | 1.1 | |||||||||||||||||||
Other | 1 | (0.1 | ) | 0.8 | (0.2 | ) | |||||||||||||||||||
Effective tax rate | 39.8 | % | 35.8 | % | 38.8 | % | 34.5 | % | |||||||||||||||||
The Company’s federal income tax returns for the years subsequent to December 31, 2009, remain subject to examination. The Company’s income tax returns in major state income tax jurisdictions remain subject to examination from various periods subsequent to December 31, 2008. State tax returns in one state jurisdiction are currently under review. The Company has evaluated the preliminary findings in this jurisdiction and believes it is more likely than not that the ultimate resolution of these matters will not have a material effect on the Company’s financial statements. The Company currently believes that all other significant filing positions are highly certain and that all of its other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions. | |||||||||||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||||
The Company holds or has held certain items that are required to be measured at fair value. These include cash and cash equivalents held in bank accounts and derivative financial instruments in the form of oil price swap agreements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements: | |||||||||||||||||||||||||
Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. | |||||||||||||||||||||||||
Level 2 – Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. | |||||||||||||||||||||||||
Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. | |||||||||||||||||||||||||
The Company’s valuation of cash and cash equivalents is a Level 1 measurement. The Company’s oil price swap agreements are not traded on a public exchange, and their value is determined utilizing a discounted cash flow model based on inputs that are readily available in public markets and, accordingly, the valuation of these swap agreements is categorized as a Level 2 measurement. | |||||||||||||||||||||||||
The following table summarizes financial assets and liabilities accounted for at fair value as of June 30, 2014: | |||||||||||||||||||||||||
Carrying | Level 1 | Level 2 | |||||||||||||||||||||||
Value | |||||||||||||||||||||||||
Measured at | |||||||||||||||||||||||||
Fair Value at | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Assets measured at fair value on a recurring basis: | |||||||||||||||||||||||||
Cash and cash equivalents held in bank accounts | $ | 3,813 | $ | 3,813 | $ | — | |||||||||||||||||||
Total assets | $ | 3,813 | $ | 3,813 | $ | — | |||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | |||||||||||||||||||||||||
Derivative financial instruments | $ | 8,492 | $ | — | $ | 8,492 | |||||||||||||||||||
Total liabilities | $ | 8,492 | $ | — | $ | 8,492 | |||||||||||||||||||
The following table presents the carrying amounts and estimated fair value of the Company’s other financial instruments: | |||||||||||||||||||||||||
As of June 30, 2014 | |||||||||||||||||||||||||
Carrying | Fair | ||||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Fixed rate debt | $ | 695,151 | $ | 766,000 | |||||||||||||||||||||
Floating rate debt | $ | 280,000 | $ | 280,000 | |||||||||||||||||||||
The fair market value of the Company’s fixed rate debt was based on the market prices as of June 30, 2014, a Level 1 measurement. The fair value of the floating rate debt outstanding at June 30, 2014 approximated its carrying value, a Level 2 measurement. | |||||||||||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||||||||||
Earnings Per Share | |||||||||||||||||||||||||
Basic earnings per share is determined without the effect of any outstanding potentially dilutive stock options or PSUs and diluted earnings per share is determined with the effect of outstanding stock options and PSUs that are potentially dilutive. Unvested share-based payment awards containing nonforfeitable rights to dividends are considered to be participatory securities and are included in the computation of basic and diluted earnings per share pursuant to the two-class method. PSUs represent the right to receive a number of shares of the Company’s common stock that may range from zero to up to three times the number of PSUs granted on the award date based on the achievement of certain performance measures during a performance period. The number of potentially dilutive shares related to PSUs is based on the number of shares, if any, which would be issuable at the end of the respective period, assuming that date was the end of the contingency period. The treasury stock method is used to measure the dilutive effect of PSUs. Basic and diluted earnings per share for the three months and six months ended June 30, 2014 and 2013 were determined as follows: | |||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Income | Shares | Per | Income | Shares | Per | ||||||||||||||||||||
Share | (Loss) | Share | |||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 1,898 | $ | (21,531 | ) | ||||||||||||||||||||
(Income) loss allocable to unvested restricted stock | (153 | ) | 697 | ||||||||||||||||||||||
Basic net income (loss) from continuing operations attributable to common stock | $ | 1,745 | 46,651 | $ | 0.04 | $ | (20,834 | ) | 46,754 | $ | (0.45 | ) | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | — | — | |||||||||||||||||||||
Performance share units | — | 353 | — | — | |||||||||||||||||||||
Diluted net income (loss) from continuing operations attributable to common stock | $ | 1,745 | 47,004 | $ | 0.04 | $ | (20,834 | ) | 46,754 | $ | (0.45 | ) | |||||||||||||
$ | 151,236 | ||||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
Income allocable to unvested restricted stock | (4,893 | ) | |||||||||||||||||||||||
Basic net income from discontinued operations attributable to common stock | $ | 146,343 | 46,754 | $ | 3.13 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | |||||||||||||||||||||||
Performance share units | — | — | |||||||||||||||||||||||
Diluted net income from discontinued operations attributable to common stock | $ | 146,343 | 46,754 | $ | 3.13 | ||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Income | Shares | Per | Income | Shares | Per | ||||||||||||||||||||
Share | (Loss) | Share | |||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 3,063 | $ | (46,048 | ) | ||||||||||||||||||||
(Income) loss allocable to unvested restricted stock | (292 | ) | 1,495 | ||||||||||||||||||||||
Basic net income (loss) from continuing operations attributable to common stock | $ | 2,771 | 46,616 | $ | 0.06 | $ | (44,553 | ) | 46,742 | $ | (0.95 | ) | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | — | — | |||||||||||||||||||||
Performance share units | — | 325 | — | — | |||||||||||||||||||||
Diluted net income (loss) from continuing operations attributable to common stock | $ | 2,771 | 46,941 | $ | 0.06 | $ | (44,553 | ) | 46,742 | $ | (0.95 | ) | |||||||||||||
$ | 148,609 | ||||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
Income allocable to unvested restricted stock | (4,825 | ) | |||||||||||||||||||||||
Basic net income from discontinued operations attributable to common stock | $ | 143,784 | 46,742 | $ | 3.07 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | |||||||||||||||||||||||
Performance share units | — | — | |||||||||||||||||||||||
Diluted net income from discontinued operations attributable to common stock | $ | 143,784 | 46,742 | $ | 3.07 | ||||||||||||||||||||
At June 30, 2014 and December 31, 2013, 1,213,361 and 1,515,889 shares of restricted stock, respectively, are included in common stock outstanding as such shares have a nonforfeitable right to participate in any dividends that might be declared and have the right to vote on matters submitted to the Company’s stockholders. Weighted average shares of unvested restricted stock outstanding during the three months and six months ended June 30, 2014 and 2013 were as follows: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Unvested restricted stock | 1,222 | 1,563 | 1,168 | 1,568 | |||||||||||||||||||||
Options to purchase common stock and PSUs that were outstanding and that were excluded as anti-dilutive from the determination of diluted earnings per share are as follows: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands except per share/unit data) | |||||||||||||||||||||||||
Weighted average anti-dilutive stock options | 115 | 134 | 115 | 145 | |||||||||||||||||||||
Weighted average exercise price per share | $ | 32.9 | $ | 32.9 | $ | 32.9 | $ | 32.9 | |||||||||||||||||
Weighted average performance share units | — | 254 | — | 254 | |||||||||||||||||||||
Weighted average grant date fair value per unit | $ | — | $ | 21.14 | $ | — | $ | 21.14 | |||||||||||||||||
Supplementary Information With Respect to the Consolidated Statements of Cash Flows | ' | ||||||||||||||||||||||||
Supplementary Information With Respect to the Consolidated Statements of Cash Flows | |||||||||||||||||||||||||
For the purpose of the consolidated statements of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At June 30, 2014 and December 31, 2013, the Company’s cash investments consisted of cash held in bank accounts. | |||||||||||||||||||||||||
The following is a summary of cash payments made for interest and income taxes: | |||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Cash Payments: | |||||||||||||||||||||||||
Interest payments | $ | 28,907 | $ | 43,738 | |||||||||||||||||||||
Income tax payments | $ | 1,408 | $ | 2 | |||||||||||||||||||||
The Company capitalizes interest on its unevaluated oil and gas property costs during periods when it is conducting exploration activity on this acreage. The Company capitalized interest capitalized interest of $2.6 million and $0.7 million for the three months ended June 30, 2014 and 2013, respectively, and $4.8 million and $1.7 million for the six months ended June 30, 2014 and 2013, respectively, which reduced interest expense. | |||||||||||||||||||||||||
Comprehensive Income | ' | ||||||||||||||||||||||||
Comprehensive Income | |||||||||||||||||||||||||
Comprehensive income consists of the following: | |||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Net income | $ | 1,898 | $ | 129,705 | $ | 3,063 | $ | 102,561 | |||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||
Realized gains on marketable securities reclassified | — | — | — | (5,120 | ) | ||||||||||||||||||||
to gain on sale of marketable securities, net of | |||||||||||||||||||||||||
a benefit from income taxes of $2,757 | |||||||||||||||||||||||||
Unrealized gains on marketable securities, net of | — | — | — | 702 | |||||||||||||||||||||
provision for income taxes of $377 | |||||||||||||||||||||||||
Total comprehensive income | $ | 1,898 | $ | 129,705 | $ | 3,063 | $ | 98,143 | |||||||||||||||||
Discontinued Operations | ' | ||||||||||||||||||||||||
Discontinued Operations | |||||||||||||||||||||||||
On March 14, 2013, the Company entered into an agreement to sell its oil and gas properties located in Reeves and Gaines counties in West Texas to a third party. The sale closed on May 14, 2013 with an effective date of January 1, 2013. Income from discontinued operations for the three months and six months ended June 30, 2013 is comprised of the following: | |||||||||||||||||||||||||
Three Months | Six Months | ||||||||||||||||||||||||
Ended | Ended | ||||||||||||||||||||||||
June 30, 2013 | June 30, 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Oil and gas sales | $ | 8,826 | $ | 25,125 | |||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||
Production taxes | 427 | 1,120 | |||||||||||||||||||||||
Gathering and transportation | 170 | 501 | |||||||||||||||||||||||
Lease operating | 3,545 | 9,853 | |||||||||||||||||||||||
Depletion, depreciation and amortization | — | 8,649 | |||||||||||||||||||||||
Interest expense(1) | 2,847 | 6,346 | |||||||||||||||||||||||
Total costs and expenses | 6,989 | 26,469 | |||||||||||||||||||||||
Gain on sale of discontinued operations | 230,637 | 230,637 | |||||||||||||||||||||||
Income from discontinued operations before income taxes | 232,474 | 229,293 | |||||||||||||||||||||||
Income tax expense: | |||||||||||||||||||||||||
Current | (637 | ) | (637 | ) | |||||||||||||||||||||
Deferred | (80,601 | ) | (80,047 | ) | |||||||||||||||||||||
Total income tax expense | (81,238 | ) | (80,684 | ) | |||||||||||||||||||||
$ | 151,236 | $ | 148,609 | ||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
-1 | Interest expense was allocated to discontinued operations based on the ratio of the net assets of discontinued operations to our consolidated net assets plus long-term debt. Interest expense is net of capitalized interest of $— and $2,010 for the three months and six months ended June 30, 2013, respectively. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Summary of Accrued Liabilities | ' | ||||||||||||||||||||||||
Accrued liabilities at June 30, 2014 and December 31, 2013 consist of the following: | |||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Accrued oil and gas property acquisition costs | $ | — | $ | 40,128 | |||||||||||||||||||||
Accrued drilling costs | 22,027 | 34,914 | |||||||||||||||||||||||
Accrued interest | 9,003 | 7,051 | |||||||||||||||||||||||
Accrued ad valorem taxes | 3,000 | — | |||||||||||||||||||||||
Other accrued liabilities | 8,105 | 9,204 | |||||||||||||||||||||||
$ | 42,135 | $ | 91,297 | ||||||||||||||||||||||
Summary of Changes in Reserve for Future Abandonment Costs | ' | ||||||||||||||||||||||||
Comstock’s asset retirement obligations relate to future plugging and abandonment expenses on its oil and gas properties and related facilities disposal. The following table summarizes the changes in Comstock’s total estimated liability during the six months ended June 30, 2014 and 2013: | |||||||||||||||||||||||||
Six Months Ended | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Future abandonment costs – beginning of period | $ | 14,534 | $ | 16,387 | |||||||||||||||||||||
Accretion expense | 402 | 494 | |||||||||||||||||||||||
New wells placed on production | 728 | 313 | |||||||||||||||||||||||
Liabilities settled and assets disposed of | (34 | ) | (534 | ) | |||||||||||||||||||||
Future abandonment costs — end of period | $ | 15,630 | $ | 16,660 | |||||||||||||||||||||
Summary of Outstanding Oil Price Derivatives | ' | ||||||||||||||||||||||||
As of June 30, 2014, the Company had the following outstanding commodity derivatives: | |||||||||||||||||||||||||
Commodity and Derivative Type | Weighted-Average | Volume | Contract Period | ||||||||||||||||||||||
Contract Price | (barrels) | ||||||||||||||||||||||||
Crude Oil Price Swap Agreements | $96.60 per Bbl. | 1,266,000 | July 2014 – | ||||||||||||||||||||||
December 2014 | |||||||||||||||||||||||||
Income Tax Expense from Continuing Operations | ' | ||||||||||||||||||||||||
The following is an analysis of consolidated income tax expense (benefit) from continuing operations: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Current provision (benefit) | $ | 23 | $ | (3 | ) | $ | 37 | $ | — | ||||||||||||||||
Deferred provision (benefit) | 1,230 | (11,993 | ) | 1,904 | (24,238 | ) | |||||||||||||||||||
Provision for (benefit from) income taxes | $ | 1,253 | $ | (11,996 | ) | $ | 1,941 | $ | (24,238 | ) | |||||||||||||||
Difference Between Customary Rate and Effective Tax Rate on Income Before Income Taxes Due | ' | ||||||||||||||||||||||||
Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates. The difference between the Company’s effective tax rate and the 35% federal statutory rate is mainly caused by non-deductible stock compensation and state taxes. The impact of these items varies based upon the Company’s projected full year income or loss and the jurisdictions that are expected to generate the projected income and/or losses. The difference between the Company’s customary rate of 35% and the effective tax rate on income before income taxes from continuing operations is due to the following: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Tax at statutory rate | 35 | % | 35 | % | 35 | % | 35 | % | |||||||||||||||||
Tax effect of: | |||||||||||||||||||||||||
Nondeductible stock-based compensation | 4.2 | 0.6 | 3.3 | (1.4 | ) | ||||||||||||||||||||
State income taxes, net of federal benefit | (0.4 | ) | 0.3 | (0.3 | ) | 1.1 | |||||||||||||||||||
Other | 1 | (0.1 | ) | 0.8 | (0.2 | ) | |||||||||||||||||||
Effective tax rate | 39.8 | % | 35.8 | % | 38.8 | % | 34.5 | % | |||||||||||||||||
Summary of Financial Assets and Liabilities at Fair Value | ' | ||||||||||||||||||||||||
The following table summarizes financial assets and liabilities accounted for at fair value as of June 30, 2014: | |||||||||||||||||||||||||
Carrying | Level 1 | Level 2 | |||||||||||||||||||||||
Value | |||||||||||||||||||||||||
Measured at | |||||||||||||||||||||||||
Fair Value at | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Assets measured at fair value on a recurring basis: | |||||||||||||||||||||||||
Cash and cash equivalents held in bank accounts | $ | 3,813 | $ | 3,813 | $ | — | |||||||||||||||||||
Total assets | $ | 3,813 | $ | 3,813 | $ | — | |||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | |||||||||||||||||||||||||
Derivative financial instruments | $ | 8,492 | $ | — | $ | 8,492 | |||||||||||||||||||
Total liabilities | $ | 8,492 | $ | — | $ | 8,492 | |||||||||||||||||||
Carrying Amounts and Estimated Fair Value of Other Financial Instruments | ' | ||||||||||||||||||||||||
The following table presents the carrying amounts and estimated fair value of the Company’s other financial instruments: | |||||||||||||||||||||||||
As of June 30, 2014 | |||||||||||||||||||||||||
Carrying | Fair | ||||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Fixed rate debt | $ | 695,151 | $ | 766,000 | |||||||||||||||||||||
Floating rate debt | $ | 280,000 | $ | 280,000 | |||||||||||||||||||||
Basic and Diluted Earnings Per Share | ' | ||||||||||||||||||||||||
Basic earnings per share is determined without the effect of any outstanding potentially dilutive stock options or PSUs and diluted earnings per share is determined with the effect of outstanding stock options and PSUs that are potentially dilutive. Unvested share-based payment awards containing nonforfeitable rights to dividends are considered to be participatory securities and are included in the computation of basic and diluted earnings per share pursuant to the two-class method. PSUs represent the right to receive a number of shares of the Company’s common stock that may range from zero to up to three times the number of PSUs granted on the award date based on the achievement of certain performance measures during a performance period. The number of potentially dilutive shares related to PSUs is based on the number of shares, if any, which would be issuable at the end of the respective period, assuming that date was the end of the contingency period. The treasury stock method is used to measure the dilutive effect of PSUs. Basic and diluted earnings per share for the three months and six months ended June 30, 2014 and 2013 were determined as follows: | |||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Income | Shares | Per | Income | Shares | Per | ||||||||||||||||||||
Share | (Loss) | Share | |||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 1,898 | $ | (21,531 | ) | ||||||||||||||||||||
(Income) loss allocable to unvested restricted stock | (153 | ) | 697 | ||||||||||||||||||||||
Basic net income (loss) from continuing operations attributable to common stock | $ | 1,745 | 46,651 | $ | 0.04 | $ | (20,834 | ) | 46,754 | $ | (0.45 | ) | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | — | — | |||||||||||||||||||||
Performance share units | — | 353 | — | — | |||||||||||||||||||||
Diluted net income (loss) from continuing operations attributable to common stock | $ | 1,745 | 47,004 | $ | 0.04 | $ | (20,834 | ) | 46,754 | $ | (0.45 | ) | |||||||||||||
$ | 151,236 | ||||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
Income allocable to unvested restricted stock | (4,893 | ) | |||||||||||||||||||||||
Basic net income from discontinued operations attributable to common stock | $ | 146,343 | 46,754 | $ | 3.13 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | |||||||||||||||||||||||
Performance share units | — | — | |||||||||||||||||||||||
Diluted net income from discontinued operations attributable to common stock | $ | 146,343 | 46,754 | $ | 3.13 | ||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Income | Shares | Per | Income | Shares | Per | ||||||||||||||||||||
Share | (Loss) | Share | |||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 3,063 | $ | (46,048 | ) | ||||||||||||||||||||
(Income) loss allocable to unvested restricted stock | (292 | ) | 1,495 | ||||||||||||||||||||||
Basic net income (loss) from continuing operations attributable to common stock | $ | 2,771 | 46,616 | $ | 0.06 | $ | (44,553 | ) | 46,742 | $ | (0.95 | ) | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | — | — | |||||||||||||||||||||
Performance share units | — | 325 | — | — | |||||||||||||||||||||
Diluted net income (loss) from continuing operations attributable to common stock | $ | 2,771 | 46,941 | $ | 0.06 | $ | (44,553 | ) | 46,742 | $ | (0.95 | ) | |||||||||||||
$ | 148,609 | ||||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
Income allocable to unvested restricted stock | (4,825 | ) | |||||||||||||||||||||||
Basic net income from discontinued operations attributable to common stock | $ | 143,784 | 46,742 | $ | 3.07 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options | — | — | |||||||||||||||||||||||
Performance share units | — | — | |||||||||||||||||||||||
Diluted net income from discontinued operations attributable to common stock | $ | 143,784 | 46,742 | $ | 3.07 | ||||||||||||||||||||
Weighted Average Shares of Unvested Restricted Stock | ' | ||||||||||||||||||||||||
At June 30, 2014 and December 31, 2013, 1,213,361 and 1,515,889 shares of restricted stock, respectively, are included in common stock outstanding as such shares have a nonforfeitable right to participate in any dividends that might be declared and have the right to vote on matters submitted to the Company’s stockholders. Weighted average shares of unvested restricted stock outstanding during the three months and six months ended June 30, 2014 and 2013 were as follows: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Unvested restricted stock | 1,222 | 1,563 | 1,168 | 1,568 | |||||||||||||||||||||
Common Stock Stock Options Excluded as Anti-Dilutive from Determination of Diluted Earnings Per Share | ' | ||||||||||||||||||||||||
Options to purchase common stock and PSUs that were outstanding and that were excluded as anti-dilutive from the determination of diluted earnings per share are as follows: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands except per share/unit data) | |||||||||||||||||||||||||
Weighted average anti-dilutive stock options | 115 | 134 | 115 | 145 | |||||||||||||||||||||
Weighted average exercise price per share | $ | 32.9 | $ | 32.9 | $ | 32.9 | $ | 32.9 | |||||||||||||||||
Weighted average performance share units | — | 254 | — | 254 | |||||||||||||||||||||
Weighted average grant date fair value per unit | $ | — | $ | 21.14 | $ | — | $ | 21.14 | |||||||||||||||||
Cash Payments Made for Interest and Income Taxes | ' | ||||||||||||||||||||||||
The following is a summary of cash payments made for interest and income taxes: | |||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Cash Payments: | |||||||||||||||||||||||||
Interest payments | $ | 28,907 | $ | 43,738 | |||||||||||||||||||||
Income tax payments | $ | 1,408 | $ | 2 | |||||||||||||||||||||
Comprehensive Income | ' | ||||||||||||||||||||||||
Comprehensive income consists of the following: | |||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Net income | $ | 1,898 | $ | 129,705 | $ | 3,063 | $ | 102,561 | |||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||
Realized gains on marketable securities reclassified | — | — | — | (5,120 | ) | ||||||||||||||||||||
to gain on sale of marketable securities, net of | |||||||||||||||||||||||||
a benefit from income taxes of $2,757 | |||||||||||||||||||||||||
Unrealized gains on marketable securities, net of | — | — | — | 702 | |||||||||||||||||||||
provision for income taxes of $377 | |||||||||||||||||||||||||
Total comprehensive income | $ | 1,898 | $ | 129,705 | $ | 3,063 | $ | 98,143 | |||||||||||||||||
Summary of Income from Discontinued Operations | ' | ||||||||||||||||||||||||
On March 14, 2013, the Company entered into an agreement to sell its oil and gas properties located in Reeves and Gaines counties in West Texas to a third party. The sale closed on May 14, 2013 with an effective date of January 1, 2013. Income from discontinued operations for the three months and six months ended June 30, 2013 is comprised of the following: | |||||||||||||||||||||||||
Three Months | Six Months | ||||||||||||||||||||||||
Ended | Ended | ||||||||||||||||||||||||
June 30, 2013 | June 30, 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Oil and gas sales | $ | 8,826 | $ | 25,125 | |||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||
Production taxes | 427 | 1,120 | |||||||||||||||||||||||
Gathering and transportation | 170 | 501 | |||||||||||||||||||||||
Lease operating | 3,545 | 9,853 | |||||||||||||||||||||||
Depletion, depreciation and amortization | — | 8,649 | |||||||||||||||||||||||
Interest expense(1) | 2,847 | 6,346 | |||||||||||||||||||||||
Total costs and expenses | 6,989 | 26,469 | |||||||||||||||||||||||
Gain on sale of discontinued operations | 230,637 | 230,637 | |||||||||||||||||||||||
Income from discontinued operations before income taxes | 232,474 | 229,293 | |||||||||||||||||||||||
Income tax expense: | |||||||||||||||||||||||||
Current | (637 | ) | (637 | ) | |||||||||||||||||||||
Deferred | (80,601 | ) | (80,047 | ) | |||||||||||||||||||||
Total income tax expense | (81,238 | ) | (80,684 | ) | |||||||||||||||||||||
$ | 151,236 | $ | 148,609 | ||||||||||||||||||||||
Net income from discontinued operations | |||||||||||||||||||||||||
-1 | Interest expense was allocated to discontinued operations based on the ratio of the net assets of discontinued operations to our consolidated net assets plus long-term debt. Interest expense is net of capitalized interest of $— and $2,010 for the three months and six months ended June 30, 2013, respectively. |
Longterm_Debt_Tables
Long-term Debt (Tables) | 6 Months Ended | |||
Jun. 30, 2014 | ||||
Long-term Debt | ' | |||
At June 30, 2014, long-term debt was comprised of: | ||||
(In thousands) | ||||
Bank credit facility | $ | 280,000 | ||
73⁄4 % Senior Notes due 2019 | 405,571 | |||
91⁄2% Senior Notes due 2020 | 289,580 | |||
$ | 975,151 | |||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Operations And Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Proceeds from sale of Stone Energy Corporation common stock available for sale | ' | ' | ' | $13,392,000 | ' |
Impairment charges for unevaluated properties | ' | 9,500,000 | 0 | 11,900,000 | ' |
Impairment charges related to oil and gas properties | 300,000 | 700,000 | 300,000 | 700,000 | ' |
Total gains (losses) on oil price swaps | -9,900,000 | 3,500,000 | -14,800,000 | -2,900,000 | ' |
(Payments) receipts on derivative financial instruments | -4,000,000 | 2,900,000 | -5,300,000 | 5,200,000 | ' |
Derivative Financial Instruments - Current Liability | 8,492,000 | ' | 8,492,000 | ' | ' |
Derivative Financial Instruments - Current Asset | ' | ' | ' | ' | 970,000 |
Common Stock Marketable Securities | ' | ' | ' | ' | ' |
Operations And Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Shares of Stone Energy Corporation common stock sold by company | ' | 600,000 | ' | 600,000 | ' |
Cost basis of Stone Energy Corporation common stock sold | ' | 5,500,000 | ' | 5,500,000 | ' |
Proceeds from sale of Stone Energy Corporation common stock available for sale | ' | ' | ' | 13,400,000 | ' |
Realized gain on available-for-sale securities before income tax | ' | ' | ' | $7,900,000 | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Summary of Accrued Liabilities (Detail) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule Of Accrued Liabilities [Line Items] | ' | ' |
Accrued oil and gas property acquisition costs | ' | $40,128 |
Accrued drilling costs | 22,027 | 34,914 |
Accrued interest | 9,003 | 7,051 |
Accrued ad valorem taxes | 3,000 | ' |
Other accrued liabilities | 8,105 | 9,204 |
Total accrued expenses | $42,135 | $91,297 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies - Summary of Changes in Reserve for Future Abandonment Costs (Detail) (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Asset Retirement Obligations [Line Items] | ' | ' |
Future abandonment costs – beginning of period | $14,534 | $16,387 |
Accretion expense | 402 | 494 |
New wells placed on production | 728 | 313 |
Liabilities settled and assets disposed of | -34 | -534 |
Future abandonment costs — end of period | $15,630 | $16,660 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies - Summary of Outstanding Commodity Derivatives (Detail) (Crude Oil Price Swap Agreements) | 6 Months Ended |
Jun. 30, 2014 | |
bbl | |
Crude Oil Price Swap Agreements | ' |
Derivative [Line Items] | ' |
Commodity Derivatives Weighted Average Contract Price | 96.6 |
Commodity Derivatives Volume | 1,266,000 |
Commodity Derivatives Beginning of Remaining Contract Period | 'July 2014 |
Commodity Derivatives End of Remaining Contract Period | 'December 2014 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies - Additional Information 1 (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Jurisdictions | Restricted Stock | Restricted Stock | Performance Shares | Performance Shares | Performance Shares | Stock Options | Stock Options | Stock Options | Stock Options | General and Administrative Expense | General and Administrative Expense | General and Administrative Expense | General and Administrative Expense | ||||
Unit | Minimum | Maximum | |||||||||||||||
Operations And Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock-based compensation expense recognized | ' | ' | $4,997,000 | $6,440,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,700,000 | $3,200,000 | $5,000,000 | $6,400,000 |
Number of shares granted | ' | ' | ' | ' | 235,524 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted stock grant date fair value | ' | ' | ' | ' | 4,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Grant date fair value of share units, per unit | ' | ' | ' | ' | $20.24 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of unvested restricted stock outstanding | ' | ' | ' | ' | 1,213,361 | 1,515,889 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average grant date fair value of stock grants per share | ' | ' | ' | ' | $19.91 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized compensation cost | ' | ' | ' | ' | 10,700,000 | ' | 4,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period in which compensation cost expected to be recognized | ' | ' | ' | ' | '1 year 7 months 6 days | ' | '1 year 4 months 24 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of units granted | ' | ' | ' | ' | ' | ' | 188,958 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Performance units grant date fair value | ' | ' | ' | ' | ' | ' | 3,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Grant date fair value of share units, per unit | ' | ' | ' | ' | ' | ' | 19.81 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of performance stock units ("PSUs") outstanding | ' | ' | ' | ' | ' | ' | 362,161 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average grant date fair value of PSU's per unit | ' | ' | ' | ' | ' | ' | 20.48 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares, issued | ' | ' | ' | ' | ' | ' | ' | 0 | 848,567 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of Options Outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | 115,150 | ' | 115,150 | ' | ' | ' | ' | ' |
Weighted average exercise price | ' | ' | ' | ' | ' | ' | ' | ' | ' | $32.90 | ' | $32.90 | ' | ' | ' | ' | ' |
Number of option, Exercised | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | 0 | 0 | ' | ' | ' | ' |
Customary rate | 35.00% | 35.00% | 35.00% | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
State jurisdiction currently under review | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Performance Multiplier, minimum | ' | ' | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Performance Multiplier, maximum | ' | ' | 300.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest costs, capitalized during period | $2,600,000 | $700,000 | $4,800,000 | $1,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies - Income Tax Expense from Continuing Operations (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Income Tax Expense Benefit From Continuing Operations [Line Items] | ' | ' | ' | ' |
Current provision (benefit) | $23 | ($3) | $37 | ' |
Deferred provision (benefit) | 1,230 | -11,993 | 1,904 | -24,238 |
Provision for (benefit from) income taxes | $1,253 | ($11,996) | $1,941 | ($24,238) |
Summary_of_Significant_Account9
Summary of Significant Accounting Policies - Difference Between Customary Rate and Effective Tax Rate on Income Before Income Taxes Due (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation [Line Items] | ' | ' | ' | ' |
Tax at statutory rate | 35.00% | 35.00% | 35.00% | 35.00% |
Tax effect of: | ' | ' | ' | ' |
Nondeductible stock-based compensation | 4.20% | 0.60% | 3.30% | -1.40% |
State income taxes, net of federal benefit | -0.40% | 0.30% | -0.30% | 1.10% |
Other | 1.00% | -0.10% | 0.80% | -0.20% |
Effective tax rate | 39.80% | 35.80% | 38.80% | 34.50% |
Recovered_Sheet1
Summary of Significant Accounting Policies - Summary of Financial Assets and Liabilities at Fair Value (Detail) (USD $) | Jun. 30, 2014 |
In Thousands, unless otherwise specified | |
Liabilities measured at fair value on a recurring basis: | ' |
Derivative Financial Instruments | $8,492 |
Fair Value, Measurements, Recurring | ' |
Assets measured at fair value on a recurring basis: | ' |
Cash and cash equivalents held in bank accounts | 3,813 |
Total assets | 3,813 |
Liabilities measured at fair value on a recurring basis: | ' |
Derivative Financial Instruments | 8,492 |
Total liabilities | 8,492 |
Fair Value, Measurements, Recurring | Level 1 | ' |
Assets measured at fair value on a recurring basis: | ' |
Cash and cash equivalents held in bank accounts | 3,813 |
Total assets | 3,813 |
Fair Value, Measurements, Recurring | Level 2 | ' |
Liabilities measured at fair value on a recurring basis: | ' |
Derivative Financial Instruments | 8,492 |
Total liabilities | $8,492 |
Recovered_Sheet2
Summary of Significant Accounting Policies - Carrying Amounts and Estimated Fair Value of Other Financial Instruments (Detail) (USD $) | Jun. 30, 2014 |
In Thousands, unless otherwise specified | |
Long-term debt, including current portion, Carrying Value | $975,151 |
Fixed Rate Debt | ' |
Long-term debt, including current portion, Carrying Value | 695,151 |
Long-term debt, including current portion, Fair Value | 766,000 |
Floating Rate Debt | ' |
Long-term debt, including current portion, Carrying Value | 280,000 |
Long-term debt, including current portion, Fair Value | $280,000 |
Recovered_Sheet3
Summary of Significant Accounting Policies - Basic and Diluted Earnings Per Share (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Earnings Per Share [Line Items] | ' | ' | ' | ' |
Net income (loss) from continuing operations | $1,898 | ($21,531) | $3,063 | ($46,048) |
Net loss from discontinued operations | ' | 151,236 | ' | 148,609 |
Basic net income (loss) attributable to common stock, Shares | 46,651 | 46,754 | 46,616 | 46,742 |
Diluted net income (loss) attributable to common stock, Shares | 47,004 | 46,754 | 46,941 | 46,742 |
Basic net income (loss) from continuing operations attributable to common stock, Per Share | $0.04 | ($0.45) | $0.06 | ($0.95) |
Diluted net income (loss) from continuing operations attributable to common stock, Per Share | $0.04 | ($0.45) | $0.06 | ($0.95) |
Basic net income from discontinued operations attributable to common stock, Per Share | ' | $3.13 | ' | $3.07 |
Diluted net income from discontinued operations attributable to common stock, Per Share | ' | $3.13 | ' | $3.07 |
Continuing Operations | ' | ' | ' | ' |
Earnings Per Share [Line Items] | ' | ' | ' | ' |
Net income (loss) from continuing operations | 1,898 | -21,531 | 3,063 | -46,048 |
(Income) loss allocable to unvested restricted stock | -153 | 697 | -292 | 1,495 |
Basic net income (loss) attributable to common stock | 1,745 | -20,834 | 2,771 | -44,553 |
Effect of dilutive securities: Stock options | ' | ' | ' | ' |
Effect of dilutive securities: Performance share units | ' | ' | ' | ' |
Diluted net income (loss) attributable to common stock | 1,745 | -20,834 | 2,771 | -44,553 |
Basic net income (loss) attributable to common stock, Shares | 46,651 | 46,754 | 46,616 | 46,742 |
Effect of dilutive securities: Stock options, Shares | ' | ' | ' | ' |
Effect of dilutive securities: Performance share units, Shares | 353 | ' | 325 | ' |
Diluted net income (loss) attributable to common stock, Shares | 47,004 | 46,754 | 46,941 | 46,742 |
Basic net income (loss) from continuing operations attributable to common stock, Per Share | $0.04 | ($0.45) | $0.06 | ($0.95) |
Diluted net income (loss) from continuing operations attributable to common stock, Per Share | $0.04 | ($0.45) | $0.06 | ($0.95) |
Discontinued Operations | ' | ' | ' | ' |
Earnings Per Share [Line Items] | ' | ' | ' | ' |
Net loss from discontinued operations | ' | 151,236 | ' | 148,609 |
(Income) loss allocable to unvested restricted stock | ' | -4,893 | ' | -4,825 |
Basic net income (loss) attributable to common stock | ' | 146,343 | ' | 143,784 |
Effect of dilutive securities: Stock options | ' | ' | ' | ' |
Effect of dilutive securities: Performance share units | ' | ' | ' | ' |
Diluted net income (loss) attributable to common stock | ' | $146,343 | ' | $143,784 |
Basic net income (loss) attributable to common stock, Shares | ' | 46,754 | ' | 46,742 |
Effect of dilutive securities: Stock options, Shares | ' | ' | ' | ' |
Effect of dilutive securities: Performance share units, Shares | ' | ' | ' | ' |
Diluted net income (loss) attributable to common stock, Shares | ' | 46,754 | ' | 46,742 |
Basic net income from discontinued operations attributable to common stock, Per Share | ' | $3.13 | ' | $3.07 |
Diluted net income from discontinued operations attributable to common stock, Per Share | ' | $3.13 | ' | $3.07 |
Recovered_Sheet4
Summary of Significant Accounting Policies - Weighted Average Shares of Unvested Restricted Stock (Detail) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Unvested restricted stock | 1,222 | 1,563 | 1,168 | 1,568 |
Recovered_Sheet5
Summary of Significant Accounting Policies - Common Stock Stock Options Excluded as Anti-Dilutive from Determination of Diluted Earnings Per Share (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Weighted average anti-dilutive stock options | 115 | 134 | 115 | 145 |
Weighted average exercise price per share | $32.90 | $32.90 | $32.90 | $32.90 |
Weighted average performance share units | ' | 254 | ' | 254 |
Weighted average grant date fair value per unit | ' | 21.14 | ' | 21.14 |
Recovered_Sheet6
Summary of Significant Accounting Policies - Cash Payments Made for Interest and Income Taxes (Detail) (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Cash Payments: | ' | ' |
Interest payments | $28,907 | $43,738 |
Income tax payments | $1,408 | $2 |
Recovered_Sheet7
Summary of Significant Accounting Policies - Comprehensive Loss (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Net income | $1,898 | $129,705 | $3,063 | $102,561 |
Other comprehensive income: | ' | ' | ' | ' |
Realized gains on marketable securities reclassified to gain on sale of marketable securities, net of a benefit from income taxes of $2,757 | ' | ' | ' | -5,120 |
Unrealized gains on marketable securities, net of provision for income taxes of $377 | ' | ' | ' | 702 |
Total comprehensive income | $1,898 | $129,705 | $3,063 | $98,143 |
Recovered_Sheet8
Summary of Significant Accounting Policies - Comprehensive Loss (Parenthetical) (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Benefit from income taxes on realized gains on marketable securities reclassified to gain on sale of marketable securities | ' | ' | ' | ($2,757) |
Provision for income taxes on unrealized gains on marketable securities | ' | ' | ' | $377 |
Recovered_Sheet9
Summary of Significant Accounting Policies - Summary of Income from Discontinued Operations (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2013 | Jun. 30, 2013 | ||
Revenues: | ' | ' | ||
Oil and gas sales | $8,826 | $25,125 | ||
Costs and expenses: | ' | ' | ||
Production taxes | 427 | 1,120 | ||
Gathering and transportation | 170 | 501 | ||
Lease operating | 3,545 | 9,853 | ||
Depletion, depreciation and amortization | ' | 8,649 | ||
Interest expense | 2,847 | [1] | 6,346 | [1] |
Total costs and expenses | 6,989 | 26,469 | ||
Gain on sale of discontinued operations | 230,637 | 230,637 | ||
Income from discontinued operations before income taxes | 232,474 | 229,293 | ||
Income tax expense: | ' | ' | ||
Current | -637 | -637 | ||
Deferred | -80,601 | -80,047 | ||
Total income tax expense | -81,238 | -80,684 | ||
Net income from discontinued operations | $151,236 | $148,609 | ||
[1] | Interest expense was allocated to discontinued operations based on the ratio of the net assets of discontinued operations to our consolidated net assets plus long-term debt. Interest expense is net of capitalized interest of $— and $2,010 for the three months and six months ended June 30, 2013, respectively. |
Recovered_Sheet10
Summary of Significant Accounting Policies - Summary of Income from Discontinued Operations (Parenthetical) (Detail) (USD $) | 6 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2013 |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ' |
Capitalized interest related to Discontinued Operations | $2,010 |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Stockholders Equity [Line Items] | ' | ' | ' | ' | ' | ' |
Dividends payable, date declared | 21-May-14 | 20-Feb-14 | ' | ' | ' | ' |
Dividends payable, date of record | 6-Jun-14 | 7-Mar-14 | ' | ' | ' | ' |
Dividends per share | $0.13 | $0.13 | $0.13 | $0.13 | $0.25 | $0.13 |
Dividend paid | ' | ' | ' | ' | $12 | $6 |
Approved amount for open market repurchase of common stock | ' | ' | ' | ' | 100 | ' |
Number of stock purchased under open market | ' | ' | ' | ' | 0 | 0 |
Available amount for open market repurchases under plan | ' | ' | ' | ' | $90.80 | ' |
Longterm_Debt_LongTerm_Debt_De
Long-term Debt - Long-Term Debt (Detail) (USD $) | Jun. 30, 2014 |
In Thousands, unless otherwise specified | |
Debt Instrument [Line Items] | ' |
Long-term Debt | $975,151 |
Bank credit facility | ' |
Debt Instrument [Line Items] | ' |
Long-term Debt | 280,000 |
7 3/4% Senior Notes due 2019 | ' |
Debt Instrument [Line Items] | ' |
Long-term Debt | 405,571 |
9 1/2% Senior Notes due 2020 | ' |
Debt Instrument [Line Items] | ' |
Long-term Debt | $289,580 |
Longterm_Debt_Additional_Infor
Long-term Debt - Additional Information (Detail) (Bank credit facility, USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Debt Instrument [Line Items] | ' |
Bank credit facility | $1,000,000,000 |
Line of credit facility commitment term (in years) | '5 years |
Maturity of credit facility | 22-Nov-18 |
Borrowing base | 700,000,000 |
Availability of borrowing base | 420,000,000 |
Stated percentage over federal funds rate to calculate base rate | 0.50% |
Stated percentage over 30 day LIBOR to calculate base rate | 1.00% |
Minimum spread rate over base rate for interest rate on credit facility | 0.50% |
Maximum spread rate over base rate for interest rate on credit facility | 1.50% |
Maximum amount of cash dividends without restriction under credit facility | $120,000,000 |
Minimum | ' |
Debt Instrument [Line Items] | ' |
Spread rate over LIBOR for interest rate on credit facility | 1.50% |
Commitment fee on unused borrowing base | 0.38% |
Maximum | ' |
Debt Instrument [Line Items] | ' |
Spread rate over LIBOR for interest rate on credit facility | 2.50% |
Commitment fee on unused borrowing base | 0.50% |
Longterm_Debt_Additional_Infor1
Long-term Debt - Additional Information 1 (Detail) (USD $) | 6 Months Ended |
In Millions, unless otherwise specified | Jun. 30, 2014 |
7 3/4% Senior Notes due 2019 | ' |
Debt Instrument [Line Items] | ' |
Outstanding senior notes | $400 |
Interest rate on senior notes | 7.75% |
Maturity of senior notes | 1-Apr-19 |
Net proceeds from issuance of debt | 103.3 |
Debt instrument, face amount | 100 |
9 1/2% Senior Notes due 2020 | ' |
Debt Instrument [Line Items] | ' |
Outstanding senior notes | $300 |
Interest rate on senior notes | 9.50% |
Maturity of senior notes | 15-Jun-20 |
Bank credit facility | ' |
Debt Instrument [Line Items] | ' |
Ownership percentage of guarantor subsidiary | 100.00% |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | 6 Months Ended |
In Millions, unless otherwise specified | Jun. 30, 2014 |
Commitments And Contingencies [Line Items] | ' |
Contract term related to drilling rigs | 'up to two years |
Commitments for contracted drilling services | $28.80 |
Natural gas transportation and treating agreements | 'Through July 2019 |
Maximum commitments under natural gas transportation and treating agreements | $15.40 |