Warren Resources (WRES) 10-Q 9 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 09, 2015
Document and Entity Information
Entity Registrant Name	WARREN RESOURCES INC
Entity Central Index Key	892,986
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		85,203,466
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current Assets
Cash and cash equivalents	$ 9,501	$ 1,703
Accounts receivable - trade	15,704	20,025
Restricted investments in U.S. Treasury Bonds-available for sale, at fair value	144	142
Derivative financial instruments	4,192	4,005
Other current assets	2,704	1,245
Total current assets	32,245	27,120
Other Assets
Oil and gas properties-at cost, based on full cost method of accounting, net of accumulated depreciation, depletion and amortization and impairment (includes unproved properties excluded from amortization of $198,612 and $204,626 as of September 30, 2015 and December 31, 2014)	379,561	753,496
Property and equipment-at cost, net	18,120	19,622
Restricted investments in U.S. Treasury Bonds-available for sale, at fair value	1,330	1,280
Deferred debt offering costs, net	12,836	13,942
Derivative financial instruments	3,338
Other assets	3,026	3,220
Total other assets	418,211	791,560
Total assets	450,456	818,680
Current Liabilities
Current maturities of debentures and other long-term liabilities	164	381
Current maturities of other long-term liabilities	218
Accounts payable and accruals	42,872	57,389
Total current liabilities	43,254	57,770
Long-Term Liabilities
First lien credit facility	219,665
Revolving loan credit facility		134,749
Other long-term liabilities, less current portion	37,666	36,084
Senior notes and debentures, less current portion and discount	229,156	297,525
Total long-term liabilities	$ 486,487	$ 468,358
Commitments and Contingencies
Stockholders' Equity
8% convertible preferred stock, par value $.0001; authorized 10,000,000 shares, issued and outstanding, 10,703 shares in 2015 and 2014 (aggregate liquidation preference $128 in 2015 and 2014)	$ 128	$ 128
Common stock - $.0001 par value; authorized, 200,000,000 shares; issued 81,203,466 shares in 2015 and 80,754,225 shares in 2014	8	8
Additional paid-in-capital	514,615	512,843
Accumulated deficit	(594,251)	(220,643)
Accumulated other comprehensive income, net of applicable income taxes of $141 in 2015 and $141 in 2014	215	216
Total stockholders' (deficit)/equity	(79,285)	292,552
Total liabilities and stockholders' equity	$ 450,456	$ 818,680

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS
Oil and gas properties, unproved properties excluded from amortization (in dollars)	$ 198,612	$ 204,626
Preferred stock dividend rate (as a percent)	8.00%	8.00%
8% convertible preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
8% convertible preferred stock, authorized shares	10,000,000	10,000,000
8% convertible preferred stock, issued shares	10,703	10,703
8% convertible preferred stock, outstanding shares	10,703	10,703
8% convertible preferred stock, aggregate liquidation preference (in dollars)	$ 128	$ 128
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized shares	200,000,000	200,000,000
Common stock, issued shares	81,203,466	80,754,225
Accumulated other comprehensive income, applicable income taxes (in dollars)	$ 141	$ 141

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Operating revenues
Oil and gas sales	$ 19,613	$ 39,175	$ 69,290	$ 105,627
Transportation revenue	1,191	1,338	3,509	4,082
Total revenues	20,804	40,513	72,799	109,709
Operating expenses
Lease operating expenses and taxes	12,034	13,337	37,413	32,046
Depreciation, depletion and amortization	18,318	15,844	54,750	36,733
Impairment	175,744		350,625
Acquisition Expense		4,080		4,080
Transportation expenses	256	558	1,243	1,674
General and administrative	3,994	2,898	12,800	10,731
Total operating expenses	210,346	36,717	456,831	85,264
Income (loss) from operations	(189,542)	3,796	(384,032)	24,445
Other income (expense)
Interest and other income	1,926	17	6,047	2,379
Gain on debt extinguishment			14,407
Interest expense	(8,967)	(3,783)	(20,935)	(5,182)
Loss on contingent consideration	(130)		(400)
Gain on derivative financial instruments	10,644	3,699	11,304	1,038
Total other income (expense)	3,473	(67)	10,423	(1,765)
Income (loss) before taxes	(186,069)	3,729	(373,609)	22,680
Deferred income tax expense (benefit)	(8)	4		(10)
Net income (loss)	(186,061)	3,725	(373,609)	22,690
Less dividends and accretion on preferred shares	2	2	7	8
Net income (loss) applicable to common stockholders	$ (186,063)	$ 3,723	$ (373,616)	$ 22,682
Earnings (loss) per share-Basic (in dollars per share)	$ (2.29)	$ 0.05	$ (4.61)	$ 0.30
Earnings (loss) per share-Diluted (in dollars per share)	$ (2.29)	$ 0.05	$ (4.61)	$ 0.30
Weighted average common shares outstanding-Basic (in shares)	81,203,466	78,549,255	81,092,772	75,121,693
Weighted average common shares outstanding-Diluted (in shares)	81,203,466	78,874,219	81,092,772	75,314,166

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$ (186,061)	$ 3,725	$ (373,609)	$ 22,690
Other comprehensive income (loss)
Gain (loss) on investments available for sale	14	(7)	1	14
Comprehensive income (loss)	$ (186,047)	$ 3,718	$ (373,608)	$ 22,704

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income (loss)	$ (373,609)	$ 22,690
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Accretion of discount on available-for-sale debt securities	(53)	(48)
Accretion of discount on high yield		72
Accretion of discount on Senior Notes	144
Amortization of deferred offering costs	1,107	946
Depreciation, depletion, amortization and impairment	405,375	36,733
Change in fair value of derivative financial instruments	(3,525)	(4,305)
Stock option expense	2,109	1,727
Gain on debt extinguishment	(14,407)
Deferred tax (benefit)		(10)
Change in assets and liabilities:
Decrease (increase) in accounts receivable-trade	4,321	(1,481)
Decrease (increase) in other assets	(1,265)	656
Decrease (increase) in accounts payable and accruals	(12,957)	5,466
Decrease in other long-term liabilities	(956)	(4,088)
Net cash provided by operating activities	6,284	58,358
Cash flows from investing activities:
Purchase, exploration and development of oil and gas properties	(28,818)	(374,376)
Purchase of property and equipment	(150)	(1,592)
Net cash used in investing activities	(28,968)	(375,968)
Cash flows from financing activities:
Proceeds from Credit Facility	189,559	371,599
Payments on debt and debentures	(158,748)	(63,238)
Payments on taxes of vested restricted stock and proceeds from the exercise of options	(329)	(594)
Net cash provided by financing activities	30,482	307,767
Net increase (decrease) in cash and cash equivalents	7,798	(9,843)
Cash and cash equivalents at beginning of period	1,703	11,620
Cash and cash equivalents at end of period	9,501	1,777
Supplemental disclosure of cash flow information
Cash paid for interest, net of amounts capitalized	13,176	4,241
Noncash investing and financing activities
Accrued preferred stock dividend	7	$ 8
Exchange of Senior Notes for First Lien debt	$ 47,164

ORGANIZATION

ORGANIZATION	9 Months Ended
	Sep. 30, 2015
ORGANIZATION
ORGANIZATION	NOTE A—ORGANIZATION Warren Resources, Inc. (the “Company” or “Warren”), was originally formed on June 12, 1990 for the purpose of acquiring and developing oil and gas properties. The Company is incorporated under the laws of the state of Maryland. The Company’s properties are primarily located in California, Pennsylvania, and Wyoming. On September 30, 2015, the Company relocated its corporate headquarters from New York City to its pre-existing Denver, Colorado office. In addition, the Company announced that it will close the New York City and Roswell, New Mexico offices, with transitioning and elimination of affected personnel and offices expected to begin in the fourth quarter of 2015 and completion expected by March 31, 2016. The accompanying unaudited financial statements and related notes present the Company’s consolidated financial position as of September 30, 2015 and December 31, 2014, the consolidated results of operations for the three and nine months ended September 30, 2015 and 2014, the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 and consolidated cash flows for the nine months ended September 30, 2015 and 2014. The unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. The accounting policies followed by the Company are set forth in Note A to the Company’s financial statements included in Form 10-K for the year ended December 31, 2014. These interim financial statements and notes thereto should be read in conjunction with the consolidated financial statements presented in the Company’s 2014 Annual Report on Form 10-K.

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION	9 Months Ended
	Sep. 30, 2015
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION	NOTE B—STOCK BASED COMPENSATION Stock Options Compensation expense related to stock options and restricted stock awards recognized in operating results (general and administrative expenses) was approximately $0.4 million and $0.7 million for the three months ended September 30, 2015 and 2014, respectively, and approximately $2.1 and $1.7 million for the nine months ending September 30, 2015 and 2014, respectively. The following assumptions were used to value stock options calculated using the Black-Scholes options pricing model: Nine months ended September 30, 2015 2014 Dividend yield % % Expected volatility % % Risk-free interest rate % % Expected life 3.5 years 3.5 years Weighted Weighted Average Average Aggregate Number Exercise Remaining Intrinsic Value of Options Price Term (in years) (in thousands) Outstanding at June 30, 2015 $ Granted Exercised — — Forfeited or expired ) Outstanding at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ — The total intrinsic value of options exercised during the nine months ended September 30 , 2015 and 2014 was approximately $0 and $1.8 million respectively. As of September 30, 2015, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $2.6 million, which we expect to recognize over a weighted average period of 1.8 years. Restricted Shares Restricted share activity for the nine months ended September 30, 2015 was as follows: Shares Weighted Average Fair Value Outstanding at December 31, 2014 $ Granted Vested ) Forfeited ) Outstanding at September 30, 2015 $ Restricted stock awards for executive officers and employees generally vest ratably over three years. Fair value of our restricted shares is based on our closing stock price on the date of grant. As of September 30, 2015, total unrecognized stock-based compensation expense related to non-vested restricted shares was $0.8 million, which is expected to be recognized over a weighted average period of approximately 1.5 years.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2015
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY	NOTE C—STOCKHOLDERS’ EQUITY The preferred stock pays an 8% cumulative dividend which is treated as a deduction of additional paid in capital, due to insufficient retained earnings. The holders of the preferred stock are not entitled to vote except as defined by the agreement or as provided by applicable law. The preferred stock may be voluntarily converted, at the election of the holder, into common stock of the Company based on a conversion rate of one share of preferred stock for 0.50 shares of common stock. The accrual of the dividend is deducted from earnings in the calculation of earnings attributable to common stockholders. Additionally, holders of the preferred stock can elect to require the Company to redeem their preferred stock at a redemption price equal to the liquidation value of $12.00 per share, plus accrued but unpaid dividends, if any (“Redemption Price”). Upon the receipt of a redemption election, the Company, at its option, shall either: (1) pay the holder cash in the amount equal to the Redemption Price or (2) issue to the holder shares of common stock in an amount equal to 125% of the redemption price and any accrued and unpaid dividends, based on the weighted average closing “bid” price of the Company’s common stock for the thirty trading days immediately preceding the date of the written redemption election by the holder up to a maximum of 1.5 shares of common stock for each one share of preferred stock redeemed. The Company has accreted the carrying value of its preferred stock to its redemption price using the effective interest method with changes recorded to additional paid in capital. Notwithstanding the forgoing, if the closing “bid” price of the Company’s publicly traded common stock as reported by the NASDAQ stock market, or any exchange on which the shares of common stock are traded, exceeds 133% of the conversion price then in effect for the convertible preferred shares for at least 10 days during any 30-day trading period, the Company has the right to redeem in whole or in part the convertible preferred stock at a redemption price of $12 per share (plus any accrued unpaid dividends) or convert the convertible preferred shares (plus any accrued unpaid dividends) into common stock at the then applicable conversion rate.

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2015
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE D—EARNINGS PER SHARE Basic earnings (loss) per share is computed by dividing net earnings (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is based on the assumption that stock options are converted into common shares using the treasury stock method and convertible bonds and preferred stock are converted using the if-converted method. Conversion is not assumed if the results are anti-dilutive. Potential common shares for the nine months ended September 30, 2015 and 2014 of 38,072 and 38,072, respectively, relating to convertible bonds and preferred stock were excluded from the computation of diluted earnings per share because they are anti-dilutive. Potential common shares of 3,989,690 and 2,322,263 relating to stock options and restricted stock were excluded from the computation of diluted earnings per share for the nine months ended September 30, 2015 and 2014, respectively, because they are anti-dilutive. At September 30, 2015 the convertible bonds may be converted from the date of issuance until maturity at 100% of principal amount into common stock of the Company at a price of $50. The preferred stock may be converted at the discretion of the holder or upon meeting certain conditions at the discretion of the Company (see Note C). Basic and diluted net earnings (loss) per share are computed based on the following information: Three Months Ended September 30, 2015 Three Months Ended September 30, 2014 Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014 (in thousands, except for per share data) (in thousands, except for per share data) Net earnings (loss) applicable to common shareholders $ ) $ $ ) $ Weighted average shares outstanding — basic Effect of dilutive securities — restricted stock — — — Effect of dilutive securities — stock options — — Weighted average shares outstanding - diluted Basic net earnings (loss) per share $ ) $ $ ) $ Diluted net earnings (loss) per share $ ) $ $ ) $

LONG-TERM LIABILITIES

LONG-TERM LIABILITIES	9 Months Ended
	Sep. 30, 2015
LONG-TERM LIABILITIES
LONG-TERM LIABILITIES	NOTE E—LONG-TERM LIABILITIES Long-term liabilities consisted of the following for the balance sheets dated: September 30, December 31, 2015 2014 (in thousands) Line of Credit $ — $ First Lien Credit Facility — Convertible Debentures Senior Notes Discount on Senior Notes ) ) Contingent Earn-Out Asset retirement obligations Less current portion Long-term portion $ $ First Lien Credit Facility and Senior Notes Exchange On May 22, 2015, Warren Resources entered into a first lien credit agreement by and among the Company, Wilmington Trust, National Association, as Administrative Agent, and the lenders from time to time party thereto, that provides for a five-year, $250 million term loan facility (the “First Lien Credit Facility”) which matures on May 22, 2020. At the closing of the First Lien Credit Facility, certain of the first lien lenders extended credit in the form of new term loans in the amount of $172.5 million and in the form of commitments for delayed draw term loans for up to an additional $30 million, subject to certain incurrence tests. Approximately $47 million in additional term loans were issued under the First Lien Credit Facility at closing in exchange for $69.59 in face value of the 9.000% Senior Notes due 2022, as described further under “ 9.000% Senior Notes due 2022 ” below. The conditions applicable to further draw downs under the First Lien Credit Facility were modified as part of the First Amendment to the First Lien Credit Facility that was entered into on October 22, 2015 and is further described under Note N to the Notes to the Consolidated Financial Statements. The First Lien Credit Facility is guaranteed by Warren Resources of California, Inc., Warren E&P, Inc. and Warren Marcellus LLC, which are three of the Company’s wholly-owned subsidiaries and is collateralized by substantially all of Warren’s assets, including the equity interests of the guarantors. Warren used the proceeds drawn at closing of the First Lien Credit Facility to repay the balance on its former credit facility, and has been released from all legal obligations on such former facility. The First Lien Credit Facility is subject to prepayment in respect of asset sales, subject to limited reinvestment rights and certain excluded asset sales. The First Lien Credit Facility also includes certain covenants, including a maintance covenant requiring the Company to maintain a minimum consolidated first lien leverage ratio. The terms of the maintenance covenant were modified as part of the First Amendment to the First Lien Credit Facility that was entered into on October 22, 2015 and is further described under Note N to the Notes to the Consolidated Financial Statements. The First Lien Credit Facility is subject to other usual and customary conditions, representations, and warranties, including restrictions on certain additional indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, asset dispositions, repurchase or redemption of our common stock, speculative commodity transactions, transactions with affiliates and other matters. The First Lien Credit Facility is subject to customary events of default. If an event of default occurs and is continuing, the Agent may, or at the request of certain required lenders shall, accelerate amounts due under the First Lien Credit Facility (except for a bankruptcy event of default, in which case such amounts will automatically, by their terms, become due and payable). The annual interest rate on borrowings under the First Lien Credit Facility is 8.5% plus LIBOR for the applicable LIBOR period (with a minimum LIBOR rate of 1%) and is pa yable quarterly in arrears on the next to last business day of each March, June, September and December . At present, the interest rate is 9.5%. As of September 30, 2015 the Company had $219.7 million outstanding on its borrowings under the First Lien Credit Facility, with zero interest accrued. As of November 9, 2015, $15 million of additional borrowings have been drawn and the total outstanding under the facility is therefore $234.7 million. Convertible Debentures The convertible debentures may be converted from the date of issuance until maturity at 100% of principal amount into common stock of the Company at a conversion price of $50. Each year the holders of the convertible debentures may tender to the Company up to 10% of the aggregate debentures issued and outstanding. During the three and nine months ended September 30, 2015, there were no debenture redemptions. 9.000% Senior Notes due 2022 To finance the Marcellus Asset Acquisition (See Note L) in 2014, the Company issued 9.000% senior notes in a private offering at a price equal to 98.617% due to mature on August 1, 2022 (the “Unregistered Senior Notes”). Interest is payable on the Unregistered Senior Notes semi-annually in arrears at a rate of 9.000% per annum on each February 1 and August 1. In connection with the First Lien Credit Facility entered into on May 22, 2015, the Company exchanged $69.59 million in face value of the Unregistered Senior Notes previously held by the lenders under the First Lien Credit Facility for approximately $45.23 million of First Lien Term Loans plus accrued unpaid interest of $1.93 million rolled into the First Lien Term Loans as additional borrowing. The Company accounted for this transaction in accordance with ASC 470 and ASC 405 and as a result recognized a gain on the retirement of debt in the amount of $14.4 million during the period. On July 27, 2015, substantially all of the outstanding Unregistered Senior Notes were exchanged for an equal principal amount of registered 9.000% senior notes due 2022 pursuant to a registration statement on Form S-4 that was declared effective by the Securities and Exchange Commission on June 19, 2015 under the Securities Act (the “Registered Senior Notes” and, together with the Unregistered Senior Notes, the “Senior Notes”). The Registered Senior Notes are identical to the Unregistered Senior Notes except that the Registered Senior Notes are registered under the Securities Act and do not have restrictions on transfer, registration rights or provisions for additional interest. At September 30, 2015, the face amount of the Senior Notes was $230.41 million and the market value was approximately $50.7 million. We may redeem, at specified redemption prices, some or all of the Senior Notes at any time on or after August 1, 2017. We may also redeem up to 35% of the Senior Notes using the proceeds of certain equity offerings completed before August 1, 2017. If we sell certain of our assets or experience certain kinds of changes in control, we may be required to offer to purchase the Senior Notes from the holders. The Senior Notes are fully, unconditionally and jointly and severally guaranteed on a senior unsecured basis by substantially all of our existing subsidiaries and are fully, unconditionally and jointly and severally guaranteed on a senior unsecured basis by our future domestic subsidiaries, subject to certain exceptions.

ASSET RETIREMENT OBLIGATION

ASSET RETIREMENT OBLIGATION	9 Months Ended
	Sep. 30, 2015
ASSET RETIREMENT OBLIGATION
ASSET RETIREMENT OBLIGATION	NOTE F—ASSET RETIREMENT OBLIGATION The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of oil and gas properties is recorded generally upon acquisition or completion of a well. The net estimated costs are discounted to present values using a risk adjusted rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the units-of-production method. The associated liability is classified in other long-term liabilities, net of current portion, in the accompanying Consolidated Balance Sheets. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense, and (4) revisions to estimated future cash flow requirements. The accretion expense is recorded as a component of depreciation, depletion and amortization. The Company has cash held in escrow with a fair market value of $2.8 million that is legally restricted for potential plugging and abandonment liability in the Wilmington field which is recorded in other assets in the Consolidated Balance Sheets. A reconciliation of the Company’s asset retirement obligations is as follows: September 30, 2015 (in thousands) Balance at beginning of period $ Liabilities incurred in current period Liabilities settled in current period ) Accretion expense Balance at end of period $

CONTINGENCIES

CONTINGENCIES	9 Months Ended
	Sep. 30, 2015
CONTINGENCIES
CONTINGENCIES	NOTE G—CONTINGENCIES We are party to a variety of legal, administrative, regulatory and government proceedings, claims and inquiries arising in the normal course of business. Although we cannot predict the outcome of these proceedings with certainty, we do not currently expect these matters to have a material adverse effect on our consolidated financial position or results of operations. There have been no significant changes with respect to the legal matters disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2015
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS	NOTE H - FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair values of financial instruments recognized in the Consolidated Balance Sheets or disclosed within these Notes to Consolidated Financial Statements have been determined using available market information, information from unrelated third party financial institutions and appropriate valuation methodologies, primarily discounted projected cash flows. However, considerable judgment is required when interpreting market information and other data to develop estimates of fair value. Short-term Assets and Liabilities. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their carrying values because of their short-term nature. U.S. Treasury Bonds - Trading and Available-For-Sale Securities. The fair values are based upon quoted market prices for those or similar investments and are reported on the Consolidated Balance Sheets at fair value. Collateral Security Agreement Account (included in other non-current assets). The balance sheet carrying amount approximates fair value, as it earns a market rate. Convertible Debentures . Fair values of fixed rate convertible debentures were calculated using interest rates in effect as of period end for similar instruments with the other terms unchanged. Other Long-Term Liabilities . The carrying amount approximates fair value due to the current rates offered to the Company for long-term liabilities of the same remaining maturities. First Lien Credit Facility. The carrying amount approximates fair value due to the current rate stipulated in the first lien credit facility agreement. Derivatives. The fair values are based upon observable inputs based on market data obtained from independent sources and are considered Level 2 inputs (quoted prices for similar assets, liabilities (adjusted) and market-corroborated inputs) and are reported on the Consolidated Balance Sheets at fair value. Senior Notes. The fair value is based upon quoted market prices for those or similar investments and are reported on the Consolidated Balance Sheets at face value, net of discount. Contingent Earn-Out. The fair value is based on the present value of the amount discounted back at the cost of capital. September 30, 2015 December 31, 2014 Fair Carrying Fair Carrying value amount value amount (in thousands) Financial assets Collateral security account $ $ $ $ Financial liabilities Fixed rate debentures $ $ $ $ Credit Facility — — First Lien Credit Facility — — Senior Notes Contingent Earn-Out FAIR VALUE MEASUREMENTS: Fair value as defined by authoritative literature is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three level hierarchy for measuring fair value. The literature requires fair value measurements be classified and disclosed in one of the following categories: Level 1 : Quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date. Level 2 : Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter forwards and swaps. Level 3 : Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability. The following tables present for each hierarchy level our assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis. September 30, 2015 Level 1 Level 2 Level 3 Total (in thousands) Assets Restricted investments in US Treasury Bonds — available for sale, at fair value $ $ — $ — $ Commodity derivatives $ — $ $ — $ December 31, 2014 Level 1 Level 2 Level 3 Total (in thousands) Assets Restricted investments in US Treasury Bonds — available for sale, at fair value $ $ — $ — $ Commodity derivatives $ — $ $ — $

DERIVATIVE FINANCIAL INSTRUMENT

DERIVATIVE FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2015
DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS	NOTE I — DERIVATIVE FINANCIAL INSTRUMENTS To minimize the effect of a downturn in oil and gas prices and protect our profitability and the economics of our development plans, we enter into crude oil and natural gas hedge contracts. The terms of contracts depend on various factors, including management’s view of future crude oil and natural gas prices. This price hedging program is designed to moderate the effects of a crude oil and natural gas price downturn while allowing us to participate in some commodity price increases. Management regularly monitors the crude oil and natural gas markets and our financial commitments to determine if, when, and at what level some form of crude oil and/or natural gas hedging and/or basis adjustments or other price protection is appropriate. However, we may use a variety of derivative instruments in the future to hedge. The Company has not designated these derivatives as hedges for accounting purposes. The Company routinely enters into derivative contracts with a variety of counterparties, typically resulting in individual derivative instruments with both fair value asset and liability positions. The Company nets the fair values of derivative instruments executed with the same counterparty pursuant to ISDA master agreements, which mitigate the credit risk of the Company’s derivative instruments by providing for net settlement over the term of the contract and in the event of default or termination of the contract. The following table summarizes the open financial derivative positions, as of September 30, 2015, related to oil and gas production. The Company will receive prices as noted in the table below and will pay a counterparty market price based on the NYMEX (for natural gas production) or WTI (for oil production) index price, settled monthly. Product Type Contract Period Volume Price per Mcf or Bbl NYMEX Oil Swap 10/01/15- 03/31/16 250 Bbl/d $ NYMEX Oil Collar 10/01/15- 03/31/16 500 Bbl/d $ 50.00- 64.00 NYMEX Oil Collar 04/01/16- 06/30/16 250 Bbl/d $ 55.00- 69.97 NYMEX Oil Collar 01/01/16- 12/31/16 500 Bbl/d $ 50.00- 71.50 NYMEX Oil Collar 10/01/15- 12/31/15 500 Bbl/d $ 50.00- 68.15 NYMEX Gas Swap 10/01/15- 12/31/15 3,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 10/31/15 10,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 10/31/15 10,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 12/31/15 15,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 03/31/16 5,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 10/31/16 15,000 MMBtu/d $ NYMEX Gas Swap 01/01/16- 12/31/16 15,000 MMBtu/d $ NYMEX Gas Swap 11/01/15- 03/31/16 15,000 MMBtu/d $ The tables below summarize the amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments under authoritative guidance. Derivatives not designated as For the Three Months For the Nine Months Hedging Instrument under Ended September 30, Ended September 30, authoritative guidance 2015 2014 2015 2014 (in thousands) Realized cash settlements on hedges $ $ $ $ ) Mark-to-market gain on hedges Total $ $ $ $ The table below reflects the line item in our Consolidated Balance Sheet where the fair value of our net derivatives, are included. September 30, 2015 Derivative Assets (in thousands) Balance Sheet Location Fair Value Commodity—Natural Gas Non-current $ Commodity—Oil Non-current $ Commodity—Oil Current $ Commodity—Natural Gas Current Total derivatives not designated as hedging instruments $ December 31, 2014 Derivative Assets (in thousands) Balance Sheet Location Fair Value Commodity—Natural Gas Current $ Commodity—Oil Current Total derivatives not designated as hedging instruments $ Derivatives Credit Risk The Company does not require collateral or other security from counterparties to support derivative instruments. However, the agreements with those counterparties typically contain netting provisions such that if a default occurs, the non-defaulting party can offset the amount payable to the defaulting party under the derivative contract with the amount due from the defaulting party. As a result of the netting provisions the Company’s maximum amount of loss due to credit risk is limited to the net amounts due to and from the counterparties under the derivative contracts. The Company’s derivative agreements contain provisions that require cross defaults and acceleration of those instruments to any material debt. If the Company were to default on any of its material debt agreements, it would be a violation of these provisions, and the counterparties to the derivative instruments could request immediate payment on derivative instruments that are in a net liability position at that time

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2015
INCOME TAXES
INCOME TAXES	NOTE J — INCOME TAXES The Company’s effective tax rate differs from the federal statutory tax rate due to changes in the valuation allowance on the Company’s net deferred tax asset.

RECENTLY ISSUED ACCOUNTING STAN

RECENTLY ISSUED ACCOUNTING STANDARDS	9 Months Ended
	Sep. 30, 2015
RECENTLY ISSUED ACCOUNTING STANDARDS
RECENTLY ISSUED ACCOUNTING STANDARDS	NOTE K — RECENTLY ISSUED ACCOUNTING STANDARDS In April 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that is intended to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU will be applied retrospectively as of the date of adoption and is effective for fiscal years beginning after December 15, 2015, and interim periods within those years (early adoption permitted). The Company is currently evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements and related disclosures.

ACQUISITIONS

ACQUISITIONS	9 Months Ended
	Sep. 30, 2015
ACQUISITIONS
ACQUISITIONS	NOTE L — ACQUISITIONS Marcellus Assets On August 11, 2014, we acquired essentially all of the Marcellus Assets of Citrus Energy Corporation (‘‘Citrus’’) and two other working interest owners in exchange for approximately 6.7 million shares of our common stock valued at $41.4 million and cash consideration of $312.5 million, subject to certain post-closing adjustments and certain closing conditions (the ‘‘Marcellus Asset Acquisition’’). The Marcellus Asset Acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) No. 805, Business Combinations (ASC 805) which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. The purchase price of the Marcellus Assets (in thousands): December 31, 2014 Cash consideration $ Fair value of Warren equity common shares Closing adjustments ) Fair value of earn-out provision Fair value of farm-out provision Total purchase price $ In connection with the Marcellus Asset Acquisition, a contingent consideration payment was included as part of the purchase and sale agreement with a maximum payout of $8.5 million, based upon proved reserves and price differential factors. The fair value of this consideration is based on a 90% probability of achieving the full payout discounted to present value. The following table presents the initial purchase price allocation of the Marcellus Asset, based on the fair values of assets acquired and liabilities assumed (in thousands): December 31, 2014 Proved oil and gas properties $ Unproved oil and gas properties Total purchase price $

CAPITALIZED INTEREST

CAPITALIZED INTEREST	9 Months Ended
	Sep. 30, 2015
CAPITALIZED INTEREST
CAPITALIZED INTEREST	NOTE M —CAPITALIZED INTEREST The Company capitalizes interest on qualifying assets, which include investments in undeveloped oil and natural gas properties and exploration and development projects for which depletion expense is not currently recognized, and for which exploration or development activities are in progress. The capitalized interest is determined by multiplying the Company’s interest rate on specific borrowing costs, adjusted to include amortization of bond discount and issuance costs, related to the Senior Notes or exchanges of the Senior Notes used to purchase the Marcellus Assets, by the qualifying costs incurred that are excluded from the full cost pool. However, the amount of capitalized interest cannot exceed the amount of gross interest expense incurred in any given period. The capitalized interest amounts are recorded as additions to unevaluated oil and natural gas properties on the unaudited condensed consolidated balance sheets. As the costs excluded are transferred to the full cost pool, the associated capitalized interest is also transferred to the full cost pool. Interest of $2.2 million and $8.8 million relating to the Senior Notes was capitalized during the three and nine months ended September 30, 2015. Previously capitalized interest of $1.4 million was transferred into the full cost pool during the three months ended September 30, 2015.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2015
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	NOTE N —SUBSEQUENT EVENTS Wyoming Purchase and Sale Agreement Amendment and Extension On June 16, 2015, the Company announced that (i) the Company and its subsidiary Warren E&P had entered into a purchase and sale agreement (the “CBM PSA”) with Escalera Resources, Co. (“Escalera”), pursuant to which Escalera would acquire all of Warren’s interests in coalbed methane assets located in the Atlantic Rim area of the Washakie Basin in Carbon County, Wyoming, (ii) the Company, through its subsidiaries, Warren Energy Services, LLC, and Warren E&P, had entered into a purchase and sale agreement (the “Midstream PSA”) with Escalera pursuant to which Escalera would acquire midstream pipeline assets appurtenant to the coalbed methane assets being sold under the CBM PSA; and (iii) the Company and Warren E&P had entered into a letter agreement (the “Deep Rights Agreement,” and together with the CBM PSA and the Midstream PSA, the “Escalera Agreements”) pursuant to which Escalera would acquire an undivided 30% of the Company’s interest in the operated deep rights associated with the Company’s former leases in the Atlantic Rim area. On August 28, 2015, the parties to the Escalera Agreements entered into an Amendment of Purchase and Sale Agreements and Letter Agreement (the “Amendment”) to extend the deadline for closing the transactions contemplated by the Escalera Agreements to September 17, 2015. The Amendment provided that either party may terminate the Escalera Agreements if the transactions contemplated thereby had not been consummated on or before September 17, 2015, or if the closing conditions of the other party had not been satisfied and could not be cured. On November 5, 2015, Escalera announced that it had filed a voluntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Colorado. Accordingly, Warren does not expect to consummate the previously announced sale of CBM assets to Escalera and is taking steps to terminate the agreements. Warren continues to consider all strategic options for these assets. Management On October 15, 2015, the Company entered into retention agreements with certain key employees who are currently located in offices being closed as part of the headquarters relocation that is further described under Note A to the Notes to the Consolidated Financial Statements. Each of Mr. Brian Gelman, the Interim CFO, Mr. Jeffrey Keeler, Vice President of Corporate Development, and Ms. Saema Somalya, Senior Vice President, General Counsel and Corporate Secretary, who collectively comprise the executive officers located in the Company’s New York City office was included in this group of employees. These retention agreements were offered in order to retain and incentivize these officers to continue providing services to the Company through the transitional period between relocation of the corporate headquarters from New York City to Denver and closure of the New York office, which is anticipated to occur on or about March 31, 2016. The Retention Agreements provide for payment of certain benefits in the event that the relevant officer remains employed with the Company through a specified retention date. In the case of Mr. Gelman and Ms. Somalya, the specified retention date is March 31, 2016 and, in the case of Mr. Keeler, the specified retention date is December 31, 2015. It is expected that the maximum cash benefits payable to the named executive officers listed above in association with the relocation of headquarters and office closures will be in the range of $1 million, and that total retention expense (including this $1 million) will be in the range of $1.6 million. Subsequent to the quarter, on November 2, 2015, Mr. Stewart Skelly, the then-current Vice President and CFO, tendered his resignation, which was effective on November 6, 2015. Pursuant to the terms of his retention and severance agreement dated October 15, 2015, Mr. Skelly will receive a lump sum payment of $275,000, plus nine months of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act upon his delivery of an irrevocable release and waiver of claims. Mr. Gelman will serve as interim CFO until the Company names a permanent CFO. In connection with his appointment as interim Chief Financial Officer and interim Chief Accounting Officer, the Company and Mr. Gelman entered into a new retention agreement that revises the terms of his previously-executed retention agreement to reflect his new position with the Company. Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock On October 22, 2015, the Company entered into a second lien credit facility (the “Second Lien Credit Facility”) by and among the Company, Cortland Capital Market Services, LLC, as Administrative Agent, and the lenders from time to time party thereto. The Second Lien Credit Facility provides for a five-year, approximately $51.0 million term loan facility that matures on November 1, 2020. At the closing, certain of the lenders extended credit in the form of new second lien term loans in the amount of approximately $11.0 million. Proceeds of these new second lien loans may be used from time to time for working capital, capital expenditures, repayment of outstanding debt, acquisitions and other general corporate purposes. In addition to the new loans, the lenders under the Second Lien Credit Facility also exchanged approximately $63.1 million in face value of previously-issued Senior Notes held by them, plus accrued interest, for (i) approximately $40.1 million of second lien term loans under the Second Lien Facility, and (ii) four million (4,000,000) shares of Company Common Stock. The Second Lien Credit Facility is subject to prepayment in respect of asset sales, subject to limited reinvestment rights and certain excluded asset sales. The Second Lien Credit Facility is guaranteed by Warren Resources of California, Inc., Warren E&P, Inc. and Warren Marcellus LLC on substantially similar terms as the guarantees related to the First Lien Credit Facility and is collateralized by second-priority liens on substantially all of Warren’s assets, including the equity interests of the guarantors, to the extent such assets or interests secure the First Lien Credit Facility. Pursuant to the terms of an intercreditor agreement, the security interest in those assets that secure the second lien loans and the guarantees are contractually subordinated to the first-priority liens that secure the First Lien Facility and certain other permitted indebtedness (including third party swaps and derivative transactions). Consequently, loans and guarantees under the Second Lien Credit Facility will be effectively subordinated to the First Lien Credit Facility and such other indebtedness to the extent of the value of such assets. The annual interest rate on borrowings under the Second Lien Facility is 12%, with interest payable semi-annually in arrears on each April 20 and October 20. On the first three semi-annual interest payment dates, beginning with April 20, 2016, the Company may elect to pay up to all of such interest (6% per semi-annual period) by capitalizing accrued and unpaid interest and adding the same to the principal amount of the second lien loans then outstanding. For the subsequent three semi-annual interest payment dates, beginning with October 20, 2017 and ending October 20, 2018, the Company may elect to pay up to one quarter of such interest (1.5% per semi-annual period) by capitalizing accrued and unpaid interest and adding the same to the principal amount of the Second Lien Loans then outstanding. As of November 9, 2015, the Company had approximately $51 million outstanding on its borrowings under the Second Lien Credit Facility. First Lien Credit Facility Amendment and Additional Draw Down of Funds In connection with the closing of the Second Lien Credit Facility, effective October 22, 2015, the Company also entered into the first amendment to its First Lien Credit Facility. The first amendment, among other things, authorizes the Second Lien Credit Facility and provides for certain changes to the First Lien Credit Facility to conform to the language in the Second Lien Credit Facility, and makes certain other changes to the First Lien Credit Facility, including, among other things, to provide that: (i) asset sales with proceeds in excess of $1,000,000 and the reinvestment of such asset sales proceeds will be at the discretion of the first lien lenders, and (ii) the Company’s compliance with the consolidated first lien leverage ratio (as defined in the First Lien Credit Facility) will begin being measured as of June 30, 2016 (instead of December 31, 2016, as required pursuant to the terms of the original First Lien Facility) and the quarterly testing dates of each year will require the delivery of a compliance certificate within 25 days after such date. The Company also drew down an additional $10 million under the First Lien Credit Facility in connection with the first amendment. As previously disclosed, the First Lien Credit Facility provided commitments for delayed draw term loans for up to $30 million, subject to certain incurrence tests. As a result of this draw, the Company has made aggregate draws of $15 million under the delayed draw feature of the First Lien Credit Facility. The first amendment provides that any future draws by the Company of the remaining availability under the First Lien Credit Facility will be at the sole discretion of the first lien lenders. See Note E to the Notes to the Consolidated Financial Statements for further information regarding total debt outstanding under the First Lien Credit Facility. Liquidity Under the terms of its First Lien Credit Facility, Warren will be subject as of June 30, 2016 to a covenant that requires us to maintain a ratio of total first lien debt to past four consecutive quarters of EBITDA that does not exceed 5.5. This ratio threshold will drop to 5.0 as of April 2017. If we are unable to execute on an aggressive program of deleveraging and benefit from significant improvements in commodity pricing between now and June 30, 2016, we do not expect that we will be in compliance with the required ratio on June 30, 2016. If the first lien lenders do not amend or waive the covenant, they would be able to accelerate the maturity of our first lien debt and exercise other rights and remedies. This, in turn, would cause a default under the Second Lien Credit Facility and the Senior Notes, which would permit the holders of each to accelerate their maturities as well. The Company is in regular communication with its first lien lenders regarding overall compliance issues including expectations around the June 30, 2016 maintenance covenant. However, no assurances can be given that the First Lien Lenders will approve waivers or amendments on terms that are acceptable to the Company, or at all. An inability to obtain an amendment or waiver of the relevant covenant would have an adverse effect on the Company’s ability to operate.

STOCK BASED COMPENSATION (Table

STOCK BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2015
STOCK BASED COMPENSATION
Schedule of assumptions used to value stock options calculated using the Black-Scholes options pricing model	Nine months ended September 30, 2015 2014 Dividend yield % % Expected volatility % % Risk-free interest rate % % Expected life 3.5 years 3.5 years
Schedule of options issued to employees and changes during the years	Weighted Weighted Average Average Aggregate Number Exercise Remaining Intrinsic Value of Options Price Term (in years) (in thousands) Outstanding at June 30, 2015 $ Granted Exercised — — Forfeited or expired ) Outstanding at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ —
Schedule of restricted share activity	Shares Weighted Average Fair Value Outstanding at December 31, 2014 $ Granted Vested ) Forfeited ) Outstanding at September 30, 2015 $

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2015
EARNINGS PER SHARE
Schedule of computation of basic and diluted net earnings (loss) per share	Three Months Ended September 30, 2015 Three Months Ended September 30, 2014 Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014 (in thousands, except for per share data) (in thousands, except for per share data) Net earnings (loss) applicable to common shareholders $ ) $ $ ) $ Weighted average shares outstanding — basic Effect of dilutive securities — restricted stock — — — Effect of dilutive securities — stock options — — Weighted average shares outstanding - diluted Basic net earnings (loss) per share $ ) $ $ ) $ Diluted net earnings (loss) per share $ ) $ $ ) $

LONG-TERM LIABILITIES (Tables)

LONG-TERM LIABILITIES (Tables)	9 Months Ended
	Sep. 30, 2015
LONG-TERM LIABILITIES
Schedule of long-term liabilities	September 30, December 31, 2015 2014 (in thousands) Line of Credit $ — $ First Lien Credit Facility — Convertible Debentures Senior Notes Discount on Senior Notes ) ) Contingent Earn-Out Asset retirement obligations Less current portion Long-term portion $ $

ASSET RETIREMENT OBLIGATION (Ta

ASSET RETIREMENT OBLIGATION (Tables)	9 Months Ended
	Sep. 30, 2015
ASSET RETIREMENT OBLIGATION
Schedule of reconciliation of the Company's asset retirement obligations	September 30, 2015 (in thousands) Balance at beginning of period $ Liabilities incurred in current period Liabilities settled in current period ) Accretion expense Balance at end of period $

FAIR VALUE OF FINANCIAL INSTR25

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
FAIR VALUE OF FINANCIAL INSTRUMENTS
Schedule of carrying amount and estimated fair value of financial instruments	September 30, 2015 December 31, 2014 Fair Carrying Fair Carrying value amount value amount (in thousands) Financial assets Collateral security account $ $ $ $ Financial liabilities Fixed rate debentures $ $ $ $ Credit Facility — — First Lien Credit Facility — — Senior Notes Contingent Earn-Out
Schedule of assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis	September 30, 2015 Level 1 Level 2 Level 3 Total (in thousands) Assets Restricted investments in US Treasury Bonds — available for sale, at fair value $ $ — $ — $ Commodity derivatives $ — $ $ — $ December 31, 2014 Level 1 Level 2 Level 3 Total (in thousands) Assets Restricted investments in US Treasury Bonds — available for sale, at fair value $ $ — $ — $ Commodity derivatives $ — $ $ — $

DERIVATIVE FINANCIAL INSTRUME26

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
DERIVATIVE FINANCIAL INSTRUMENTS
Summary of open financial derivative positions related to oil and gas production	Product Type Contract Period Volume Price per Mcf or Bbl NYMEX Oil Swap 10/01/15- 03/31/16 250 Bbl/d $ NYMEX Oil Collar 10/01/15- 03/31/16 500 Bbl/d $ 50.00- 64.00 NYMEX Oil Collar 04/01/16- 06/30/16 250 Bbl/d $ 55.00- 69.97 NYMEX Oil Collar 01/01/16- 12/31/16 500 Bbl/d $ 50.00- 71.50 NYMEX Oil Collar 10/01/15- 12/31/15 500 Bbl/d $ 50.00- 68.15 NYMEX Gas Swap 10/01/15- 12/31/15 3,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 10/31/15 10,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 10/31/15 10,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 12/31/15 15,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 03/31/16 5,000 MMBtu/d $ NYMEX Gas Swap 10/01/15- 10/31/16 15,000 MMBtu/d $ NYMEX Gas Swap 01/01/16- 12/31/16 15,000 MMBtu/d $ NYMEX Gas Swap 11/01/15- 03/31/16 15,000 MMBtu/d $
Summary of amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments	Derivatives not designated as For the Three Months For the Nine Months Hedging Instrument under Ended September 30, Ended September 30, authoritative guidance 2015 2014 2015 2014 (in thousands) Realized cash settlements on hedges $ $ $ $ ) Mark-to-market gain on hedges Total $ $ $ $
Schedule of fair value and balance sheet location of net derivatives	September 30, 2015 Derivative Assets (in thousands) Balance Sheet Location Fair Value Commodity—Natural Gas Non-current $ Commodity—Oil Non-current $ Commodity—Oil Current $ Commodity—Natural Gas Current Total derivatives not designated as hedging instruments $ December 31, 2014 Derivative Assets (in thousands) Balance Sheet Location Fair Value Commodity—Natural Gas Current $ Commodity—Oil Current Total derivatives not designated as hedging instruments $

ACQUISITIONS (Tables)

ACQUISITIONS (Tables)	9 Months Ended
	Sep. 30, 2015
ACQUISITIONS
Schedule of business acquisition purchase price	The purchase price of the Marcellus Assets (in thousands): December 31, 2014 Cash consideration $ Fair value of Warren equity common shares Closing adjustments ) Fair value of earn-out provision Fair value of farm-out provision Total purchase price $
Schedule of initial purchase price allocation of the acquisition	The following table presents the initial purchase price allocation of the Marcellus Asset, based on the fair values of assets acquired and liabilities assumed (in thousands): December 31, 2014 Proved oil and gas properties $ Unproved oil and gas properties Total purchase price $

STOCK BASED COMPENSATION (Detai

STOCK BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
STOCK BASED COMPENSATION
Compensation expense related to stock options and restricted stock awards	$ 400	$ 700	$ 2,100	$ 1,700
Stock options
Weighted-average assumptions used to value stock options
Dividend yield (as a percent)			0.00%	0.00%
Expected volatility (as a percent)			60.85%	52.80%
Risk-free interest rate (as a percent)			1.20%	1.10%
Expected life			3 years 6 months	3 years 6 months
Number of Options
Outstanding at the beginning of the period (in shares)	3,631,059
Granted (in shares)	35,000
Forfeited or expired (in shares)	(158,864)
Outstanding at the end of the period (in shares)	3,507,195		3,507,195
Exercisable at the end of the period (in shares)	738,765		738,765
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 2.67
Granted (in dollars per share)	0.42
Forfeited or expired (in dollars per share)	3.04
Outstanding at the end of the period (in dollars per share)	2.63		$ 2.63
Exercisable at the end of the period (in dollars per share)	$ 4.14		$ 4.14
Weighted Average Remaining Term (in years)
Outstanding at the end of the period	3 years 10 months 24 days
Exercisable at the end of the period	2 years 10 months 13 days
Aggregate Intrinsic Value
Outstanding at the end of the period	$ 3		$ 3
Additional disclosures
Total intrinsic value of options exercised			0	$ 1,800
Total unrecognized stock-based compensation expense	$ 2,600		$ 2,600
Weighted Average Fair Value
Weighted average period over which unrecognized compensation cost is expected to be recognized			1 year 9 months 18 days
Restricted Shares
Shares
Outstanding at the beginning of the period (in shares)			689,370
Granted (in shares)			521,322
Vested (in shares)			(697,630)
Forfeited (in shares)			(30,567)
Outstanding at the end of the period (in shares)	482,495		482,495
Weighted Average Fair Value
Outstanding at the beginning of the period (in dollars per share)			$ 2.87
Granted (in dollars per share)			1.11
Vested (in dollars per share)			1.79
Forfeited (in dollars per share)			3.15
Outstanding at the end of the period (in dollars per share)	$ 2.50		$ 2.50
Vesting period			3 years
Total unrecognized stock-based compensation expense	$ 800		$ 800
Weighted average period over which unrecognized compensation cost is expected to be recognized			1 year 6 months

STOCKHOLDERS' EQUITY (Details)

STOCKHOLDERS' EQUITY (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
STOCKHOLDERS' EQUITY
Cumulative dividend on preferred stock (as a percent)	8.00%	8.00%
Number of common shares into which one share of preferred stock is to be converted	0.50
Shares to be issued as percentage of redemption price and any accrued and unpaid dividends	125.00%
Number of trading days considered for calculating the weighted average closing bid price at which preferred stock will be redeemed	30 days
Maximum number of shares of common stock that the company, at its option, can issue for each one share of preferred stock redeemed	1.5
Percentage of conversion price that the entity's common stock must exceed to give the entity the right to redeem	133.00%
Minimum number of days within 30-day trading period in which the closing price of the entity's common stock must exceed the conversion price	10 days
Number of trading days during which the closing bid price of the entity's common stock must exceed the conversion price	30 days
Preferred stock
Redemption price (in dollars per share)	$ 12
Preferred stock
Preferred stock
Redemption price (in dollars per share)	$ 12

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic and diluted net earnings (loss) per share
Net earnings (loss) applicable to common shareholders	$ (186,063)	$ 3,723	$ (373,616)	$ 22,682
Weighted average shares outstanding - basic	81,203,466	78,549,255	81,092,772	75,121,693
Effect of dilutive securities - restricted stock		12,524
Effect of dilutive securities - stock options		312,440		192,473
Weighted average shares outstanding - diluted	81,203,466	78,874,219	81,092,772	75,314,166
Basic net earnings (loss) per share (in dollars per share)	$ (2.29)	$ 0.05	$ (4.61)	$ 0.30
Diluted net earnings (loss) per share (in dollars per share)	(2.29)	$ 0.05	$ (4.61)	$ 0.30
Convertible bonds and preferred stock
Earnings per share
Anti-dilutive securities (in shares)			38,072	38,072
Stock options and restricted stock
Earnings per share
Anti-dilutive securities (in shares)			3,989,690	2,322,263
Secured Convertible Debentures
Earnings per share
Percentage of principal amount at which debentures may be converted from the date of issuance until maturity into common stock			100.00%
Conversion price (in dollars per share)	$ 50		$ 50

LONG-TERM LIABILITIES (Details)

LONG-TERM LIABILITIES (Details) - USD ($) $ / shares in Units, $ in Thousands	Aug. 01, 2017	Nov. 09, 2015	May. 22, 2015	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Aug. 11, 2014
LONG-TERM LIABILITIES
Line of Credit							$ 134,749
First lien credit facility				$ 219,665	$ 219,665
Convertible Debentures				1,636	1,636		1,636
Senior Notes				230,410	230,410		300,000
Discount on Senior Notes				(2,727)	(2,727)		(3,947)
Contingent Earn-Out				6,931	6,931		6,531
Asset retirement obligations				30,954	30,954		29,771
Total long-term liabilities				486,869	486,869		468,740
Less current portion				382	382		382
Long-term portion				486,487	486,487		$ 468,358
Long-term liabilities
Draw downs from additional borrowings					189,559	$ 371,599
Gain on retirement of debt					14,407
Credit Facility | The "First Lien Credit Facility"
Long-term liabilities
Term of loan			5 years
Borrowing capacity			$ 250,000
Additional borrowing capacity			$ 30,000
Accrued interest				$ 0	$ 0
Draw downs from additional borrowings		$ 15,000
Outstanding borrowing amount		$ 234,700
Credit Facility | The "First Lien Credit Facility" | LIBOR
Long-term liabilities
Variable rate basis					LIBOR
Interest rate (as a percent)			8.50%
Interest rate during the period (as a percent)					9.50%
Credit Facility | Certain Lenders | The "First Lien Credit Facility"
Long-term liabilities
Borrowing capacity			$ 172,500
Additional borrowing capacity			30,000
Amount of Lien Credit Facility exchanged from Senior Notes			$ 45,230
Minimum | Credit Facility | The "First Lien Credit Facility" | LIBOR
Long-term liabilities
Margin (as a percent)			1.00%
Credit Facility | The "First Lien Credit Facility"
Long-term liabilities
Amount of Lien Credit Facility exchanged from Senior Notes			$ 47,000
Credit Facility | Certain Lenders | The "First Lien Credit Facility"
Long-term liabilities
Accrued unpaid interest rolled into the First Lien Term Loans			1,930
Secured Convertible Debentures
Long-term liabilities
Percentage of principal amount at which debentures may be converted from the date of issuance until maturity into common stock					100.00%
Conversion price (in dollars per share)				$ 50	$ 50
Amount of bond redemptions				$ 0	$ 0
Secured Convertible Debentures | Maximum
Long-term liabilities
Percentage of issued and outstanding debentures may be converted each year					10.00%
Senior Notes.
Long-term liabilities
Interest rate (as a percent)				9.00%	9.00%
Percentage on initial purchase price								98.617%
Gain on retirement of debt					$ 14,400
Senior notes, face amount				$ 230,410	230,410
Senior notes, market value				$ 50,700	$ 50,700
Senior Notes. | Certain Lenders
Long-term liabilities
Face Value of Senior Notes exchanged to Lien Credit Facility			$ 69,590
Senior Notes. | Maximum | Forecast
Long-term liabilities
Percentage of Senior Notes can be redeemed on or after August 1, 2017	35.00%

ASSET RETIREMENT OBLIGATION (De

ASSET RETIREMENT OBLIGATION (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
ASSET RETIREMENT OBLIGATION
Fair market value of cash held in escrow that is legally restricted for potential plugging and abandonment liability	$ 2,800
Reconciliation of asset retirement obligations
Balance at beginning of period	29,771
Liabilities incurred in current period	9
Liabilities settled in current period	(956)
Accretion expense	2,130
Balance at end of period	$ 30,954

FAIR VALUE OF FINANCIAL INSTR33

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair value
Financial assets
Collateral security account	$ 2,812	$ 3,165
Financial liabilities
Fixed rate debentures	3,116	3,035
Senior Notes	50,690	195,000
Contingent Earn-Out	6,930	6,530
Carrying amount
Financial assets
Collateral security account	2,812	3,165
Financial liabilities
Fixed rate debentures	1,636	1,636
Senior Notes	227,683	296,053
Contingent Earn-Out	$ 6,930	6,530
Senior Notes.
Fair value of financial instruments
Interest rate (as a percent)	9.00%
Financial liabilities
Senior Notes	$ 50,700
The "Credit Facility" | Fair value
Financial liabilities
Line of credit		134,749
The "Credit Facility" | Carrying amount
Financial liabilities
Line of credit		$ 134,749
The "First Lien Credit Facility" | Fair value
Financial liabilities
Line of credit	219,665
The "First Lien Credit Facility" | Carrying amount
Financial liabilities
Line of credit	$ 219,665

FAIR VALUE OF FINANCIAL INSTR34

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - Recurring - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets
Restricted investments in US Treasury Bonds - available for sale, at fair value	$ 1,474	$ 1,422
Commodity derivatives	7,530	4,005
Level 1
Assets
Restricted investments in US Treasury Bonds - available for sale, at fair value	1,474	1,422
Level 2
Assets
Commodity derivatives	$ 7,530	$ 4,005

DERIVATIVE FINANCIAL INSTRUME35

DERIVATIVE FINANCIAL INSTRUMENTS (Details) - Commodity derivatives	Sep. 30, 2015MMBTU / dbbl / d$ / Mcf$ / bbl
Oil | Swap | 10/01/15 - 03/31/16
Derivative financial instruments
Volume in BBl or MMBtu per day | bbl / d	250
Price per Mcf or Bbl	62.92
Oil | Collar | 10/01/15 - 03/31/16
Derivative financial instruments
Volume in BBl or MMBtu per day | bbl / d	500
Oil | Collar | 10/01/15 - 03/31/16 | Minimum
Derivative financial instruments
Price per Mcf or Bbl	50
Oil | Collar | 10/01/15 - 03/31/16 | Maximum
Derivative financial instruments
Price per Mcf or Bbl	64
Oil | Collar | 04/01/16- 06/30/16
Derivative financial instruments
Volume in BBl or MMBtu per day | bbl / d	250
Oil | Collar | 04/01/16- 06/30/16 | Minimum
Derivative financial instruments
Price per Mcf or Bbl	55
Oil | Collar | 04/01/16- 06/30/16 | Maximum
Derivative financial instruments
Price per Mcf or Bbl	69.97
Oil | Collar | 01/01/16- 12/31/16
Derivative financial instruments
Volume in BBl or MMBtu per day | bbl / d	500
Oil | Collar | 01/01/16- 12/31/16 | Minimum
Derivative financial instruments
Price per Mcf or Bbl	50
Oil | Collar | 01/01/16- 12/31/16 | Maximum
Derivative financial instruments
Price per Mcf or Bbl	71.50
Oil | Collar | 10/01/15- 12/31/15
Derivative financial instruments
Volume in BBl or MMBtu per day | bbl / d	500
Oil | Collar | 10/01/15- 12/31/15 | Minimum
Derivative financial instruments
Price per Mcf or Bbl	50
Oil | Collar | 10/01/15- 12/31/15 | Maximum
Derivative financial instruments
Price per Mcf or Bbl	68.15
Natural Gas | Swap | 10/01/15 - 03/31/16
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	5,000
Price per Mcf or Bbl | $ / Mcf	3.02
Natural Gas | Swap | 01/01/16- 12/31/16
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	15,000
Price per Mcf or Bbl | $ / Mcf	3.16
Natural Gas | Swap | 10/01/15- 12/31/15
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	3,000
Price per Mcf or Bbl | $ / Mcf	4.16
Natural Gas | Swap | 10/01/15- 10/31/15
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	10,000
Price per Mcf or Bbl | $ / Mcf	3.18
Natural Gas | Swap | 10/01/15- 10/31/15 period two
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	10,000
Price per Mcf or Bbl | $ / Mcf	3.14
Natural Gas | Swap | 10/01/15- 12/31/15 period two
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	15,000
Price per Mcf or Bbl | $ / Mcf	2.92
Natural Gas | Swap | 10/01/15- 10/31/16
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	15,000
Price per Mcf or Bbl | $ / Mcf	2.93
Natural Gas | Swap | 11/01/15- 03/31/16
Derivative financial instruments
Volume in BBl or MMBtu per day | MMBTU / d	15,000
Price per Mcf or Bbl | $ / Mcf	3.18

DERIVATIVE FINANCIAL INSTRUME36

DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments
Total	$ 10,644	$ 3,699	$ 11,304	$ 1,038
Commodity derivatives | Not designated as hedging instruments
Amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments
Realized cash settlements on hedges	2,644	11	7,778	(3,267)
Mark-to-market gain on hedges	8,000	3,688	3,526	4,305
Total	$ 10,644	$ 3,699	$ 11,304	$ 1,038

DERIVATIVE FINANCIAL INSTRUME37

DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair value of net derivatives
Derivative Assets, Non-current	$ 3,338
Derivative Assets, current	4,192	$ 4,005
Commodity derivatives | Not designated as hedging instruments
Fair value of net derivatives
Derivative Assets	7,530	4,005
Commodity derivatives | Not designated as hedging instruments | Natural Gas
Fair value of net derivatives
Derivative Assets, Non-current	3,106
Derivative Assets, current	2,427	3,611
Commodity derivatives | Not designated as hedging instruments | Oil
Fair value of net derivatives
Derivative Assets, Non-current	232
Derivative Assets, current	$ 1,765	$ 394

ACQUISITIONS (Details)

ACQUISITIONS (Details) - Marcellus Assets $ in Thousands, shares in Millions	Aug. 11, 2014USD ($)itemshares	Dec. 31, 2014USD ($)
ACQUISITIONS
Number of other working interest owners | item	2
Number of shares exchanged | shares	6.7
Common stock issued	$ 41,400
Purchase price
Cash consideration	312,500
Fair value of Warren equity common shares	41,400
Closing adjustments	(7,828)
Fair value of earn-out provision	6,340
Fair value of farm-out provision	3,410
Total purchase price	355,822
Maximum payout included as part of the purchase and sale agreement	$ 8,500
Probability percentage of achieving the full payout	90.00%
Fair values of the assets acquired and liabilities assumed
Proved oil and gas properties		$ 171,070
Unproved oil and gas properties		184,752
Total purchase price		$ 355,822

CAPTILIZED INTEREST (Details)

CAPTILIZED INTEREST (Details) - Senior Notes. - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Capitalized Interest [Line Items]
Interest costs capitalized	$ 2.2	$ 8.8
Capitalized Interest Transferred To Cost Pool	$ 1.4

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) shares in Millions	Nov. 09, 2015USD ($)	Oct. 22, 2015USD ($)itemshares	Oct. 15, 2015USD ($)	Aug. 28, 2015	May. 22, 2015USD ($)	Mar. 31, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2014USD ($)	Apr. 01, 2017	Jun. 30, 2016
First Lien Credit Facility Amendment and Additional Draw Down of Funds
Draw downs from additional borrowings							$ 189,559,000	$ 371,599,000
Subsequent Event
Management
Total retention expense						$ 1,600,000
Mr. Stewart skelly, the then-current Vice President and CFO | Subsequent Event
Management
Lump sum payment			$ 275,000
Medical care coverage period pursuant to the terms of retention and severance agreement			9 months
Credit Facility | The "First Lien Credit Facility"
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Term of loan					5 years
Borrowing capacity					$ 250,000,000
Accrued interest							$ 0
First Lien Credit Facility Amendment and Additional Draw Down of Funds
Draw downs from additional borrowings	$ 15,000,000
Additional borrowing capacity					30,000,000
Credit Facility | The "First Lien Credit Facility" | Subsequent Event
First Lien Credit Facility Amendment and Additional Draw Down of Funds
Lenders approval limit for sale of assets and reinvestment of proceeds back		$ 1,000,000
Maximum duration for delivery of compliance certificate		25 days
Draw downs from additional borrowings		$ 10,000,000
Delayed drawings		$ 15,000,000
Liquidity
Covenant ratio threshold									5	5.5
Credit Facility | The "Second Lien Credit Facility" | Subsequent Event
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Term of loan		5 years
Borrowing capacity		$ 51,000,000
Interest rate (as a percent)		12.00%
Outstanding balance	$ 51,000,000
Credit Facility | The "Second Lien Credit Facility" | Subsequent Event | Beginning with April 20, 2016
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Number of semi annual interest payment dates | item		3
Semi-annual interest may elect (as a percent)		6.00%
Credit Facility | The "Second Lien Credit Facility" | Subsequent Event | Beginning with October 20, 2017 and ending October 20, 2018
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Number of semi annual interest payment dates | item		3
Credit Facility | The "Second Lien Credit Facility" | Subsequent Event | Beginning with October 20, 2017 and ending October 20, 2018 | Maximum
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Semi-annual interest may elect (as a percent)		1.50%
Senior Notes.
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Interest rate (as a percent)							9.00%
Certain Lenders | Credit Facility | The "First Lien Credit Facility"
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Borrowing capacity					172,500,000
Amount of Lien Credit Facility exchanged from Senior Notes					45,230,000
First Lien Credit Facility Amendment and Additional Draw Down of Funds
Additional borrowing capacity					30,000,000
Certain Lenders | Credit Facility | The "Second Lien Credit Facility" | Subsequent Event
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Borrowing capacity		$ 11,000,000
Certain Lenders | Senior Notes.
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Face Value of Senior Notes exchanged to Lien Credit Facility					$ 69,590,000
Certain Holders | Credit Facility | The "Second Lien Credit Facility" | Subsequent Event
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Amount of Lien Credit Facility exchanged from Senior Notes		40,100,000
Certain Holders | Senior Notes. | Subsequent Event
Second Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock
Face Value of Senior Notes exchanged to Lien Credit Facility		$ 63,100,000
Number of common stocks issued for conversion of debt | shares		4
Named executive officers located in the Company's New York City office | Subsequent Event
Management
Cash benefits payable associates with relocation of headquarters and office			$ 1,000,000
Interest in certain deep rights associated with former leases in the Atlantic Rim area | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Wyoming Purchase and Sale Agreement Amendment and Extension
Sale of undivided interest in the operated deep rights (as in percent)				30.00%