Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SGY | |
Entity Registrant Name | STONE ENERGY CORP | |
Entity Central Index Key | 904,080 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,998,701 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 277,842,000 | $ 263,495,000 |
Restricted cash | 0 | 18,742,000 |
Accounts receivable | 36,378,000 | 39,258,000 |
Fair value of derivative contracts | 417,000 | 879,000 |
Current income tax receivable | 16,212,000 | 36,260,000 |
Other current assets | 6,901,000 | 7,138,000 |
Total current assets | 337,750,000 | 365,772,000 |
Oil and gas properties, full cost method of accounting: | ||
Proved | 713,304,000 | 713,157,000 |
Less: accumulated depreciation, depletion and amortization | (374,063,000) | (353,462,000) |
Net proved oil and gas properties | 339,241,000 | 359,695,000 |
Unevaluated | 118,365,000 | 102,187,000 |
Other property and equipment, net | 16,544,000 | 17,275,000 |
Other assets, net | 14,066,000 | 13,844,000 |
Total assets | 825,966,000 | 858,773,000 |
Current liabilities: | ||
Accounts payable to vendors | 20,088,000 | 54,226,000 |
Undistributed oil and gas proceeds | 4,283,000 | 5,142,000 |
Accrued interest | 6,038,000 | 1,685,000 |
Fair value of derivative contracts | 13,147,000 | 8,969,000 |
Asset retirement obligations | 56,428,000 | 79,300,000 |
Current portion of long-term debt | 430,000 | 425,000 |
Other current liabilities | 13,552,000 | 22,579,000 |
Total current liabilities | 113,966,000 | 172,326,000 |
Long-term debt | 235,394,000 | 235,502,000 |
Asset retirement obligations | 140,226,000 | 133,801,000 |
Fair value of derivative contracts | 4,564,000 | 3,085,000 |
Other long-term liabilities | 5,743,000 | 5,891,000 |
Total liabilities | 499,893,000 | 550,605,000 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock ($.01 par value; authorized 60,000,000 shares; issued 19,998,701 and 19,998,019 shares, respectively) | 200,000 | 200,000 |
Additional paid-in capital | 555,940,000 | 555,607,000 |
Accumulated deficit | (230,067,000) | (247,639,000) |
Total stockholders’ equity | 326,073,000 | 308,168,000 |
Total liabilities and stockholders’ equity | $ 825,966,000 | $ 858,773,000 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock, shares issued (in shares) | 19,998,701 | 19,998,019 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | |
Operating revenue: | |||
Oil production | $ 20,027 | $ 73,261 | |
Natural gas production | 2,210 | 4,900 | |
Natural gas liquids production | 777 | 3,188 | |
Other operational income | 149 | 27 | |
Derivative income, net | 2,646 | 0 | |
Total operating revenue | 25,809 | 81,376 | |
Operating expenses: | |||
Lease operating expenses | 4,740 | 14,380 | |
Transportation, processing and gathering expenses | 144 | 783 | |
Production taxes | 65 | (2,201) | |
Depreciation, depletion and amortization | 15,847 | 21,333 | |
Write-down of oil and gas properties | 256,435 | 0 | |
Accretion expense | 2,901 | 4,287 | |
Salaries, general and administrative expenses | 3,322 | 12,556 | |
Incentive compensation expense | 0 | 387 | |
Restructuring fees | 288 | 0 | |
Other operational expenses | 661 | 179 | |
Derivative expense, net | 0 | 9,548 | |
Total operating expenses | 284,403 | 61,252 | |
Gain on Appalachia Properties divestiture | 0 | 0 | |
Income (loss) from operations | (258,594) | 20,124 | |
Other (income) expense: | |||
Interest expense | 1,190 | 3,537 | |
Interest income | (40) | (1,539) | |
Other income | (131) | (203) | |
Other expense | 0 | 21 | |
Reorganization items, net | 0 | 0 | |
Total other expense | 1,019 | 1,816 | |
Loss before income taxes | (259,613) | 18,308 | |
Provision (benefit) for income taxes: | |||
Current | 0 | 0 | |
Total income taxes | 0 | 0 | |
Net income (loss) | $ (259,613) | $ 18,308 | |
Basic income (loss) per share (in usd per share) | $ (12.98) | $ 0.91 | |
Diluted income (loss) per share (in usd per share) | $ (12.98) | $ 0.91 | |
Average shares outstanding (in shares) | 19,997 | 19,998 | |
Average shares outstanding assuming dilution (in shares) | 19,997 | 19,998 | |
Predecessor | |||
Operating revenue: | |||
Oil production | $ 45,837 | ||
Natural gas production | 13,476 | ||
Natural gas liquids production | 8,706 | ||
Other operational income | 903 | ||
Derivative income, net | 0 | ||
Total operating revenue | 68,922 | ||
Operating expenses: | |||
Lease operating expenses | 8,820 | ||
Transportation, processing and gathering expenses | 6,933 | ||
Production taxes | $ 700 | 682 | |
Depreciation, depletion and amortization | 37,429 | ||
Write-down of oil and gas properties | 0 | ||
Accretion expense | 5,447 | ||
Salaries, general and administrative expenses | 9,629 | ||
Incentive compensation expense | 2,008 | ||
Restructuring fees | 0 | ||
Other operational expenses | 530 | ||
Derivative expense, net | 1,778 | ||
Total operating expenses | 73,256 | ||
Gain on Appalachia Properties divestiture | 213,453 | ||
Income (loss) from operations | 209,119 | ||
Other (income) expense: | |||
Interest expense | 0 | ||
Interest income | (45) | ||
Other income | (315) | ||
Other expense | 13,336 | ||
Reorganization items, net | (437,744) | ||
Total other expense | (424,768) | ||
Loss before income taxes | 633,887 | ||
Provision (benefit) for income taxes: | |||
Current | 3,570 | ||
Total income taxes | 3,570 | ||
Net income (loss) | $ 630,317 | ||
Basic income (loss) per share (in usd per share) | $ 110.99 | ||
Diluted income (loss) per share (in usd per share) | $ 110.99 | ||
Average shares outstanding (in shares) | 5,634 | ||
Average shares outstanding assuming dilution (in shares) | 5,634 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit |
Beginning Balance (Predecessor) at Dec. 31, 2016 | $ (637,282,000) | $ 56,000 | $ (860,000) | $ 1,659,731,000 | $ (2,296,209,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | Predecessor | 630,317,000 | 630,317,000 | |||
Lapsing of forfeiture restrictions of restricted stock and granting of stock awards | Predecessor | (172,000) | (172,000) | |||
Amortization of stock compensation expense | Predecessor | 3,527,000 | 3,527,000 | |||
Issuance of Successor common stock and warrants | 554,737,000 | 200,000 | 554,537,000 | ||
Ending Balance (Predecessor) at Feb. 28, 2017 | (3,610,000) | 56,000 | (860,000) | 1,663,086,000 | (1,665,892,000) |
Ending Balance at Feb. 28, 2017 | 554,737,000 | 200,000 | 554,537,000 | 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cancellation of Predecessor equity | Predecessor | 3,610,000 | (56,000) | $ 860,000 | (1,663,086,000) | 1,665,892,000 |
Net income (loss) | (247,639,000) | (247,639,000) | |||
Lapsing of forfeiture restrictions of restricted stock and granting of stock awards | (19,000) | (19,000) | |||
Amortization of stock compensation expense | 1,272,000 | 1,272,000 | |||
Stock issuance costs - Talos combination | (183,000) | (183,000) | |||
Ending Balance at Dec. 31, 2017 | 308,168,000 | 200,000 | 555,607,000 | (247,639,000) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 18,308,000 | 18,308,000 | |||
Lapsing of forfeiture restrictions of restricted stock and granting of stock awards | (15,000) | (15,000) | |||
Amortization of stock compensation expense | 348,000 | 348,000 | |||
Stock issuance costs - Talos combination | (200,000) | ||||
Ending Balance at Mar. 31, 2018 | $ 326,073,000 | $ 200,000 | $ 555,940,000 | $ (230,067,000) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | Feb. 28, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Cash flows from operating activities: | ||||||
Net income (loss) | $ (259,613) | $ 18,308 | $ (247,639) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
Depreciation, depletion and amortization | 15,847 | 21,333 | ||||
Write-down of oil and gas properties | 256,435 | 0 | ||||
Accretion expense | 2,901 | 4,287 | ||||
Gain on sale of oil and gas properties | 0 | 0 | ||||
Settlement of asset retirement obligations | (17,600) | (20,734) | ||||
Non-cash stock compensation expense | 17 | 348 | ||||
Non-cash derivative (income) expense | (2,484) | 6,119 | ||||
Non-cash interest expense | 0 | 1 | ||||
Non-cash reorganization items | 0 | 0 | ||||
Other non-cash expense | 0 | 22 | ||||
Change in current income taxes | 0 | 20,049 | ||||
Decrease in accounts receivable | 6,728 | 2,144 | ||||
(Increase) decrease in other current assets | 964 | 237 | ||||
Increase (decrease) in accounts payable | 3,015 | (13,701) | ||||
Increase (decrease) in other current liabilities | 1,672 | (5,534) | ||||
Investment in derivative contracts | (2,140) | 0 | ||||
Other | 4,904 | (393) | ||||
Net cash provided by (used in) operating activities | 10,646 | 32,486 | ||||
Cash flows from investing activities: | ||||||
Investment in oil and gas properties | (5,584) | (37,081) | ||||
Proceeds from sale of oil and gas properties, net of expenses | $ 512,472 | 10,770 | 320 | |||
Investment in fixed and other assets | (2) | 0 | ||||
Net cash provided by (used in) investing activities | 5,184 | (36,761) | ||||
Cash flows from financing activities: | ||||||
Repayments of bank borrowings | (341,500) | 0 | 0 | |||
Repayments of building loan | (36) | (105) | ||||
Cash payment to noteholders | 0 | 0 | ||||
Debt issuance costs | 0 | 0 | ||||
Net payments for share-based compensation | 0 | (15) | ||||
Net cash used in financing activities | (36) | (120) | ||||
Net change in cash, cash equivalents and restricted cash | 15,794 | (4,395) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 238,513 | 282,237 | 238,513 | |||
Cash, cash equivalents and restricted cash, end of period | 238,513 | 254,307 | $ 238,513 | $ 277,842 | $ 254,307 | 282,237 |
Predecessor | ||||||
Cash flows from operating activities: | ||||||
Net income (loss) | 630,317 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
Depreciation, depletion and amortization | 37,429 | |||||
Write-down of oil and gas properties | 0 | |||||
Accretion expense | 5,447 | |||||
Gain on sale of oil and gas properties | (213,453) | |||||
Settlement of asset retirement obligations | (3,641) | |||||
Non-cash stock compensation expense | 2,645 | |||||
Non-cash derivative (income) expense | 1,778 | |||||
Non-cash interest expense | 0 | |||||
Non-cash reorganization items | (458,677) | |||||
Other non-cash expense | 172 | |||||
Change in current income taxes | 3,570 | |||||
Decrease in accounts receivable | 6,354 | |||||
(Increase) decrease in other current assets | (2,274) | |||||
Increase (decrease) in accounts payable | (4,652) | |||||
Increase (decrease) in other current liabilities | (9,653) | |||||
Investment in derivative contracts | (3,736) | |||||
Other | 2,490 | |||||
Net cash provided by (used in) operating activities | (5,884) | |||||
Cash flows from investing activities: | ||||||
Investment in oil and gas properties | (8,754) | |||||
Proceeds from sale of oil and gas properties, net of expenses | 505,383 | |||||
Investment in fixed and other assets | (61) | |||||
Net cash provided by (used in) investing activities | 496,568 | |||||
Cash flows from financing activities: | ||||||
Repayments of bank borrowings | (341,500) | |||||
Repayments of building loan | (24) | |||||
Cash payment to noteholders | (100,000) | |||||
Debt issuance costs | (1,055) | |||||
Net payments for share-based compensation | (173) | |||||
Net cash used in financing activities | (442,752) | |||||
Net change in cash, cash equivalents and restricted cash | 47,932 | |||||
Cash, cash equivalents and restricted cash, beginning of period | $ 238,513 | 190,581 | $ 190,581 | $ 238,513 | ||
Cash, cash equivalents and restricted cash, end of period | $ 238,513 | $ 238,513 |
FINANCIAL STATEMENT PRESENTATIO
FINANCIAL STATEMENT PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
FINANCIAL STATEMENT PRESENTATION | FINANCIAL STATEMENT PRESENTATION Interim Financial Statements The condensed consolidated financial statements of Stone Energy Corporation (“Stone” or the “Company”) and its subsidiaries as of March 31, 2018 (Successor) and for the three months ended March 31, 2018 (Successor) and the periods from March 1, 2017 through March 31, 2017 (Successor) and January 1, 2017 through February 28, 2017 (Predecessor) are unaudited and reflect all adjustments (consisting only of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The condensed consolidated balance sheet as of December 31, 2017 (Successor) has been derived from the audited financial statements as of that date contained in our Annual Report on Form 10-K for the year ended December 31, 2017 (our “ 2017 Annual Report on Form 10-K”). The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our 2017 Annual Report on Form 10-K, although, as described below, such prior financial statements will not be comparable to the interim financial statements due to the adoption of fresh start accounting on February 28, 2017. For additional information, see Note 3 – Fresh Start Accounting . The results of operations for the three months ended March 31, 2018 (Successor) are not necessarily indicative of future financial results. Certain prior period amounts have been reclassified to conform to current period presentation. Pending Combination with Talos On November 21, 2017, Stone and certain of its subsidiaries entered into a series of related agreements pertaining to a business combination with Talos Energy LLC (“Talos Energy”) and its indirect wholly owned subsidiary Talos Production LLC (“Talos Production” and, together with Talos Energy, “Talos”). Talos Energy is controlled indirectly by entities controlled by Apollo Management VII, L.P. (“Apollo VII”), Apollo Commodities Management, L.P., with respect to Series I (together with Apollo VII, “Apollo Management”) and Riverstone Energy Partners V, L.P. (“Riverstone”). Stone, Sailfish Energy Holdings Corporation (“New Talos”), a direct wholly owned subsidiary of Stone, and Sailfish Merger Sub Corporation, a direct wholly owned subsidiary of New Talos, entered into a Transaction Agreement (the “Transaction Agreement”) with Talos on November 21, 2017, which contemplates a series of transactions (the “Transactions”) occurring on the date of closing of the Transaction Agreement (the “Closing”) that will result in such business combination. Stone and Talos will become wholly owned subsidiaries of New Talos. At the time of the Closing, the parties intend that New Talos will become a publicly traded entity named Talos Energy Inc. The Transactions include (i) the contribution of 100% of the equity interests in Talos Production to New Talos in exchange for shares of New Talos common stock, (ii) the contribution by entities controlled by or affiliated with Apollo Management (the “Apollo Funds”) and Riverstone (the “Riverstone Funds”) of $102 million in aggregate principal amount of 9.75% Senior Notes due 2022 issued by Talos Production and Talos Production Finance Inc. (together, the “the Talos Issuers”) to New Talos in exchange for shares of New Talos common stock, (iii) the exchange of the second lien bridge loans due 2022 issued by the Talos Issuers for newly issued 11.0% second lien notes issued by the Talos Issuers, and (iv) the exchange of the 7.50% Senior Second Lien Notes due 2022 (the “2022 Second Lien Notes”) issued by Stone for newly issued 11.0% second lien notes issued by the Talos Issuers. Under the terms of the Transaction Agreement, each outstanding share of Stone common stock will be exchanged for one share of New Talos common stock and the current Talos stakeholders (including the Apollo Funds and the Riverstone Funds) will be issued an aggregate of approximately 34.1 million shares of New Talos common stock. After the completion of the Transactions contemplated by the Transaction Agreement, holders of Stone common stock immediately prior to the combination will collectively hold 37% of the outstanding New Talos common stock and Talos Energy stakeholders will hold 63% of the outstanding New Talos common stock. Outstanding warrants to acquire Stone common stock will become warrants to acquire New Talos common stock with terms and conditions substantially identical to their existing terms and conditions. The combination was unanimously approved by the boards of directors of Stone and Talos Energy. On March 20, 2018, the Talos Issuers launched an offer to exchange (the “Exchange Offer”) Stone’s outstanding 2022 Second Lien Notes for newly issued 11.0% second lien notes due 2022 of the Talos Issuers. Concurrently with the Exchange Offer, the Talos Issuers solicited and received sufficient consents from the holders of the 2022 Second Lien Notes to adopt certain proposed amendments to the indenture governing the 2022 Second Lien Notes (the “Stone Notes Indenture”) and to release the collateral securing the obligations under the 2022 Second Lien Notes. Stone entered into supplemental indentures related to the amendments and the release of collateral. The supplemental indentures, which will not become operative until the tendered 2022 Second Lien Notes are accepted for exchange by the Talos Issuers, will amend the Stone Notes Indenture to, among other things, eliminate or modify substantially all of the restrictive covenants, certain reporting obligations, certain events of default and related provisions contained in the Stone Notes Indenture and to release the collateral securing the 2022 Second Lien Notes. Pursuant to a consent solicitation statement/prospectus dated April 9, 2018, which was included as part of a Registration Statement on Form S-4 filed by New Talos, Stone solicited written consents from its stockholders to adopt the Transaction Agreement, and thereby approve and adopt the Transactions. As of May 3, 2018, stockholders party to voting agreements with Stone and Talos Energy that owned 10,212,937 shares of Stone common stock as of April 5, 2018 had delivered written consents adopting the Transaction Agreement, and thereby approving and adopting the Transactions. The Stone stockholders that delivered written consents collectively own approximately 51.1% of the outstanding shares of Stone common stock. As a result, no further action by any Stone stockholder is required under applicable law or otherwise to adopt the Transaction Agreement, and thereby approve and adopt the Transactions. The combination is expected to close on or about May 10, 2018. We cannot provide any assurance that the combination will be completed on the terms or timeline currently contemplated, or at all. The above is a summary of the material terms of the Transactions and is qualified in its entirety by reference to the New Talos Registration Statement on Form S-4 (which became effective on April 9, 2018). Reorganization and Emergence from Voluntary Reorganization Under Chapter 11 Proceedings On December 14, 2016, the Company and certain of its subsidiaries (the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) to pursue a prepackaged plan of reorganization (the “Plan”) under the provisions of Chapter 11 of the United States Bankruptcy Code. On February 15, 2017, the Bankruptcy Court entered an order confirming the Plan, and on February 28, 2017, the Plan became effective (the “Effective Date”) and the Debtors emerged from bankruptcy. See Note 2 – Reorganization for additional details. Upon emergence from bankruptcy, the Company adopted fresh start accounting in accordance with the provisions of Accounting Standards Codification (“ASC”) 852, “ Reorganizations ”, which resulted in the Company becoming a new entity for financial reporting purposes on the Effective Date. As a result of the adoption of fresh start accounting, the Company’s unaudited condensed consolidated financial statements subsequent to February 28, 2017 will not be comparable to its financial statements prior to that date. See Note 3 – Fresh Start Accounting for further details on the impact of fresh start accounting on the Company’s unaudited condensed consolidated financial statements. References to “Successor” or “Successor Company” relate to the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to “Predecessor” or “Predecessor Company” relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. Use of Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions and information believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects are uncertain and, accordingly, these estimates may change as new events occur, as additional information is obtained and as the Company’s operating environment changes. Actual results could differ from those estimates. Estimates are used primarily when accounting for depreciation, depletion and amortization (“DD&A”) expense, unevaluated property costs, estimated future net cash flows from proved reserves, costs to abandon oil and gas properties, income taxes, accruals of capitalized costs, operating costs and production revenue, capitalized general and administrative costs and interest, insurance recoveries, estimated fair value of derivative contracts, contingencies and fair value estimates, including estimates of reorganization value, enterprise value and the fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting. Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements. The new standard supersedes current revenue recognition requirements and industry-specific guidance. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. We adopted this new standard on January 1, 2018 using the modified retrospective approach by recognizing the cumulative effect of initially applying the new standard as an adjustment to the opening balance of accumulated deficit. We implemented the necessary changes to our business processes, systems and controls to support recognition and disclosure of this ASU upon adoption. The adoption of the standard did not have a material effect on our financial position, results of operations or cash flows, but did result in increased disclosures related to revenue recognition policies and disaggregation of revenues. See Note 13 – Revenue Recognition for additional information. In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230) – Restricted Cash ” , which requires that amounts generally described as restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. We adopted this new standard on January 1, 2018. Retrospective presentation was required. The adoption of the standard did not have a material effect on our financial position, results of operations or cash flows. In accordance with ASU 2016-18, we have included restricted cash as part of the beginning-of-period and end-of-period cash balances on the condensed consolidated statement of cash flows. At February 28, 2017 (Predecessor) and March 31, 2017 (Successor), we had restricted cash of $75.5 million and $74.1 million , respectively. We had no restricted cash at March 31, 2018 (Successor). For the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through March 31, 2017 (Successor), removing the change in restricted funds from the condensed consolidated statement of cash flows resulted in an increase of $75.5 million and a decrease of $1.5 million , respectively, in our net cash provided by investing activities. Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard is effective for public companies for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years, with earlier application permitted. Upon adoption the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. In August 2017, the FASB issued ASU 2017-12, “ Derivatives and Hedging (Topic 815) ” to improve the financial reporting of hedging relationships to better reflect an entity’s hedging strategies. The standard expands an entity’s ability to apply hedge accounting for both non-financial and financial risk components and amends the presentation and disclosure requirements. Additionally, ASU 2017-12 eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be recorded in the same income statement line as the earnings effect of the hedged item. The standard is effective for public companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The standard must be adopted by applying a modified retrospective approach to existing designated hedging relationships as of the adoption date, with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. |
REORGANIZATION
REORGANIZATION | 3 Months Ended |
Mar. 31, 2018 | |
Reorganizations [Abstract] | |
REORGANIZATION | REORGANIZATION In connection with our reorganization, we sold certain producing properties and acreage, including approximately 86,000 net acres, in the Appalachia regions of Pennsylvania and West Virginia (the “Appalachia Properties”) to EQT Corporation, through its wholly-owned subsidiary EQT Production Company (“EQT”), on February 27, 2017, for net cash consideration of approximately $522.5 million . A portion of the consideration received from the sale of the Appalachia Properties was used to fund the Company’s cash payment obligations under the Plan, as described below. Additionally, the Company used a portion of the cash consideration received to pay TH Exploration III, LLC, an affiliate of Tug Hill, Inc. (“Tug Hill”), a break-up fee and expense reimbursements totaling approximately $11.5 million related to the termination of a purchase and sale agreement for the Appalachia Properties prior to the sale to EQT. See Note 5 – Divestiture for additional information on the sale of the Appalachia Properties. Upon emergence from bankruptcy, pursuant to the terms of the Plan, the following significant transactions occurred: • Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were cancelled, and on the Effective Date, reorganized Stone issued an aggregate of 20.0 million shares of new common stock (the “New Common Stock”). • The Predecessor Company’s 7 ½% Senior Notes due 2022 (the “2022 Notes”) and 1 ¾% Senior Convertible Notes due 2017 (the “2017 Convertible Notes”) were cancelled and the holders of such notes received their pro rata share of (a) $100 million of cash, (b) 19.0 million shares of the New Common Stock, representing 95% of the New Common Stock and (c) $225 million of 2022 Second Lien Notes. • The Predecessor Company’s common stockholders received their pro rata share of 1.0 million shares of the New Common Stock, representing 5% of the New Common Stock, and warrants to purchase approximately 3.5 million shares of New Common Stock. The warrants have an exercise price of $42.04 per share and a term of four years , unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company. • The Predecessor Company’s Fourth Amended and Restated Credit Agreement, dated as of June 24, 2014, as amended, modified, or otherwise supplemented from time to time (the “Pre-Emergence Credit Agreement”) was amended and restated as the Amended Credit Agreement (as defined in Note 8 – Debt ). The obligations owed to the lenders under the Pre-Emergence Credit Agreement were converted to obligations under the Amended Credit Agreement. • All claims of creditors with unsecured claims, other than the claims by the holders of the 2022 Notes and 2017 Convertible Notes, including vendors, were unaltered and paid in full in the ordinary course of business to the extent the claims were undisputed. FRESH START ACCOUNTING Upon emergence from bankruptcy, the Company qualified for and adopted fresh start accounting in accordance with the provisions of ASC 852, “ Reorganizations ” as (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. See Note 2 – Reorganization for the terms of the Plan. The Company applied fresh start accounting as of February 28, 2017. Fresh start accounting required the Company to present its assets, liabilities and equity as if it were a new entity upon emergence from bankruptcy, with no beginning retained earnings or deficit as of the fresh start reporting date. As described in Note 1 – Financial Statement Presentation , the new entity is referred to as Successor or Successor Company, and includes the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to Predecessor or Predecessor Company relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. Reorganization Value Under fresh start accounting, reorganization value represents the fair value of the Successor Company’s total assets and is intended to approximate the amount a willing buyer would pay for the assets immediately after restructuring. Upon application of fresh start accounting, the Company allocated the reorganization value to its individual assets based on their estimated fair values. The Company’s reorganization value is derived from an estimate of enterprise value. Enterprise value represents the estimated fair value of an entity’s long-term debt and stockholders’ equity. In support of the Plan, the Company estimated the enterprise value of the core assets (as defined in the Plan) of the Successor Company to be in the range of $300 million to $450 million , which was subsequently approved by the Bankruptcy Court. This valuation analysis was prepared using reserve information, development schedules, other financial information and financial projections and applying standard valuation techniques, including net asset value analysis, precedent transactions analyses and public comparable company analyses. Based on the estimates and assumptions used in determining the enterprise value, the Company ultimately estimated the enterprise value of the Successor Company’s core assets to be approximately $420 million . Valuation of Assets The Company’s principal assets are its oil and gas properties, which the Company accounts for under the full cost accounting method. With the assistance of valuation experts, the Company determined the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the bankruptcy emergence date. The fair value analysis performed by valuation experts was based on the Company’s estimates of reserves as developed internally by the Company’s reserve engineers. For purposes of estimating the fair value of the Company’s proved, probable and possible reserves, an income approach was used, which estimated fair value based on the anticipated cash flows associated with the Company’s reserves, risked by reserve category and discounted using a weighted average cost of capital of 12.5% . The discount factor was derived from a weighted average cost of capital computation which utilized a blended expected cost of debt and expected returns on equity for similar market participants. Future revenues were based upon forward strip oil and natural gas prices as of the emergence date, adjusted for differentials realized by the Company, and adjusted for a 2% annual escalation after 2021. Development and operating costs were based on the Company’s recent cost trends adjusted for inflation. The discounted cash flow models also included estimates not typically included in proved reserves such as depreciation and income tax expenses. The proved reserve locations were limited to wells expected to be drilled in the Company’s five year development plan. As a result of this analysis, the Company concluded the fair value of its proved reserves was $380.8 million and the fair value of its probable and possible reserves was $16.8 million as of the Effective Date. The Company also reviewed its undeveloped leasehold acreage and inventory. An analysis of comparable market transactions indicated a fair value of undeveloped acreage and inventory totaling $80.2 million . These amounts are reflected in the Fresh Start Adjustments item number 12 below. The fair value of the Company’s asset retirement obligations was estimated at $290.1 million and was based on estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate of 12% . See further discussion in Fresh Start Adjustments below for details on the specific assumptions used in the valuation of the Company’s various other assets. The following table reconciles the enterprise value per the Plan to the estimated fair value (for fresh start accounting purposes) of the Successor Company’s common stock as of February 28, 2017 (in thousands, except per share value): February 28, 2017 Enterprise value $ 419,720 Plus: Cash and other assets 371,278 Less: Fair value of debt (236,261 ) Less: Fair value of warrants (15,648 ) Fair value of Successor common stock $ 539,089 Shares issued upon emergence 20,000 Per share value $ 26.95 The following table reconciles the enterprise value per the Plan to the estimated reorganization value as of the Effective Date (in thousands): February 28, 2017 Enterprise value $ 419,720 Plus: Cash and other assets 371,278 Plus: Asset retirement obligations (current and long-term) 290,067 Plus: Working capital and other liabilities 58,055 Reorganization value of Successor assets $ 1,139,120 Reorganization value and enterprise value were estimated using numerous projections and assumptions that are inherently subject to significant uncertainties and resolution of contingencies that are beyond our control. Accordingly, the estimates set forth herein are not necessarily indicative of actual outcomes, and there can be no assurance that the estimates, projections or assumptions will be realized. Condensed Consolidated Balance Sheet The adjustments set forth in the following condensed consolidated balance sheet reflect the effects of the transactions contemplated by the Plan and carried out by the Company (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities as well as significant assumptions or inputs. The following table reflects the reorganization and application of ASC 852 on our consolidated balance sheet as of February 28, 2017 (in thousands): Predecessor Company Reorganization Adjustments Fresh Start Adjustments Successor Company Assets Current assets: Cash and cash equivalents $ 198,571 $ (35,605 ) (1) $ — $ 162,966 Restricted cash — 75,547 (1) — 75,547 Accounts receivable 42,808 9,301 (2) — 52,109 Fair value of derivative contracts 1,267 — — 1,267 Current income tax receivable 22,516 — — 22,516 Other current assets 11,033 875 (3) (124 ) (12) 11,784 Total current assets 276,195 50,118 (124 ) 326,189 Oil and gas properties, full cost method of accounting: Proved 9,633,907 (188,933 ) (1) (8,774,122 ) (12) 670,852 Less: accumulated DD&A (9,215,679 ) — 9,215,679 (12) — Net proved oil and gas properties 418,228 (188,933 ) 441,557 670,852 Unevaluated 371,140 (127,838 ) (1) (146,292 ) (12) 97,010 Other property and equipment, net 25,586 (101 ) (4) (4,423 ) (13) 21,062 Fair value of derivative contracts 1,819 — — 1,819 Other assets, net 26,516 (4,328 ) (5) — 22,188 Total assets $ 1,119,484 $ (271,082 ) $ 290,718 $ 1,139,120 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable to vendors $ 20,512 $ — $ — $ 20,512 Undistributed oil and gas proceeds 5,917 (4,139 ) (1) — 1,778 Accrued interest 266 — — 266 Asset retirement obligations 92,597 — — 92,597 Fair value of derivative contracts 476 — — 476 Current portion of long-term debt 411 — — 411 Other current liabilities 17,032 (195 ) (6) — 16,837 Total current liabilities 137,211 (4,334 ) — 132,877 Long-term debt 352,350 (116,500 ) (7) — 235,850 Asset retirement obligations 151,228 (8,672 ) (1) 54,914 (14) 197,470 Fair value of derivative contracts 653 — — 653 Other long-term liabilities 17,533 — — 17,533 Total liabilities not subject to compromise 658,975 (129,506 ) 54,914 584,383 Liabilities subject to compromise 1,110,182 (1,110,182 ) (8) — — Total liabilities 1,769,157 (1,239,688 ) 54,914 584,383 Commitments and contingencies Stockholders’ equity: Common stock (Predecessor) 56 (56 ) (9) — — Treasury stock (Predecessor) (860 ) 860 (9) — — Additional paid-in capital (Predecessor) 1,660,810 (1,660,810 ) (9) — — Common stock (Successor) — 200 (10) — 200 Additional paid-in capital (Successor) — 554,537 (10) — 554,537 Accumulated deficit (2,309,679 ) 2,073,875 (11) 235,804 (15) — Total stockholders’ equity (649,673 ) 968,606 235,804 554,737 Total liabilities and stockholders’ equity $ 1,119,484 $ (271,082 ) $ 290,718 $ 1,139,120 Reorganization Adjustments 1. Reflects the net cash proceeds received from the sale of the Appalachia Properties in connection with the Plan and net cash payments made as of the Effective Date from implementation of the Plan (in thousands): Sources: Net cash proceeds from sale of Appalachia Properties (a) $ 512,472 Total sources 512,472 Uses: Cash transferred to restricted account (b) 75,547 Break-up fee to Tug Hill 10,800 Repayment of outstanding borrowings under Pre-Emergence Credit Agreement 341,500 Repayment of 2017 Convertible Notes and 2022 Notes 100,000 Other fees and expenses (c) 20,230 Total uses 548,077 Net uses $ (35,605 ) (a) The closing of the sale of the Appalachia Properties occurred on February 27, 2017, but as emergence was contingent on such closing, the effects of the transaction are reflected as reorganization adjustments. See Note 5 – Divestiture for additional details on the sale. Total consideration received for the sale of the Appalachia Properties of $522.5 million included cash consideration of $512.5 million received at closing and a $10.0 million indemnity escrow which was released subsequent to emergence from bankruptcy (see Reorganization Adjustments item number 2 below). (b) Reflects the movement of $75.0 million of cash held in a restricted account to satisfy near-term plugging and abandonment liabilities, pursuant to the provisions of the Amended Credit Agreement (as defined in Note 8 – Debt ), and $0.5 million held in a restricted cash account for certain cure amounts in connection with the Chapter 11 proceedings. (c) Other fees and expenses include approximately $15.2 million of emergence and success fees, $2.7 million of professional fees and $2.4 million of payments made to seismic providers in settlement of their bankruptcy claims. 2. Reflects a receivable for a $10.0 million indemnity escrow with release delayed until emergence from bankruptcy, net of a $0.7 million reimbursement to Tug Hill in connection with the sale of the Appalachia Properties (see Note 2 – Reorganization ). 3. Reflects the payment of a claim to a seismic provider as a prepayment/deposit. 4. Reflects the sale of vehicles in connection with the sale of the Appalachia Properties. 5. Reflects the write-off of $2.6 million of unamortized debt issuance costs related to the Pre-Emergence Credit Agreement and the reversal of a $1.8 million prepayment made to Tug Hill in October 2016. 6. Reflects the accrual of $2.0 million in expected bonus payments under the Key Executive Incentive Plan and a $0.4 million termination fee in connection with the early termination of an office lease, less the settlement of a property tax accrual of $2.6 million in connection with the sale of the Appalachia Properties. 7. Reflects the repayment of $341.5 million of outstanding borrowings under the Pre-Emergence Credit Agreement and the issuance of $225 million of 2022 Second Lien Notes as part of the settlement of the Predecessor Company 2017 Convertible Notes and 2022 Notes. 8. Liabilities subject to compromise were settled as follows in accordance with the Plan (in thousands): 1 ¾% Senior Convertible Notes due 2017 $ 300,000 7 ½% Senior Notes due 2022 775,000 Accrued interest 35,182 Liabilities subject to compromise of the Predecessor Company 1,110,182 Cash payment to senior noteholders (100,000 ) Issuance of 2022 Second Lien Notes to former holders of the senior notes (225,000 ) Fair value of equity issued to unsecured creditors (539,089 ) Fair value of warrants issued to unsecured creditors (15,648 ) Gain on settlement of liabilities subject to compromise $ 230,445 9. Reflects the cancellation of the Predecessor Company’s common stock, treasury stock and additional paid-in capital. 10. Reflects the issuance of Successor Company equity. In accordance with the Plan, the Successor Company issued 19.0 million shares of New Common Stock to the former holders of the 2017 Convertible Notes and the 2022 Notes and 1.0 million shares of New Common Stock to the Predecessor Company’s common stockholders. These amounts are subject to dilution by warrants issued to the Predecessor Company common stockholders, totaling approximately 3.5 million shares, with an exercise price of $42.04 per share and a term of four years . The fair value of the warrants was estimated at $4.43 per share using a Black-Scholes-Merton valuation model. 11. Reflects the cumulative impact of the reorganization adjustments discussed above (in thousands): Gain on settlement of liabilities subject to compromise $ 230,445 Professional and other fees paid at emergence (10,648 ) Write-off of unamortized debt issuance costs (2,577 ) Other reorganization adjustments (1,915 ) Net impact to reorganization items 215,305 Gain on sale of Appalachia Properties 213,453 Cancellation of Predecessor Company equity 1,662,282 Other adjustments to accumulated deficit (17,165 ) Net impact to accumulated deficit $ 2,073,875 Fresh Start Adjustments 12. Fair value adjustments to oil and gas properties, associated inventory and unproved acreage. See above for a detailed discussion of the fair value methodology. 13. Fair value adjustment for an office building owned by the Company. The income and sales comparison approaches were used in determining the fair value, using anticipated future earnings and an appropriate expected rate of return, as well as relying upon recent sales or offerings of similar assets. 14. Fair value adjustments to the Company’s asset retirement obligations using estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate. 15. Reflects the cumulative effect of the fresh start accounting adjustments discussed above. Reorganization Items Reorganization items represent liabilities settled, net of amounts incurred subsequent to the Chapter 11 filing as a direct result of the Plan and are classified as “Reorganization items, net” in the Company’s unaudited condensed consolidated statement of operations. The following table summarizes reorganization items, net (in thousands): Predecessor Period from Gain on settlement of liabilities subject to compromise $ 230,445 Fresh start valuation adjustments 235,804 Reorganization professional fees and other expenses (20,403 ) Write-off of unamortized debt issuance costs (2,577 ) Other reorganization items (5,525 ) Gain on reorganization items, net $ 437,744 The cash payments for reorganization items for the period from January 1, 2017 through February 28, 2017 include approximately $10.6 million of emergence and success fees and approximately $8.9 million of other reorganization professional fees and expenses paid on the Effective Date. |
FRESH START ACCOUNTING
FRESH START ACCOUNTING | 3 Months Ended |
Mar. 31, 2018 | |
Reorganizations [Abstract] | |
FRESH START ACCOUNTING | REORGANIZATION In connection with our reorganization, we sold certain producing properties and acreage, including approximately 86,000 net acres, in the Appalachia regions of Pennsylvania and West Virginia (the “Appalachia Properties”) to EQT Corporation, through its wholly-owned subsidiary EQT Production Company (“EQT”), on February 27, 2017, for net cash consideration of approximately $522.5 million . A portion of the consideration received from the sale of the Appalachia Properties was used to fund the Company’s cash payment obligations under the Plan, as described below. Additionally, the Company used a portion of the cash consideration received to pay TH Exploration III, LLC, an affiliate of Tug Hill, Inc. (“Tug Hill”), a break-up fee and expense reimbursements totaling approximately $11.5 million related to the termination of a purchase and sale agreement for the Appalachia Properties prior to the sale to EQT. See Note 5 – Divestiture for additional information on the sale of the Appalachia Properties. Upon emergence from bankruptcy, pursuant to the terms of the Plan, the following significant transactions occurred: • Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were cancelled, and on the Effective Date, reorganized Stone issued an aggregate of 20.0 million shares of new common stock (the “New Common Stock”). • The Predecessor Company’s 7 ½% Senior Notes due 2022 (the “2022 Notes”) and 1 ¾% Senior Convertible Notes due 2017 (the “2017 Convertible Notes”) were cancelled and the holders of such notes received their pro rata share of (a) $100 million of cash, (b) 19.0 million shares of the New Common Stock, representing 95% of the New Common Stock and (c) $225 million of 2022 Second Lien Notes. • The Predecessor Company’s common stockholders received their pro rata share of 1.0 million shares of the New Common Stock, representing 5% of the New Common Stock, and warrants to purchase approximately 3.5 million shares of New Common Stock. The warrants have an exercise price of $42.04 per share and a term of four years , unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company. • The Predecessor Company’s Fourth Amended and Restated Credit Agreement, dated as of June 24, 2014, as amended, modified, or otherwise supplemented from time to time (the “Pre-Emergence Credit Agreement”) was amended and restated as the Amended Credit Agreement (as defined in Note 8 – Debt ). The obligations owed to the lenders under the Pre-Emergence Credit Agreement were converted to obligations under the Amended Credit Agreement. • All claims of creditors with unsecured claims, other than the claims by the holders of the 2022 Notes and 2017 Convertible Notes, including vendors, were unaltered and paid in full in the ordinary course of business to the extent the claims were undisputed. FRESH START ACCOUNTING Upon emergence from bankruptcy, the Company qualified for and adopted fresh start accounting in accordance with the provisions of ASC 852, “ Reorganizations ” as (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. See Note 2 – Reorganization for the terms of the Plan. The Company applied fresh start accounting as of February 28, 2017. Fresh start accounting required the Company to present its assets, liabilities and equity as if it were a new entity upon emergence from bankruptcy, with no beginning retained earnings or deficit as of the fresh start reporting date. As described in Note 1 – Financial Statement Presentation , the new entity is referred to as Successor or Successor Company, and includes the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to Predecessor or Predecessor Company relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. Reorganization Value Under fresh start accounting, reorganization value represents the fair value of the Successor Company’s total assets and is intended to approximate the amount a willing buyer would pay for the assets immediately after restructuring. Upon application of fresh start accounting, the Company allocated the reorganization value to its individual assets based on their estimated fair values. The Company’s reorganization value is derived from an estimate of enterprise value. Enterprise value represents the estimated fair value of an entity’s long-term debt and stockholders’ equity. In support of the Plan, the Company estimated the enterprise value of the core assets (as defined in the Plan) of the Successor Company to be in the range of $300 million to $450 million , which was subsequently approved by the Bankruptcy Court. This valuation analysis was prepared using reserve information, development schedules, other financial information and financial projections and applying standard valuation techniques, including net asset value analysis, precedent transactions analyses and public comparable company analyses. Based on the estimates and assumptions used in determining the enterprise value, the Company ultimately estimated the enterprise value of the Successor Company’s core assets to be approximately $420 million . Valuation of Assets The Company’s principal assets are its oil and gas properties, which the Company accounts for under the full cost accounting method. With the assistance of valuation experts, the Company determined the fair value of its oil and gas properties based on the discounted cash flows expected to be generated from these assets. The computations were based on market conditions and reserves in place as of the bankruptcy emergence date. The fair value analysis performed by valuation experts was based on the Company’s estimates of reserves as developed internally by the Company’s reserve engineers. For purposes of estimating the fair value of the Company’s proved, probable and possible reserves, an income approach was used, which estimated fair value based on the anticipated cash flows associated with the Company’s reserves, risked by reserve category and discounted using a weighted average cost of capital of 12.5% . The discount factor was derived from a weighted average cost of capital computation which utilized a blended expected cost of debt and expected returns on equity for similar market participants. Future revenues were based upon forward strip oil and natural gas prices as of the emergence date, adjusted for differentials realized by the Company, and adjusted for a 2% annual escalation after 2021. Development and operating costs were based on the Company’s recent cost trends adjusted for inflation. The discounted cash flow models also included estimates not typically included in proved reserves such as depreciation and income tax expenses. The proved reserve locations were limited to wells expected to be drilled in the Company’s five year development plan. As a result of this analysis, the Company concluded the fair value of its proved reserves was $380.8 million and the fair value of its probable and possible reserves was $16.8 million as of the Effective Date. The Company also reviewed its undeveloped leasehold acreage and inventory. An analysis of comparable market transactions indicated a fair value of undeveloped acreage and inventory totaling $80.2 million . These amounts are reflected in the Fresh Start Adjustments item number 12 below. The fair value of the Company’s asset retirement obligations was estimated at $290.1 million and was based on estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate of 12% . See further discussion in Fresh Start Adjustments below for details on the specific assumptions used in the valuation of the Company’s various other assets. The following table reconciles the enterprise value per the Plan to the estimated fair value (for fresh start accounting purposes) of the Successor Company’s common stock as of February 28, 2017 (in thousands, except per share value): February 28, 2017 Enterprise value $ 419,720 Plus: Cash and other assets 371,278 Less: Fair value of debt (236,261 ) Less: Fair value of warrants (15,648 ) Fair value of Successor common stock $ 539,089 Shares issued upon emergence 20,000 Per share value $ 26.95 The following table reconciles the enterprise value per the Plan to the estimated reorganization value as of the Effective Date (in thousands): February 28, 2017 Enterprise value $ 419,720 Plus: Cash and other assets 371,278 Plus: Asset retirement obligations (current and long-term) 290,067 Plus: Working capital and other liabilities 58,055 Reorganization value of Successor assets $ 1,139,120 Reorganization value and enterprise value were estimated using numerous projections and assumptions that are inherently subject to significant uncertainties and resolution of contingencies that are beyond our control. Accordingly, the estimates set forth herein are not necessarily indicative of actual outcomes, and there can be no assurance that the estimates, projections or assumptions will be realized. Condensed Consolidated Balance Sheet The adjustments set forth in the following condensed consolidated balance sheet reflect the effects of the transactions contemplated by the Plan and carried out by the Company (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities as well as significant assumptions or inputs. The following table reflects the reorganization and application of ASC 852 on our consolidated balance sheet as of February 28, 2017 (in thousands): Predecessor Company Reorganization Adjustments Fresh Start Adjustments Successor Company Assets Current assets: Cash and cash equivalents $ 198,571 $ (35,605 ) (1) $ — $ 162,966 Restricted cash — 75,547 (1) — 75,547 Accounts receivable 42,808 9,301 (2) — 52,109 Fair value of derivative contracts 1,267 — — 1,267 Current income tax receivable 22,516 — — 22,516 Other current assets 11,033 875 (3) (124 ) (12) 11,784 Total current assets 276,195 50,118 (124 ) 326,189 Oil and gas properties, full cost method of accounting: Proved 9,633,907 (188,933 ) (1) (8,774,122 ) (12) 670,852 Less: accumulated DD&A (9,215,679 ) — 9,215,679 (12) — Net proved oil and gas properties 418,228 (188,933 ) 441,557 670,852 Unevaluated 371,140 (127,838 ) (1) (146,292 ) (12) 97,010 Other property and equipment, net 25,586 (101 ) (4) (4,423 ) (13) 21,062 Fair value of derivative contracts 1,819 — — 1,819 Other assets, net 26,516 (4,328 ) (5) — 22,188 Total assets $ 1,119,484 $ (271,082 ) $ 290,718 $ 1,139,120 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable to vendors $ 20,512 $ — $ — $ 20,512 Undistributed oil and gas proceeds 5,917 (4,139 ) (1) — 1,778 Accrued interest 266 — — 266 Asset retirement obligations 92,597 — — 92,597 Fair value of derivative contracts 476 — — 476 Current portion of long-term debt 411 — — 411 Other current liabilities 17,032 (195 ) (6) — 16,837 Total current liabilities 137,211 (4,334 ) — 132,877 Long-term debt 352,350 (116,500 ) (7) — 235,850 Asset retirement obligations 151,228 (8,672 ) (1) 54,914 (14) 197,470 Fair value of derivative contracts 653 — — 653 Other long-term liabilities 17,533 — — 17,533 Total liabilities not subject to compromise 658,975 (129,506 ) 54,914 584,383 Liabilities subject to compromise 1,110,182 (1,110,182 ) (8) — — Total liabilities 1,769,157 (1,239,688 ) 54,914 584,383 Commitments and contingencies Stockholders’ equity: Common stock (Predecessor) 56 (56 ) (9) — — Treasury stock (Predecessor) (860 ) 860 (9) — — Additional paid-in capital (Predecessor) 1,660,810 (1,660,810 ) (9) — — Common stock (Successor) — 200 (10) — 200 Additional paid-in capital (Successor) — 554,537 (10) — 554,537 Accumulated deficit (2,309,679 ) 2,073,875 (11) 235,804 (15) — Total stockholders’ equity (649,673 ) 968,606 235,804 554,737 Total liabilities and stockholders’ equity $ 1,119,484 $ (271,082 ) $ 290,718 $ 1,139,120 Reorganization Adjustments 1. Reflects the net cash proceeds received from the sale of the Appalachia Properties in connection with the Plan and net cash payments made as of the Effective Date from implementation of the Plan (in thousands): Sources: Net cash proceeds from sale of Appalachia Properties (a) $ 512,472 Total sources 512,472 Uses: Cash transferred to restricted account (b) 75,547 Break-up fee to Tug Hill 10,800 Repayment of outstanding borrowings under Pre-Emergence Credit Agreement 341,500 Repayment of 2017 Convertible Notes and 2022 Notes 100,000 Other fees and expenses (c) 20,230 Total uses 548,077 Net uses $ (35,605 ) (a) The closing of the sale of the Appalachia Properties occurred on February 27, 2017, but as emergence was contingent on such closing, the effects of the transaction are reflected as reorganization adjustments. See Note 5 – Divestiture for additional details on the sale. Total consideration received for the sale of the Appalachia Properties of $522.5 million included cash consideration of $512.5 million received at closing and a $10.0 million indemnity escrow which was released subsequent to emergence from bankruptcy (see Reorganization Adjustments item number 2 below). (b) Reflects the movement of $75.0 million of cash held in a restricted account to satisfy near-term plugging and abandonment liabilities, pursuant to the provisions of the Amended Credit Agreement (as defined in Note 8 – Debt ), and $0.5 million held in a restricted cash account for certain cure amounts in connection with the Chapter 11 proceedings. (c) Other fees and expenses include approximately $15.2 million of emergence and success fees, $2.7 million of professional fees and $2.4 million of payments made to seismic providers in settlement of their bankruptcy claims. 2. Reflects a receivable for a $10.0 million indemnity escrow with release delayed until emergence from bankruptcy, net of a $0.7 million reimbursement to Tug Hill in connection with the sale of the Appalachia Properties (see Note 2 – Reorganization ). 3. Reflects the payment of a claim to a seismic provider as a prepayment/deposit. 4. Reflects the sale of vehicles in connection with the sale of the Appalachia Properties. 5. Reflects the write-off of $2.6 million of unamortized debt issuance costs related to the Pre-Emergence Credit Agreement and the reversal of a $1.8 million prepayment made to Tug Hill in October 2016. 6. Reflects the accrual of $2.0 million in expected bonus payments under the Key Executive Incentive Plan and a $0.4 million termination fee in connection with the early termination of an office lease, less the settlement of a property tax accrual of $2.6 million in connection with the sale of the Appalachia Properties. 7. Reflects the repayment of $341.5 million of outstanding borrowings under the Pre-Emergence Credit Agreement and the issuance of $225 million of 2022 Second Lien Notes as part of the settlement of the Predecessor Company 2017 Convertible Notes and 2022 Notes. 8. Liabilities subject to compromise were settled as follows in accordance with the Plan (in thousands): 1 ¾% Senior Convertible Notes due 2017 $ 300,000 7 ½% Senior Notes due 2022 775,000 Accrued interest 35,182 Liabilities subject to compromise of the Predecessor Company 1,110,182 Cash payment to senior noteholders (100,000 ) Issuance of 2022 Second Lien Notes to former holders of the senior notes (225,000 ) Fair value of equity issued to unsecured creditors (539,089 ) Fair value of warrants issued to unsecured creditors (15,648 ) Gain on settlement of liabilities subject to compromise $ 230,445 9. Reflects the cancellation of the Predecessor Company’s common stock, treasury stock and additional paid-in capital. 10. Reflects the issuance of Successor Company equity. In accordance with the Plan, the Successor Company issued 19.0 million shares of New Common Stock to the former holders of the 2017 Convertible Notes and the 2022 Notes and 1.0 million shares of New Common Stock to the Predecessor Company’s common stockholders. These amounts are subject to dilution by warrants issued to the Predecessor Company common stockholders, totaling approximately 3.5 million shares, with an exercise price of $42.04 per share and a term of four years . The fair value of the warrants was estimated at $4.43 per share using a Black-Scholes-Merton valuation model. 11. Reflects the cumulative impact of the reorganization adjustments discussed above (in thousands): Gain on settlement of liabilities subject to compromise $ 230,445 Professional and other fees paid at emergence (10,648 ) Write-off of unamortized debt issuance costs (2,577 ) Other reorganization adjustments (1,915 ) Net impact to reorganization items 215,305 Gain on sale of Appalachia Properties 213,453 Cancellation of Predecessor Company equity 1,662,282 Other adjustments to accumulated deficit (17,165 ) Net impact to accumulated deficit $ 2,073,875 Fresh Start Adjustments 12. Fair value adjustments to oil and gas properties, associated inventory and unproved acreage. See above for a detailed discussion of the fair value methodology. 13. Fair value adjustment for an office building owned by the Company. The income and sales comparison approaches were used in determining the fair value, using anticipated future earnings and an appropriate expected rate of return, as well as relying upon recent sales or offerings of similar assets. 14. Fair value adjustments to the Company’s asset retirement obligations using estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate. 15. Reflects the cumulative effect of the fresh start accounting adjustments discussed above. Reorganization Items Reorganization items represent liabilities settled, net of amounts incurred subsequent to the Chapter 11 filing as a direct result of the Plan and are classified as “Reorganization items, net” in the Company’s unaudited condensed consolidated statement of operations. The following table summarizes reorganization items, net (in thousands): Predecessor Period from Gain on settlement of liabilities subject to compromise $ 230,445 Fresh start valuation adjustments 235,804 Reorganization professional fees and other expenses (20,403 ) Write-off of unamortized debt issuance costs (2,577 ) Other reorganization items (5,525 ) Gain on reorganization items, net $ 437,744 The cash payments for reorganization items for the period from January 1, 2017 through February 28, 2017 include approximately $10.6 million of emergence and success fees and approximately $8.9 million of other reorganization professional fees and expenses paid on the Effective Date. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE On February 28, 2017, upon emergence from Chapter 11 bankruptcy, the Company’s Predecessor equity was cancelled and new equity was issued. Additionally, the Predecessor Company’s 2017 Convertible Notes were cancelled. See Note 2 – Reorganization for further details. The following table sets forth the calculation of basic and diluted weighted average shares outstanding and earnings per share for the indicated periods (in thousands, except per share amounts): Successor Predecessor Three Months Ended Period from Period from Income (numerator): Basic: Net income (loss) $ 18,308 $ (259,613 ) $ 630,317 Net income attributable to participating securities (57 ) — (4,995 ) Net income (loss) attributable to common stock - basic $ 18,251 $ (259,613 ) $ 625,322 Diluted: Net income (loss) $ 18,308 $ (259,613 ) $ 630,317 Net income attributable to participating securities (56 ) — (4,995 ) Net income (loss) attributable to common stock - diluted $ 18,252 $ (259,613 ) $ 625,322 Weighted average shares (denominator): Weighted average shares - basic 19,998 19,997 5,634 Dilutive effect of stock options — — — Dilutive effect of warrants — — — Dilutive effect of convertible notes — — — Weighted average shares - diluted 19,998 19,997 5,634 Basic income (loss) per share $ 0.91 $ (12.98 ) $ 110.99 Diluted income (loss) per share $ 0.91 $ (12.98 ) $ 110.99 All outstanding stock options were considered antidilutive during the period from January 1, 2017 through February 28, 2017 (Predecessor) ( 10,400 shares) because the exercise price of the options exceeded the average price of our common stock for the applicable period. On February 28, 2017, upon emergence from bankruptcy, all outstanding stock options were cancelled. On February 28, 2017, upon emergence from bankruptcy, the Predecessor Company’s existing common stockholders received warrants to purchase common stock of the Successor Company. See Note 2 – Reorganization . For the three months ended March 31, 2018 (Successor), all outstanding warrants (approximately 3.5 million ) were considered antidilutive because the exercise price of the warrants exceeded the average price of our common stock for the applicable period. For the period of March 1, 2017 through March 31, 2017 (Successor), all outstanding warrants (approximately 3.5 million ) were antidilutive because we had a net loss for such period. The Predecessor Company had no outstanding restricted stock units. The board of directors of the Successor Company (the “Board”) received grants of restricted stock units on March 1, 2017. For the period from March 1, 2017 through March 31, 2017 (Successor), all outstanding restricted stock units ( 62,137 ) were considered antidilutive because we had a net loss for such period. For the period from January 1, 2017 through February 28, 2017 (Predecessor), the average price of our common stock was less than the effective conversion price for the 2017 Convertible Notes, resulting in no dilutive effect on the diluted earnings per share computation for such period. On February 28, 2017, upon emergence from bankruptcy, the 2017 Convertible Notes were cancelled. See Note 2 – Reorganization . During the three months ended March 31, 2018 (Successor), 682 shares of common stock of the Successor Company were issued from authorized shares upon the lapsing of forfeiture restrictions of restricted stock for employees. During the period from March 1, 2017 through March 31, 2017 (Successor), we had no issuances of shares of our common stock. During the period from January 1, 2017 through February 28, 2017 (Predecessor), 47,390 shares of Predecessor Company common stock were issued from authorized shares upon the granting of stock awards and the lapsing of forfeiture restrictions of restricted stock for employees and nonemployee directors. |
DIVESTITURE
DIVESTITURE | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DIVESTITURE | DIVESTITURE On February 27, 2017, we completed the sale of the Appalachia Properties to EQT for net cash consideration of approximately $522.5 million . We no longer have assets or operations in Appalachia. Since accounting for the sale of these oil and gas properties as a reduction of the capitalized costs of oil and gas properties would have significantly altered the relationship between capitalized costs and reserves, we recognized a gain on the sale of $213.5 million during the period from January 1, 2017 through February 28, 2017 (Predecessor), computed as follows (in thousands): Net consideration received for sale of Appalachia Properties $ 522,472 Add: Release of funds held in suspense 4,139 Transfer of asset retirement obligations 8,672 Other adjustments, net 2,597 Less: Transaction costs (7,087 ) Carrying value of properties sold (317,340 ) Gain on sale $ 213,453 The carrying value of the properties sold was determined by allocating total capitalized costs within the U.S. full cost pool between properties sold and properties retained based on their relative fair values. |
INVESTMENT IN OIL AND GAS PROPE
INVESTMENT IN OIL AND GAS PROPERTIES | 3 Months Ended |
Mar. 31, 2018 | |
Extractive Industries [Abstract] | |
INVESTMENT IN OIL AND GAS PROPERTIES | INVESTMENT IN OIL AND GAS PROPERTIES Under the full cost method of accounting, we compare, at the end of each financial reporting period, the present value of estimated future net cash flows from proved reserves (adjusted for designated cash flow hedges and excluding cash flows related to estimated abandonment costs) to the net capitalized costs of proved oil and gas properties, net of related deferred taxes. We refer to this comparison as a ceiling test. If the net capitalized costs of proved oil and gas properties exceed the estimated discounted future net cash flows from proved reserves, we are required to write down the value of our oil and gas properties to the value of the discounted cash flows. At March 31, 2018 (Successor), the present value of the estimated future net cash flows from proved reserves was based on twelve-month average prices, net of applicable differentials, of $53.04 per Bbl of oil, $2.28 per Mcf of natural gas and $25.27 per Bbl of natural gas liquids (“NGLs”). Using these prices, the Company’s net capitalized costs of proved oil and natural gas properties at March 31, 2018 (Successor) did not exceed the ceiling amount. At March 31, 2017 (Successor), our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $256.4 million based on twelve-month average prices, net of applicable differentials, of $45.40 per Bbl of oil, $2.24 per Mcf of natural gas and $19.18 per Bbl of NGLs. The write-down at March 31, 2017 is reflected in the statement of operations of the Successor Company for the period from March 1, 2017 through March 31, 2017 and was primarily due to differences between the trailing twelve-month average pricing assumption used in calculating the ceiling test and the forward prices used in fresh start accounting to estimate the fair value of our oil and gas properties on the fresh start reporting date of February 28, 2017. Weighted average commodity prices used in the determination of the fair value of our oil and gas properties for purposes of fresh start accounting were $56.01 per Bbl of oil, $2.52 per Mcf of natural gas and $14.18 per Bbl of NGLs, net of applicable differentials. Since none of our derivatives as of March 31, 2017 were designated as cash flow hedges (see Note 7 – Derivative Instruments and Hedging Activities ), the write-down at March 31, 2017 was not affected by hedging. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Our hedging strategy is designed to protect our near and intermediate term cash flows from future declines in oil and natural gas prices. This protection is essential to capital budget planning, which is sensitive to expenditures that must be committed to in advance, such as rig contracts and the purchase of tubular goods. We enter into derivative transactions to secure a commodity price for a portion of our expected future production that is acceptable at the time of the transaction. We do not enter into derivative transactions for trading purposes. All derivatives are recognized as assets or liabilities on the balance sheet and are measured at fair value. At the end of each quarterly period, these derivatives are marked-to-market. If the derivative does not qualify or is not designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in earnings through derivative income (expense) in the statement of operations. If the derivative qualifies and is designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in stockholders’ equity through other comprehensive income (loss), net of related taxes, to the extent the hedge is considered effective. Monthly settlements of effective hedges are reflected in revenue from oil and natural gas production. Monthly settlements of ineffective hedges and derivatives not designated or that do not qualify for hedge accounting are recognized in earnings through derivative income (expense). The resulting cash flows from all monthly settlements are reported as cash flows from operating activities. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements of these derivative contracts have been, or will be, recorded in earnings through derivative income (expense). We have entered into put contracts, fixed-price swaps and collar contracts with various counterparties for a portion of our expected 2018 and 2019 oil and natural gas production from the Gulf Coast Basin. All of our derivative transactions have been carried out in the over-the-counter market and are not typically subject to margin-deposit requirements. The use of derivative instruments involves the risk that the counterparties will be unable to meet the financial terms of such transactions. The counterparties to all of our derivative instruments have an “investment grade” credit rating. We monitor the credit ratings of our derivative counterparties on an ongoing basis. Although we typically enter into derivative contracts with multiple counterparties to mitigate our exposure to any individual counterparty, if any of our counterparties were to default on its obligations to us under the derivative contracts or seek bankruptcy protection, we may not realize the benefit of some of our derivative instruments and incur a loss. At May 7, 2018 , our derivative instruments were with four counterparties, two of which accounted for approximately 64% of our contracted volumes. Currently, all of our outstanding derivative instruments are with lenders under our current bank credit facility. Put contracts are purchased at a rate per unit of hedged production that fluctuates with the commodity futures market. The historical cost of the put contract represents our maximum cash exposure. We are not obligated to make any further payments under the put contract regardless of future commodity price fluctuations. Under put contracts, monthly payments are made to us if the New York Mercantile Exchange (“NYMEX”) prices fall below the agreed upon floor price, while allowing us to fully participate in commodity prices above the floor. Swaps typically provide for monthly payments by us if prices rise above the swap price or monthly payments to us if prices fall below the swap price. Collar contracts typically require payments by us if the NYMEX average closing price is above the ceiling price or payments to us if the NYMEX average closing price is below the floor price. Settlements for our oil put contracts, oil collar contracts and fixed-price oil swaps are based on an average of the NYMEX closing price for West Texas Intermediate crude oil during the entire calendar month. Settlements for our natural gas collar contracts are based on the NYMEX price for the last day of a respective contract month. The following tables illustrate our derivative positions for calendar years 2018 and 2019 as of May 7, 2018 : Put Contracts (NYMEX) Oil Daily Volume Price 2018 January - December 1,000 $ 54.00 2018 January - December 1,000 45.00 Fixed-Price Swaps (NYMEX) Oil Daily Volume (Bbls/d) Swap Price ($ per Bbl) 2018 January - December 1,000 $ 52.50 2018 January - December 1,000 51.98 2018 January - December 1,000 53.67 2019 January - December 1,000 51.00 2019 January - December 1,000 51.57 2019 January - December 2,000 56.13 Collar Contracts (NYMEX) Natural Gas Oil Daily Volume Floor Price Ceiling Price Daily Volume (Bbls/d) Floor Price Ceiling Price 2018 January - December 6,000 $ 2.75 $ 3.24 1,000 $ 45.00 $ 55.35 Derivatives not designated or not qualifying as hedging instruments The following tables disclose the location and fair value amounts of derivatives not designated or not qualifying as hedging instruments, as reported in our balance sheet, at March 31, 2018 (Successor) and December 31, 2017 (Successor) (in thousands). Fair Value of Derivatives Not Designated or Not Qualifying as Hedging Instruments at March 31, 2018 (Successor) Asset Derivatives Liability Derivatives Description Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Current assets: Fair value of $ 417 Current liabilities: Fair value of derivative contracts $ 13,147 Long-term assets: Fair value — Long-term liabilities: Fair 4,564 $ 417 $ 17,711 Fair Value of Derivatives Not Designated or Not Qualifying as Hedging Instruments at December 31, 2017 (Successor) Asset Derivatives Liability Derivatives Description Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Current assets: Fair value of $ 879 Current liabilities: Fair value $ 8,969 Long-term assets: Fair value — Long-term liabilities: Fair 3,085 $ 879 $ 12,054 Gains or losses related to changes in fair value and cash settlements for derivatives not designated or not qualifying as hedging instruments are recorded as derivative income (expense) in the statement of operations. The following table discloses the before tax effect of our derivatives not designated or not qualifying as hedging instruments on the statement of operations for the three months ended March 31, 2018 (Successor), the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through March 31, 2017 (Successor) (in thousands). Gain (Loss) Recognized in Derivative Income (Expense) Successor Predecessor Three Months Ended Period from Period from Description Commodity contracts: Cash settlements $ (3,429 ) $ 161 $ — Change in fair value (6,119 ) 2,485 (1,778 ) Total gains (losses) on derivatives not designated or not qualifying as hedging instruments $ (9,548 ) $ 2,646 $ (1,778 ) Offsetting of derivative assets and liabilities Our derivative contracts are subject to netting arrangements. It is our policy to not offset our derivative contracts in presenting the fair value of these contracts as assets and liabilities in our balance sheet. The following tables present the potential impact of the offset rights associated with our recognized assets and liabilities at March 31, 2018 (Successor) and December 31, 2017 (Successor) (in thousands): March 31, 2018 (Successor) As Presented Without Netting Effects of Netting With Effects of Netting Current assets: Fair value of derivative contracts $ 417 $ (417 ) $ — Long-term assets: Fair value of derivative contracts — — — Current liabilities: Fair value of derivative contracts (13,147 ) 417 (12,730 ) Long-term liabilities: Fair value of derivative contracts (4,564 ) — (4,564 ) December 31, 2017 (Successor) As Presented Without Netting Effects of Netting With Effects of Netting Current assets: Fair value of derivative contracts $ 879 $ (879 ) $ — Long-term assets: Fair value of derivative contracts — — — Current liabilities: Fair value of derivative contracts (8,969 ) 879 (8,090 ) Long-term liabilities: Fair value of derivative contracts (3,085 ) — (3,085 ) |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Our debt balances (net of related unamortized discounts and debt issuance costs) as of March 31, 2018 (Successor) and December 31, 2017 (Successor) were as follows (in thousands): Successor March 31, December 31, 7 ½% Senior Second Lien Notes due 2022 $ 225,000 $ 225,000 4.20% Building Loan 10,824 10,927 Total debt 235,824 235,927 Less: current portion of long-term debt (430 ) (425 ) Long-term debt $ 235,394 $ 235,502 Current Portion of Long-Term Debt As of March 31, 2018 (Successor), the current portion of long-term debt of $0.4 million represented principal payments due within one year on the 4.20% Building Loan (the “Building Loan”). Revolving Credit Facility On February 28, 2017, the Company entered into the Fifth Amended and Restated Credit Agreement with the lenders party thereto and Bank of America, N.A. (as amended from time to time, the “Amended Credit Agreement”), as administrative agent and issuing lender. The Amended Credit Agreement provides for a reserve-based revolving credit facility and matures on February 28, 2021. The Company’s borrowing base under the Amended Credit Agreement was redetermined to $100 million on November 8, 2017. On March 31, 2018 , the Company had no outstanding borrowings and $9.8 million of outstanding letters of credit, leaving $90.2 million of availability under the Amended Credit Agreement. Interest on loans under the Amended Credit Agreement is calculated using the London Interbank Offering Rate (“LIBOR”) or the base rate, at the election of the Company, plus, in each case, an applicable margin. The applicable margin is determined based on borrowing base utilization and ranges from 2.00% to 3.00% per annum for base rate loans and 3.00% to 4.00% per annum for LIBOR loans. The borrowing base under the Amended Credit Agreement is redetermined semi-annually, in May and November, by the lenders, in accordance with the lenders’ customary practices for oil and gas loans. In addition, we and the lenders each have discretion at any time, but not more than two additional times in any calendar year, to have the borrowing base redetermined. In connection with the pending Talos combination, the May 1, 2018 redetermination has been moved to June 1, 2018. Subject to certain exceptions, the Amended Credit Agreement is required to be guaranteed by all of the material domestic direct and indirect subsidiaries of the Company. As of March 31, 2018 , the Amended Credit Agreement is guaranteed by Stone Energy Offshore, L.L.C. (“Stone Offshore”). The Amended Credit Agreement is secured by substantially all of the Company’s and its subsidiaries’ assets. The Amended Credit Agreement provides for customary optional and mandatory prepayments, affirmative and negative covenants and events of default, including limitation on the incurrence of debt, liens, restrictive agreements, mergers, asset sales, dividends, investments, affiliate transactions and restrictions on commodity hedging. During the continuance of certain events of default, the lenders may take a number of actions, including declaring the entire amount then outstanding under the Amended Credit Agreement due and payable (in the event of certain insolvency-related events, the entire amount then outstanding under the Amended Credit Agreement will become automatically due and payable). The Amended Credit Agreement also requires maintenance of certain financial covenants, including (i) a consolidated funded debt to EBITDA ratio of not more than 2.50 x for the test periods ending March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively, 2.75 x for the test period ending March 31, 2019, 3.00 x for the test period ending June 30, 2019, 3.50 x for the test periods ending September 30, 2019 and December 31, 2019, respectively, 3.00 x for the test period ending March 31, 2020, 2.75 x for the test periods ending June 30, 2020 and September 30, 2020, respectively, and 2.50 x for the test periods ending December 31, 2020 and March 31, 2021, respectively, (ii) a consolidated interest coverage ratio of not less than 2.75 to 1.00, and (iii) a requirement to maintain minimum liquidity of at least 20% of the borrowing base. We were in compliance with all covenants under the Amended Credit Agreement as of March 31, 2018 . |
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 3 Months Ended |
Mar. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATIONS | ASSET RETIREMENT OBLIGATIONS The change in our asset retirement obligations during the three months ended March 31, 2018 (Successor) is set forth below (in thousands, inclusive of current portion): Asset retirement obligations as of January 1, 2018 (Successor) $ 213,101 Liabilities settled (20,734 ) Accretion expense 4,287 Asset retirement obligations as of March 31, 2018 (Successor) $ 196,654 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). Generally effective for tax years 2018 and beyond, the Tax Act makes broad and complex changes to the Internal Revenue Code, including, but not limited to, (i) reducing the U.S. federal corporate tax rate from 35% to 21%; (ii) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits are realized; (iii) creating a new limitation on deductible interest expense; and (iv) changing rules related to uses and limitation of net operating loss carryforwards created in tax years beginning after December 31, 2017. As of March 31, 2018, we have not completed our accounting for the tax effects of enactment of the Tax Act. However, we have made a reasonable estimate of the effects on our existing deferred tax balances and recognized a provisional amount of $87.3 million to remeasure our deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. This amount is included as a component of income tax expense (benefit) from continuing operations and is fully offset by the related adjustment to our valuation allowance. We are still analyzing certain aspects of the Tax Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. As a result of the significant declines in commodity prices and the resulting ceiling test write-downs and net losses incurred, we determined during 2015 that it was more likely than not that a portion of our deferred tax assets will not be realized in the future. Accordingly, we established a valuation allowance against a portion of our deferred tax assets. As of March 31, 2018 (Successor), our valuation allowance totaled $127.1 million. Our assessment of the realizability of our deferred tax assets is based on the weight of all available evidence, both positive and negative, including future reversals of deferred tax liabilities. We had a current income tax receivable of $36.3 million at December 31, 2017 (Successor), which related to expected tax refunds from the carryback of net operating losses to previous tax years. In January 2018, we received $20.1 million of the tax refund and have a current income tax receivable of $ 16.2 million at March 31, 2018 (Successor). |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS U.S. Generally Accepted Accounting Principles establish a fair value hierarchy that has three levels based on the reliability of the inputs used to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. As of March 31, 2018 (Successor) and December 31, 2017 (Successor), we held certain financial assets that are required to be measured at fair value on a recurring basis, including our commodity derivative instruments and our investments in marketable securities. We utilize the services of an independent third party to assist us in valuing our derivative instruments. The income approach is used in this determination utilizing the third party’s proprietary pricing model. The model accounts for our credit risk and the credit risk of our counterparties in the discount rate applied to estimated future cash inflows and outflows. Our swap contracts are included within the Level 2 fair value hierarchy, and our collar and put contracts are included within the Level 3 fair value hierarchy. Significant unobservable inputs used in establishing fair value for the collars and puts were the volatility impacts in the pricing model as it relates to the call portion of the collar and the floor of the put. For a more detailed description of our derivative instruments, see Note 7 – Derivative Instruments and Hedging Activities . We used the market approach in determining the fair value of our investments in marketable securities, which are included within the Level 1 fair value hierarchy. The following tables present our assets and liabilities that are measured at fair value on a recurring basis at March 31, 2018 (Successor) (in thousands). Fair Value Measurements Successor as of March 31, 2018 Assets Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Marketable securities (Other assets) $ 4,964 $ 4,964 $ — $ — Derivative contracts 417 — — 417 Total $ 5,381 $ 4,964 $ — $ 417 Fair Value Measurements Successor as of March 31, 2018 Liabilities Total Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative contracts $ 17,711 $ — $ 15,330 $ 2,381 Total $ 17,711 $ — $ 15,330 $ 2,381 The following tables present our assets and liabilities that are measured at fair value on a recurring basis at December 31, 2017 (Successor) (in thousands). Fair Value Measurements Successor as of December 31, 2017 Assets Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Marketable securities (Other assets) $ 5,081 $ 5,081 $ — $ — Derivative contracts 879 — — 879 Total $ 5,960 $ 5,081 $ — $ 879 Fair Value Measurements Successor as of December 31, 2017 Liabilities Total Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative contracts $ 12,054 $ — $ 10,110 $ 1,944 Total $ 12,054 $ — $ 10,110 $ 1,944 The table below presents a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2018 (Successor) (in thousands). Hedging Contracts, net Balance as of January 1, 2018 (Successor) $ (1,065 ) Total gains/(losses) (realized or unrealized): Included in earnings (1,579 ) Included in other comprehensive income — Purchases, sales, issuances and settlements 680 Transfers in and out of Level 3 — Balance as of March 31, 2018 (Successor) $ (1,964 ) The amount of total gains/(losses) for the period included in earnings (derivative income) attributable to the change in unrealized gain/(losses) relating to derivatives still held at March 31, 2018 $ (4,702 ) The fair value of cash and cash equivalents approximated book value at March 31, 2018 and December 31, 2017 . As of March 31, 2018 and December 31, 2017 , the fair value of the 2022 Second Lien Notes was approximately $229.5 million and $227.3 million , respectively. The fair value of the 2022 Second Lien Notes was determined based on quotes obtained from brokers, which represent Level 1 inputs. On February 28, 2017, the Company emerged from bankruptcy and adopted fresh start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. Upon the adoption of fresh start accounting, the Company’s assets and liabilities were recorded at their fair values as of the fresh start reporting date, February 28, 2017. See Note 3 – Fresh Start Accounting for a detailed discussion of the fair value approaches used by the Company. The inputs utilized in the valuation of our most significant asset, our oil and gas properties, included mostly unobservable inputs, which fall within Level 3 of the fair value hierarchy. |
COMBINATION TRANSACTION COSTS
COMBINATION TRANSACTION COSTS | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
COMBINATION TRANSACTION COSTS | COMBINATION TRANSACTION COSTS In connection with the pending combination with Talos, we incurred approximately $3.4 million in transaction costs during the three months ended March 31, 2018 (Successor). These costs consist primarily of legal and financial advisor costs and are included in salaries, general and administrative (“SG&A”) expense on our statement of operations for the three months ended March 31, 2018 (Successor). Additionally, we have incurred approximately $0.2 million of direct costs for purposes of registering equity securities to effect the Talos combination. These direct costs were recorded as a reduction of additional paid-in-capital during 2017. See Note 1 – Financial Statement Presentation (Pending Combination with Talos) for more information on the pending combination. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Our major sources of revenue are oil, natural gas and NGL production from our oil and gas properties. We sell crude oil to purchasers typically through monthly contracts, with the sale taking place at the wellhead. Natural gas is sold to purchasers through monthly contracts, with the sale taking place at the wellhead or the tailgate of an onshore gas processing plant (after the removal of NGLs). We actively market our crude oil and natural gas to purchasers and the volumes are metered and therefore readily determinable. Sales prices for purchased oil and natural gas volumes are negotiated with purchasers and are based on certain published indices. Since the oil and natural gas contracts are month-to-month, there is no dedication of production to any one purchaser. We sell the NGLs entrained in the natural gas that we produce. The arrangements to sell these products first requires natural gas to be processed at an onshore gas processing plant. Once the liquids are removed and fractionated (broken into the individual hydrocarbon chains for sale), the products are sold by the processing plant. The residue gas left over is sold to natural gas purchasers as natural gas sales (referenced above). The contracts for NGL sales are with the processing plant. The prices received for the NGLs are not negotiated by the Company, but rather, are based on what the processing plant can receive from a third party purchaser. The gas processing and subsequent sales of NGLs are subject to contracts with longer terms and dedications of lease production from the Company’s leases offshore. In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606)” to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements. See Note 1 – Financial Statement Presentation ( Recently Adopted Accounting Standards) . We adopted ASU 2014-09 on January 1, 2018 using the modified retrospective approach, with the cumulative effect of initially applying the new standard as an adjustment to accumulated deficit on the date of initial application. We applied the standard to contracts in place during 2017 and to new contracts entered into after January 1, 2018. The adoption of the standard did not have a material effect on our financial position, results of operations or cash flows. We have historically recognized oil, natural gas and NGL production revenue under the entitlements method of accounting. Under this method, revenue was deferred for deliveries in excess of our net revenue interest, while revenue was accrued for undelivered or underdelivered volumes (production imbalances). Production imbalances were generally recorded at the estimated sales price in effect at the time of production. ASU 2014-09 effectively eliminated the entitlements method of accounting, requiring us instead to recognize production revenue for the quantities and values of oil, natural gas and NGLs delivered or received. Our aggregate imbalance positions at December 31, 2017 were immaterial and required only a $0.7 million cumulative effect adjustment (all of which related to oil production) to the January 1, 2018 opening balance of our accumulated deficit upon adoption of ASU 2014-09. Sales of oil, natural gas and NGLs are recognized when the product is delivered and title transfers to the purchaser. Payment is generally received one to three months after the sale has occurred. To the extent actual quantities and values of oil, natural gas and NGL production for properties are not available for a given reporting period because of timing or information not received from the purchasers, the expected sales volumes and price are estimated and the result is recorded as purchaser accounts receivable (included in Accounts Receivable) in our balance sheet and as Oil, Natural Gas and NGL production revenue in our statement of operations. At March 31, 2018 (Successor), we recorded a purchaser accounts receivable of $31.2 million , consisting of $25.5 million of oil production revenue, $3.5 million of natural gas production revenue and $2.2 million of NGL production revenue. At December 31, 2017 (Successor), we recorded a purchaser accounts receivable of $32.8 million , consisting of $26.7 million of oil production revenue, $3.9 million of natural gas production revenue and $2.2 million of NGL production revenue. Revenue proceeds relating to third-party royalty owners not remitted by the end of a reporting period are recorded as Undistributed Oil and Gas Proceeds in our balance sheet. |
PRODUCTION TAXES
PRODUCTION TAXES | 3 Months Ended |
Mar. 31, 2018 | |
Other Income and Expenses [Abstract] | |
PRODUCTION TAXES | PRODUCTION TAXES Production taxes for the three months ended March 31, 2018 (Successor), the period of March 1, 2017 through March 31, 2017 (Successor) and the period of January 1, 2017 through February 28, 2017 (Predecessor) totaled ($2.2) million , $0.1 million and $0.7 million , respectively. During the three months ended March 31, 2018, we received a $2.4 million refund related to previously paid severance taxes in West Virginia. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings We are named as a party in certain lawsuits and regulatory proceedings arising in the ordinary course of business. We do not expect that these matters, individually or in the aggregate, will have a material adverse effect on our financial condition. Other Commitments and Contingencies On March 21, 2016, we received notice letters from the Bureau of Ocean Energy Management (“BOEM”) stating that BOEM had determined that we no longer qualified for a supplemental bonding waiver under the financial criteria specified in BOEM’s guidance to lessees at such time. In late March 2016, we proposed a tailored plan to BOEM for financial assurances relating to our abandonment obligations, which provides for posting some incremental financial assurances in favor of BOEM. On May 13, 2016, we received notice letters from BOEM rescinding its demand for supplemental bonding with the understanding that we will continue to make progress with BOEM towards finalizing and implementing our long-term tailored plan. As of March 31, 2018, we have posted an aggregate of approximately $115 million in surety bonds in favor of BOEM, third-party bonds and letters of credit, all relating to our offshore abandonment obligations. In July 2016, BOEM issued a Notice to Lessees (the “NTL”), with an effective date of September 12, 2016, that augments requirements for the posting of additional financial assurances by offshore lessees. The NTL details procedures to determine a lessee’s ability to carry out its lease obligations (primarily the decommissioning of facilities on the Outer Continental Shelf (“OCS”)) and whether to require lessees to furnish additional financial assurances to meet BOEM’s estimate of the lessees decommissioning obligations. The NTL supersedes the agency’s prior practice of allowing operators of a certain net worth to waive the need for supplemental bonds and provides updated criteria for determining a lessee’s ability to self-insure only a small portion of its OCS liabilities based upon the lessee’s financial capacity and financial strength. The NTL also allows lessees to meet their additional financial security requirements pursuant to an individually approved tailored plan, whereby an operator and BOEM agree to set a timeframe for the posting of additional financial assurances. We received a self-insurance letter from BOEM dated September 30, 2016 stating that we were not eligible to self-insure any of our additional security obligations. We received a proposal letter from BOEM dated October 20, 2016 indicating that additional security may be required. The September 30, 2016 self-insurance determination letter was rescinded by BOEM on March 24, 2017. In the first quarter of 2017, BOEM announced that it would extend the implementation timeline for the July 2016 NTL by an additional six months. Furthermore, on April 28, 2017, President Trump issued an executive order directing the Secretary of the Interior to review the NTL to determine whether modifications are necessary to ensure operator compliance with lease terms while minimizing unnecessary regulatory burdens. On June 22, 2017, BOEM announced that, pending its review of the NTL, the implementation timeline would be indefinitely extended, subject to certain exceptions. At this time, it is uncertain when the July 2016 NTL will be implemented as a revised NTL. A revised tailored plan may require incremental financial assurance or bonding for non-sole liability properties, dependent on adjustments following ongoing discussions with BOEM and the Bureau of Safety and Environmental Enforcement (“BSEE”), and any modifications to the proposed NTL. There is no assurance that our current tailored plan will be approved by BOEM, and BOEM may require further revisions to our plan. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On May 1, 2018, Stone completed the acquisition of a 100% working interest in the Ram Powell Unit, including six lease blocks in the Viosca Knoll Area, the Ram Powell tension leg platform (“TLP”), and related assets, from Shell Offshore Inc., Exxon Mobil Corporation, and Anadarko US Offshore LLC, for a purchase price of $34 million , with an effective date of October 1, 2017, and the posting of decommissioning surety bonds of $200 million . After considering the effects of customary purchase price adjustments from the effective date of the acquisition through closing, Stone received net cash of $29.4 million at closing. |
FINANCIAL STATEMENT PRESENTAT23
FINANCIAL STATEMENT PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | Interim Financial Statements The condensed consolidated financial statements of Stone Energy Corporation (“Stone” or the “Company”) and its subsidiaries as of March 31, 2018 (Successor) and for the three months ended March 31, 2018 (Successor) and the periods from March 1, 2017 through March 31, 2017 (Successor) and January 1, 2017 through February 28, 2017 (Predecessor) are unaudited and reflect all adjustments (consisting only of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The condensed consolidated balance sheet as of December 31, 2017 (Successor) has been derived from the audited financial statements as of that date contained in our Annual Report on Form 10-K for the year ended December 31, 2017 (our “ 2017 Annual Report on Form 10-K”). The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our 2017 Annual Report on Form 10-K, although, as described below, such prior financial statements will not be comparable to the interim financial statements due to the adoption of fresh start accounting on February 28, 2017. For additional information, see Note 3 – Fresh Start Accounting . The results of operations for the three months ended March 31, 2018 (Successor) are not necessarily indicative of future financial results. Certain prior period amounts have been reclassified to conform to current period presentation. Pending Combination with Talos On November 21, 2017, Stone and certain of its subsidiaries entered into a series of related agreements pertaining to a business combination with Talos Energy LLC (“Talos Energy”) and its indirect wholly owned subsidiary Talos Production LLC (“Talos Production” and, together with Talos Energy, “Talos”). Talos Energy is controlled indirectly by entities controlled by Apollo Management VII, L.P. (“Apollo VII”), Apollo Commodities Management, L.P., with respect to Series I (together with Apollo VII, “Apollo Management”) and Riverstone Energy Partners V, L.P. (“Riverstone”). Stone, Sailfish Energy Holdings Corporation (“New Talos”), a direct wholly owned subsidiary of Stone, and Sailfish Merger Sub Corporation, a direct wholly owned subsidiary of New Talos, entered into a Transaction Agreement (the “Transaction Agreement”) with Talos on November 21, 2017, which contemplates a series of transactions (the “Transactions”) occurring on the date of closing of the Transaction Agreement (the “Closing”) that will result in such business combination. Stone and Talos will become wholly owned subsidiaries of New Talos. At the time of the Closing, the parties intend that New Talos will become a publicly traded entity named Talos Energy Inc. The Transactions include (i) the contribution of 100% of the equity interests in Talos Production to New Talos in exchange for shares of New Talos common stock, (ii) the contribution by entities controlled by or affiliated with Apollo Management (the “Apollo Funds”) and Riverstone (the “Riverstone Funds”) of $102 million in aggregate principal amount of 9.75% Senior Notes due 2022 issued by Talos Production and Talos Production Finance Inc. (together, the “the Talos Issuers”) to New Talos in exchange for shares of New Talos common stock, (iii) the exchange of the second lien bridge loans due 2022 issued by the Talos Issuers for newly issued 11.0% second lien notes issued by the Talos Issuers, and (iv) the exchange of the 7.50% Senior Second Lien Notes due 2022 (the “2022 Second Lien Notes”) issued by Stone for newly issued 11.0% second lien notes issued by the Talos Issuers. Under the terms of the Transaction Agreement, each outstanding share of Stone common stock will be exchanged for one share of New Talos common stock and the current Talos stakeholders (including the Apollo Funds and the Riverstone Funds) will be issued an aggregate of approximately 34.1 million shares of New Talos common stock. After the completion of the Transactions contemplated by the Transaction Agreement, holders of Stone common stock immediately prior to the combination will collectively hold 37% of the outstanding New Talos common stock and Talos Energy stakeholders will hold 63% of the outstanding New Talos common stock. Outstanding warrants to acquire Stone common stock will become warrants to acquire New Talos common stock with terms and conditions substantially identical to their existing terms and conditions. The combination was unanimously approved by the boards of directors of Stone and Talos Energy. On March 20, 2018, the Talos Issuers launched an offer to exchange (the “Exchange Offer”) Stone’s outstanding 2022 Second Lien Notes for newly issued 11.0% second lien notes due 2022 of the Talos Issuers. Concurrently with the Exchange Offer, the Talos Issuers solicited and received sufficient consents from the holders of the 2022 Second Lien Notes to adopt certain proposed amendments to the indenture governing the 2022 Second Lien Notes (the “Stone Notes Indenture”) and to release the collateral securing the obligations under the 2022 Second Lien Notes. Stone entered into supplemental indentures related to the amendments and the release of collateral. The supplemental indentures, which will not become operative until the tendered 2022 Second Lien Notes are accepted for exchange by the Talos Issuers, will amend the Stone Notes Indenture to, among other things, eliminate or modify substantially all of the restrictive covenants, certain reporting obligations, certain events of default and related provisions contained in the Stone Notes Indenture and to release the collateral securing the 2022 Second Lien Notes. Pursuant to a consent solicitation statement/prospectus dated April 9, 2018, which was included as part of a Registration Statement on Form S-4 filed by New Talos, Stone solicited written consents from its stockholders to adopt the Transaction Agreement, and thereby approve and adopt the Transactions. As of May 3, 2018, stockholders party to voting agreements with Stone and Talos Energy that owned 10,212,937 shares of Stone common stock as of April 5, 2018 had delivered written consents adopting the Transaction Agreement, and thereby approving and adopting the Transactions. The Stone stockholders that delivered written consents collectively own approximately 51.1% of the outstanding shares of Stone common stock. As a result, no further action by any Stone stockholder is required under applicable law or otherwise to adopt the Transaction Agreement, and thereby approve and adopt the Transactions. The combination is expected to close on or about May 10, 2018. We cannot provide any assurance that the combination will be completed on the terms or timeline currently contemplated, or at all. The above is a summary of the material terms of the Transactions and is qualified in its entirety by reference to the New Talos Registration Statement on Form S-4 (which became effective on April 9, 2018). Reorganization and Emergence from Voluntary Reorganization Under Chapter 11 Proceedings On December 14, 2016, the Company and certain of its subsidiaries (the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) to pursue a prepackaged plan of reorganization (the “Plan”) under the provisions of Chapter 11 of the United States Bankruptcy Code. On February 15, 2017, the Bankruptcy Court entered an order confirming the Plan, and on February 28, 2017, the Plan became effective (the “Effective Date”) and the Debtors emerged from bankruptcy. See Note 2 – Reorganization for additional details. Upon emergence from bankruptcy, the Company adopted fresh start accounting in accordance with the provisions of Accounting Standards Codification (“ASC”) 852, “ Reorganizations ”, which resulted in the Company becoming a new entity for financial reporting purposes on the Effective Date. As a result of the adoption of fresh start accounting, the Company’s unaudited condensed consolidated financial statements subsequent to February 28, 2017 will not be comparable to its financial statements prior to that date. See Note 3 – Fresh Start Accounting for further details on the impact of fresh start accounting on the Company’s unaudited condensed consolidated financial statements. References to “Successor” or “Successor Company” relate to the financial position and results of operations of the reorganized Company subsequent to February 28, 2017. References to “Predecessor” or “Predecessor Company” relate to the financial position and results of operations of the Company prior to, and including, February 28, 2017. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions and information believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects are uncertain and, accordingly, these estimates may change as new events occur, as additional information is obtained and as the Company’s operating environment changes. Actual results could differ from those estimates. Estimates are used primarily when accounting for depreciation, depletion and amortization (“DD&A”) expense, unevaluated property costs, estimated future net cash flows from proved reserves, costs to abandon oil and gas properties, income taxes, accruals of capitalized costs, operating costs and production revenue, capitalized general and administrative costs and interest, insurance recoveries, estimated fair value of derivative contracts, contingencies and fair value estimates, including estimates of reorganization value, enterprise value and the fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting. |
Recently Adopted and Issued Accounting Standard | Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements. The new standard supersedes current revenue recognition requirements and industry-specific guidance. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. We adopted this new standard on January 1, 2018 using the modified retrospective approach by recognizing the cumulative effect of initially applying the new standard as an adjustment to the opening balance of accumulated deficit. We implemented the necessary changes to our business processes, systems and controls to support recognition and disclosure of this ASU upon adoption. The adoption of the standard did not have a material effect on our financial position, results of operations or cash flows, but did result in increased disclosures related to revenue recognition policies and disaggregation of revenues. See Note 13 – Revenue Recognition for additional information. In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230) – Restricted Cash ” , which requires that amounts generally described as restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. We adopted this new standard on January 1, 2018. Retrospective presentation was required. The adoption of the standard did not have a material effect on our financial position, results of operations or cash flows. In accordance with ASU 2016-18, we have included restricted cash as part of the beginning-of-period and end-of-period cash balances on the condensed consolidated statement of cash flows. At February 28, 2017 (Predecessor) and March 31, 2017 (Successor), we had restricted cash of $75.5 million and $74.1 million , respectively. We had no restricted cash at March 31, 2018 (Successor). For the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through March 31, 2017 (Successor), removing the change in restricted funds from the condensed consolidated statement of cash flows resulted in an increase of $75.5 million and a decrease of $1.5 million , respectively, in our net cash provided by investing activities. Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard is effective for public companies for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years, with earlier application permitted. Upon adoption the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. In August 2017, the FASB issued ASU 2017-12, “ Derivatives and Hedging (Topic 815) ” to improve the financial reporting of hedging relationships to better reflect an entity’s hedging strategies. The standard expands an entity’s ability to apply hedge accounting for both non-financial and financial risk components and amends the presentation and disclosure requirements. Additionally, ASU 2017-12 eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be recorded in the same income statement line as the earnings effect of the hedged item. The standard is effective for public companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The standard must be adopted by applying a modified retrospective approach to existing designated hedging relationships as of the adoption date, with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date. We are currently evaluating the effect that this new standard may have on our financial statements and related disclosures. |
Derivatives | Our hedging strategy is designed to protect our near and intermediate term cash flows from future declines in oil and natural gas prices. This protection is essential to capital budget planning, which is sensitive to expenditures that must be committed to in advance, such as rig contracts and the purchase of tubular goods. We enter into derivative transactions to secure a commodity price for a portion of our expected future production that is acceptable at the time of the transaction. We do not enter into derivative transactions for trading purposes. All derivatives are recognized as assets or liabilities on the balance sheet and are measured at fair value. At the end of each quarterly period, these derivatives are marked-to-market. If the derivative does not qualify or is not designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in earnings through derivative income (expense) in the statement of operations. If the derivative qualifies and is designated as a cash flow hedge, subsequent changes in the fair value of the derivative are recognized in stockholders’ equity through other comprehensive income (loss), net of related taxes, to the extent the hedge is considered effective. Monthly settlements of effective hedges are reflected in revenue from oil and natural gas production. Monthly settlements of ineffective hedges and derivatives not designated or that do not qualify for hedge accounting are recognized in earnings through derivative income (expense). The resulting cash flows from all monthly settlements are reported as cash flows from operating activities. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements of these derivative contracts have been, or will be, recorded in earnings through derivative income (expense). We have entered into put contracts, fixed-price swaps and collar contracts with various counterparties for a portion of our expected 2018 and 2019 oil and natural gas production from the Gulf Coast Basin. All of our derivative transactions have been carried out in the over-the-counter market and are not typically subject to margin-deposit requirements. The use of derivative instruments involves the risk that the counterparties will be unable to meet the financial terms of such transactions. The counterparties to all of our derivative instruments have an “investment grade” credit rating. We monitor the credit ratings of our derivative counterparties on an ongoing basis. Although we typically enter into derivative contracts with multiple counterparties to mitigate our exposure to any individual counterparty, if any of our counterparties were to default on its obligations to us under the derivative contracts or seek bankruptcy protection, we may not realize the benefit of some of our derivative instruments and incur a loss. At May 7, 2018 , our derivative instruments were with four counterparties, two of which accounted for approximately 64% of our contracted volumes. Currently, all of our outstanding derivative instruments are with lenders under our current bank credit facility. Put contracts are purchased at a rate per unit of hedged production that fluctuates with the commodity futures market. The historical cost of the put contract represents our maximum cash exposure. We are not obligated to make any further payments under the put contract regardless of future commodity price fluctuations. Under put contracts, monthly payments are made to us if the New York Mercantile Exchange (“NYMEX”) prices fall below the agreed upon floor price, while allowing us to fully participate in commodity prices above the floor. Swaps typically provide for monthly payments by us if prices rise above the swap price or monthly payments to us if prices fall below the swap price. Collar contracts typically require payments by us if the NYMEX average closing price is above the ceiling price or payments to us if the NYMEX average closing price is below the floor price. Settlements for our oil put contracts, oil collar contracts and fixed-price oil swaps are based on an average of the NYMEX closing price for West Texas Intermediate crude oil during the entire calendar month. Settlements for our natural gas collar contracts are based on the NYMEX price for the last day of a respective contract month. |
Fair Value of Financial Instruments | U.S. Generally Accepted Accounting Principles establish a fair value hierarchy that has three levels based on the reliability of the inputs used to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. As of March 31, 2018 (Successor) and December 31, 2017 (Successor), we held certain financial assets that are required to be measured at fair value on a recurring basis, including our commodity derivative instruments and our investments in marketable securities. We utilize the services of an independent third party to assist us in valuing our derivative instruments. The income approach is used in this determination utilizing the third party’s proprietary pricing model. The model accounts for our credit risk and the credit risk of our counterparties in the discount rate applied to estimated future cash inflows and outflows. Our swap contracts are included within the Level 2 fair value hierarchy, and our collar and put contracts are included within the Level 3 fair value hierarchy. Significant unobservable inputs used in establishing fair value for the collars and puts were the volatility impacts in the pricing model as it relates to the call portion of the collar and the floor of the put. For a more detailed description of our derivative instruments, see Note 7 – Derivative Instruments and Hedging Activities . We used the market approach in determining the fair value of our investments in marketable securities, which are included within the Level 1 fair value hierarchy. |
FRESH START ACCOUNTING (Tables)
FRESH START ACCOUNTING (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Reorganizations [Abstract] | |
Reconciliation of Enterprise Value to Estimated Fair Value of Successor Common Stock | The following table reconciles the enterprise value per the Plan to the estimated fair value (for fresh start accounting purposes) of the Successor Company’s common stock as of February 28, 2017 (in thousands, except per share value): February 28, 2017 Enterprise value $ 419,720 Plus: Cash and other assets 371,278 Less: Fair value of debt (236,261 ) Less: Fair value of warrants (15,648 ) Fair value of Successor common stock $ 539,089 Shares issued upon emergence 20,000 Per share value $ 26.95 |
Reconciliation of Enterprise Value to Estimated Reorganization Value | The following table reconciles the enterprise value per the Plan to the estimated reorganization value as of the Effective Date (in thousands): February 28, 2017 Enterprise value $ 419,720 Plus: Cash and other assets 371,278 Plus: Asset retirement obligations (current and long-term) 290,067 Plus: Working capital and other liabilities 58,055 Reorganization value of Successor assets $ 1,139,120 |
Schedule of Fresh-Start Adjustments | The following table reflects the reorganization and application of ASC 852 on our consolidated balance sheet as of February 28, 2017 (in thousands): Predecessor Company Reorganization Adjustments Fresh Start Adjustments Successor Company Assets Current assets: Cash and cash equivalents $ 198,571 $ (35,605 ) (1) $ — $ 162,966 Restricted cash — 75,547 (1) — 75,547 Accounts receivable 42,808 9,301 (2) — 52,109 Fair value of derivative contracts 1,267 — — 1,267 Current income tax receivable 22,516 — — 22,516 Other current assets 11,033 875 (3) (124 ) (12) 11,784 Total current assets 276,195 50,118 (124 ) 326,189 Oil and gas properties, full cost method of accounting: Proved 9,633,907 (188,933 ) (1) (8,774,122 ) (12) 670,852 Less: accumulated DD&A (9,215,679 ) — 9,215,679 (12) — Net proved oil and gas properties 418,228 (188,933 ) 441,557 670,852 Unevaluated 371,140 (127,838 ) (1) (146,292 ) (12) 97,010 Other property and equipment, net 25,586 (101 ) (4) (4,423 ) (13) 21,062 Fair value of derivative contracts 1,819 — — 1,819 Other assets, net 26,516 (4,328 ) (5) — 22,188 Total assets $ 1,119,484 $ (271,082 ) $ 290,718 $ 1,139,120 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable to vendors $ 20,512 $ — $ — $ 20,512 Undistributed oil and gas proceeds 5,917 (4,139 ) (1) — 1,778 Accrued interest 266 — — 266 Asset retirement obligations 92,597 — — 92,597 Fair value of derivative contracts 476 — — 476 Current portion of long-term debt 411 — — 411 Other current liabilities 17,032 (195 ) (6) — 16,837 Total current liabilities 137,211 (4,334 ) — 132,877 Long-term debt 352,350 (116,500 ) (7) — 235,850 Asset retirement obligations 151,228 (8,672 ) (1) 54,914 (14) 197,470 Fair value of derivative contracts 653 — — 653 Other long-term liabilities 17,533 — — 17,533 Total liabilities not subject to compromise 658,975 (129,506 ) 54,914 584,383 Liabilities subject to compromise 1,110,182 (1,110,182 ) (8) — — Total liabilities 1,769,157 (1,239,688 ) 54,914 584,383 Commitments and contingencies Stockholders’ equity: Common stock (Predecessor) 56 (56 ) (9) — — Treasury stock (Predecessor) (860 ) 860 (9) — — Additional paid-in capital (Predecessor) 1,660,810 (1,660,810 ) (9) — — Common stock (Successor) — 200 (10) — 200 Additional paid-in capital (Successor) — 554,537 (10) — 554,537 Accumulated deficit (2,309,679 ) 2,073,875 (11) 235,804 (15) — Total stockholders’ equity (649,673 ) 968,606 235,804 554,737 Total liabilities and stockholders’ equity $ 1,119,484 $ (271,082 ) $ 290,718 $ 1,139,120 Reorganization Adjustments 1. Reflects the net cash proceeds received from the sale of the Appalachia Properties in connection with the Plan and net cash payments made as of the Effective Date from implementation of the Plan (in thousands): Sources: Net cash proceeds from sale of Appalachia Properties (a) $ 512,472 Total sources 512,472 Uses: Cash transferred to restricted account (b) 75,547 Break-up fee to Tug Hill 10,800 Repayment of outstanding borrowings under Pre-Emergence Credit Agreement 341,500 Repayment of 2017 Convertible Notes and 2022 Notes 100,000 Other fees and expenses (c) 20,230 Total uses 548,077 Net uses $ (35,605 ) (a) The closing of the sale of the Appalachia Properties occurred on February 27, 2017, but as emergence was contingent on such closing, the effects of the transaction are reflected as reorganization adjustments. See Note 5 – Divestiture for additional details on the sale. Total consideration received for the sale of the Appalachia Properties of $522.5 million included cash consideration of $512.5 million received at closing and a $10.0 million indemnity escrow which was released subsequent to emergence from bankruptcy (see Reorganization Adjustments item number 2 below). (b) Reflects the movement of $75.0 million of cash held in a restricted account to satisfy near-term plugging and abandonment liabilities, pursuant to the provisions of the Amended Credit Agreement (as defined in Note 8 – Debt ), and $0.5 million held in a restricted cash account for certain cure amounts in connection with the Chapter 11 proceedings. (c) Other fees and expenses include approximately $15.2 million of emergence and success fees, $2.7 million of professional fees and $2.4 million of payments made to seismic providers in settlement of their bankruptcy claims. 2. Reflects a receivable for a $10.0 million indemnity escrow with release delayed until emergence from bankruptcy, net of a $0.7 million reimbursement to Tug Hill in connection with the sale of the Appalachia Properties (see Note 2 – Reorganization ). 3. Reflects the payment of a claim to a seismic provider as a prepayment/deposit. 4. Reflects the sale of vehicles in connection with the sale of the Appalachia Properties. 5. Reflects the write-off of $2.6 million of unamortized debt issuance costs related to the Pre-Emergence Credit Agreement and the reversal of a $1.8 million prepayment made to Tug Hill in October 2016. 6. Reflects the accrual of $2.0 million in expected bonus payments under the Key Executive Incentive Plan and a $0.4 million termination fee in connection with the early termination of an office lease, less the settlement of a property tax accrual of $2.6 million in connection with the sale of the Appalachia Properties. 7. Reflects the repayment of $341.5 million of outstanding borrowings under the Pre-Emergence Credit Agreement and the issuance of $225 million of 2022 Second Lien Notes as part of the settlement of the Predecessor Company 2017 Convertible Notes and 2022 Notes. 8. Liabilities subject to compromise were settled as follows in accordance with the Plan (in thousands): 1 ¾% Senior Convertible Notes due 2017 $ 300,000 7 ½% Senior Notes due 2022 775,000 Accrued interest 35,182 Liabilities subject to compromise of the Predecessor Company 1,110,182 Cash payment to senior noteholders (100,000 ) Issuance of 2022 Second Lien Notes to former holders of the senior notes (225,000 ) Fair value of equity issued to unsecured creditors (539,089 ) Fair value of warrants issued to unsecured creditors (15,648 ) Gain on settlement of liabilities subject to compromise $ 230,445 9. Reflects the cancellation of the Predecessor Company’s common stock, treasury stock and additional paid-in capital. 10. Reflects the issuance of Successor Company equity. In accordance with the Plan, the Successor Company issued 19.0 million shares of New Common Stock to the former holders of the 2017 Convertible Notes and the 2022 Notes and 1.0 million shares of New Common Stock to the Predecessor Company’s common stockholders. These amounts are subject to dilution by warrants issued to the Predecessor Company common stockholders, totaling approximately 3.5 million shares, with an exercise price of $42.04 per share and a term of four years . The fair value of the warrants was estimated at $4.43 per share using a Black-Scholes-Merton valuation model. 11. Reflects the cumulative impact of the reorganization adjustments discussed above (in thousands): Gain on settlement of liabilities subject to compromise $ 230,445 Professional and other fees paid at emergence (10,648 ) Write-off of unamortized debt issuance costs (2,577 ) Other reorganization adjustments (1,915 ) Net impact to reorganization items 215,305 Gain on sale of Appalachia Properties 213,453 Cancellation of Predecessor Company equity 1,662,282 Other adjustments to accumulated deficit (17,165 ) Net impact to accumulated deficit $ 2,073,875 Fresh Start Adjustments 12. Fair value adjustments to oil and gas properties, associated inventory and unproved acreage. See above for a detailed discussion of the fair value methodology. 13. Fair value adjustment for an office building owned by the Company. The income and sales comparison approaches were used in determining the fair value, using anticipated future earnings and an appropriate expected rate of return, as well as relying upon recent sales or offerings of similar assets. 14. Fair value adjustments to the Company’s asset retirement obligations using estimated plugging and abandonment costs as of the Effective Date, adjusted for inflation and discounted at the Successor Company’s credit-adjusted risk free rate. 15. Reflects the cumulative effect of the fresh start accounting adjustments discussed above. |
Summary of Reorganization Items | The following table summarizes reorganization items, net (in thousands): Predecessor Period from Gain on settlement of liabilities subject to compromise $ 230,445 Fresh start valuation adjustments 235,804 Reorganization professional fees and other expenses (20,403 ) Write-off of unamortized debt issuance costs (2,577 ) Other reorganization items (5,525 ) Gain on reorganization items, net $ 437,744 The cash payments for reorganization items for the period from January 1, 2017 through February 28, 2017 include approximately $10.6 million of emergence and success fees and approximately $8.9 million of other reorganization professional fees and expenses paid on the Effective Date. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Weighted Average Shares Outstanding Earnings Per Share | The following table sets forth the calculation of basic and diluted weighted average shares outstanding and earnings per share for the indicated periods (in thousands, except per share amounts): Successor Predecessor Three Months Ended Period from Period from Income (numerator): Basic: Net income (loss) $ 18,308 $ (259,613 ) $ 630,317 Net income attributable to participating securities (57 ) — (4,995 ) Net income (loss) attributable to common stock - basic $ 18,251 $ (259,613 ) $ 625,322 Diluted: Net income (loss) $ 18,308 $ (259,613 ) $ 630,317 Net income attributable to participating securities (56 ) — (4,995 ) Net income (loss) attributable to common stock - diluted $ 18,252 $ (259,613 ) $ 625,322 Weighted average shares (denominator): Weighted average shares - basic 19,998 19,997 5,634 Dilutive effect of stock options — — — Dilutive effect of warrants — — — Dilutive effect of convertible notes — — — Weighted average shares - diluted 19,998 19,997 5,634 Basic income (loss) per share $ 0.91 $ (12.98 ) $ 110.99 Diluted income (loss) per share $ 0.91 $ (12.98 ) $ 110.99 |
DIVESTITURE (Tables)
DIVESTITURE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Net Gain Recognized in Sale | Since accounting for the sale of these oil and gas properties as a reduction of the capitalized costs of oil and gas properties would have significantly altered the relationship between capitalized costs and reserves, we recognized a gain on the sale of $213.5 million during the period from January 1, 2017 through February 28, 2017 (Predecessor), computed as follows (in thousands): Net consideration received for sale of Appalachia Properties $ 522,472 Add: Release of funds held in suspense 4,139 Transfer of asset retirement obligations 8,672 Other adjustments, net 2,597 Less: Transaction costs (7,087 ) Carrying value of properties sold (317,340 ) Gain on sale $ 213,453 |
DERIVATIVE INSTRUMENTS AND HE27
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Positions | The following tables illustrate our derivative positions for calendar years 2018 and 2019 as of May 7, 2018 : Put Contracts (NYMEX) Oil Daily Volume Price 2018 January - December 1,000 $ 54.00 2018 January - December 1,000 45.00 Fixed-Price Swaps (NYMEX) Oil Daily Volume (Bbls/d) Swap Price ($ per Bbl) 2018 January - December 1,000 $ 52.50 2018 January - December 1,000 51.98 2018 January - December 1,000 53.67 2019 January - December 1,000 51.00 2019 January - December 1,000 51.57 2019 January - December 2,000 56.13 Collar Contracts (NYMEX) Natural Gas Oil Daily Volume Floor Price Ceiling Price Daily Volume (Bbls/d) Floor Price Ceiling Price 2018 January - December 6,000 $ 2.75 $ 3.24 1,000 $ 45.00 $ 55.35 |
Gains or Losses Related to Changes in Fair Value and Cash Settlements on Derivatives Not Qualifying as Hedging Instruments | The following tables disclose the location and fair value amounts of derivatives not designated or not qualifying as hedging instruments, as reported in our balance sheet, at March 31, 2018 (Successor) and December 31, 2017 (Successor) (in thousands). Fair Value of Derivatives Not Designated or Not Qualifying as Hedging Instruments at March 31, 2018 (Successor) Asset Derivatives Liability Derivatives Description Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Current assets: Fair value of $ 417 Current liabilities: Fair value of derivative contracts $ 13,147 Long-term assets: Fair value — Long-term liabilities: Fair 4,564 $ 417 $ 17,711 Fair Value of Derivatives Not Designated or Not Qualifying as Hedging Instruments at December 31, 2017 (Successor) Asset Derivatives Liability Derivatives Description Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Current assets: Fair value of $ 879 Current liabilities: Fair value $ 8,969 Long-term assets: Fair value — Long-term liabilities: Fair 3,085 $ 879 $ 12,054 |
Before Tax Effect of Derivative Instruments in Statement of Operations | The following table discloses the before tax effect of our derivatives not designated or not qualifying as hedging instruments on the statement of operations for the three months ended March 31, 2018 (Successor), the period from January 1, 2017 through February 28, 2017 (Predecessor) and the period from March 1, 2017 through March 31, 2017 (Successor) (in thousands). Gain (Loss) Recognized in Derivative Income (Expense) Successor Predecessor Three Months Ended Period from Period from Description Commodity contracts: Cash settlements $ (3,429 ) $ 161 $ — Change in fair value (6,119 ) 2,485 (1,778 ) Total gains (losses) on derivatives not designated or not qualifying as hedging instruments $ (9,548 ) $ 2,646 $ (1,778 ) |
Summary of Offsetting Liabilities | The following tables present the potential impact of the offset rights associated with our recognized assets and liabilities at March 31, 2018 (Successor) and December 31, 2017 (Successor) (in thousands): March 31, 2018 (Successor) As Presented Without Netting Effects of Netting With Effects of Netting Current assets: Fair value of derivative contracts $ 417 $ (417 ) $ — Long-term assets: Fair value of derivative contracts — — — Current liabilities: Fair value of derivative contracts (13,147 ) 417 (12,730 ) Long-term liabilities: Fair value of derivative contracts (4,564 ) — (4,564 ) December 31, 2017 (Successor) As Presented Without Netting Effects of Netting With Effects of Netting Current assets: Fair value of derivative contracts $ 879 $ (879 ) $ — Long-term assets: Fair value of derivative contracts — — — Current liabilities: Fair value of derivative contracts (8,969 ) 879 (8,090 ) Long-term liabilities: Fair value of derivative contracts (3,085 ) — (3,085 ) |
Summary of Offsetting Assets | The following tables present the potential impact of the offset rights associated with our recognized assets and liabilities at March 31, 2018 (Successor) and December 31, 2017 (Successor) (in thousands): March 31, 2018 (Successor) As Presented Without Netting Effects of Netting With Effects of Netting Current assets: Fair value of derivative contracts $ 417 $ (417 ) $ — Long-term assets: Fair value of derivative contracts — — — Current liabilities: Fair value of derivative contracts (13,147 ) 417 (12,730 ) Long-term liabilities: Fair value of derivative contracts (4,564 ) — (4,564 ) December 31, 2017 (Successor) As Presented Without Netting Effects of Netting With Effects of Netting Current assets: Fair value of derivative contracts $ 879 $ (879 ) $ — Long-term assets: Fair value of derivative contracts — — — Current liabilities: Fair value of derivative contracts (8,969 ) 879 (8,090 ) Long-term liabilities: Fair value of derivative contracts (3,085 ) — (3,085 ) |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Our debt balances (net of related unamortized discounts and debt issuance costs) as of March 31, 2018 (Successor) and December 31, 2017 (Successor) were as follows (in thousands): Successor March 31, December 31, 7 ½% Senior Second Lien Notes due 2022 $ 225,000 $ 225,000 4.20% Building Loan 10,824 10,927 Total debt 235,824 235,927 Less: current portion of long-term debt (430 ) (425 ) Long-term debt $ 235,394 $ 235,502 |
ASSET RETIREMENT OBLIGATIONS (T
ASSET RETIREMENT OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Changes in Asset Retirement Obligations | The change in our asset retirement obligations during the three months ended March 31, 2018 (Successor) is set forth below (in thousands, inclusive of current portion): Asset retirement obligations as of January 1, 2018 (Successor) $ 213,101 Liabilities settled (20,734 ) Accretion expense 4,287 Asset retirement obligations as of March 31, 2018 (Successor) $ 196,654 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value Recurring Basis | The following tables present our assets and liabilities that are measured at fair value on a recurring basis at March 31, 2018 (Successor) (in thousands). Fair Value Measurements Successor as of March 31, 2018 Assets Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Marketable securities (Other assets) $ 4,964 $ 4,964 $ — $ — Derivative contracts 417 — — 417 Total $ 5,381 $ 4,964 $ — $ 417 Fair Value Measurements Successor as of March 31, 2018 Liabilities Total Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative contracts $ 17,711 $ — $ 15,330 $ 2,381 Total $ 17,711 $ — $ 15,330 $ 2,381 The following tables present our assets and liabilities that are measured at fair value on a recurring basis at December 31, 2017 (Successor) (in thousands). Fair Value Measurements Successor as of December 31, 2017 Assets Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Marketable securities (Other assets) $ 5,081 $ 5,081 $ — $ — Derivative contracts 879 — — 879 Total $ 5,960 $ 5,081 $ — $ 879 Fair Value Measurements Successor as of December 31, 2017 Liabilities Total Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative contracts $ 12,054 $ — $ 10,110 $ 1,944 Total $ 12,054 $ — $ 10,110 $ 1,944 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The table below presents a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2018 (Successor) (in thousands). Hedging Contracts, net Balance as of January 1, 2018 (Successor) $ (1,065 ) Total gains/(losses) (realized or unrealized): Included in earnings (1,579 ) Included in other comprehensive income — Purchases, sales, issuances and settlements 680 Transfers in and out of Level 3 — Balance as of March 31, 2018 (Successor) $ (1,964 ) The amount of total gains/(losses) for the period included in earnings (derivative income) attributable to the change in unrealized gain/(losses) relating to derivatives still held at March 31, 2018 $ (4,702 ) |
FINANCIAL STATEMENT PRESENTAT31
FINANCIAL STATEMENT PRESENTATION - Additional Information (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | Jun. 30, 2018 | Apr. 05, 2018 | Dec. 31, 2017 | Nov. 21, 2017 | Mar. 01, 2017 | |
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Restricted cash | $ 74,100,000 | $ 0 | $ 18,742,000 | |||||
Increase (decrease) in net cash provided by investing activities | (5,184,000) | $ 36,761,000 | ||||||
Predecessor | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Restricted cash | $ 75,500,000 | |||||||
Increase (decrease) in net cash provided by investing activities | (496,568,000) | |||||||
Talos Energy, Inc. | Scenario, Forecast | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Percentage of outstanding stock | 37.00% | |||||||
Talos Energy, Inc. | Talos Energy | Scenario, Forecast | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Percentage of outstanding stock | 63.00% | |||||||
Stone Energy Corp. | Talos Energy, Inc. | Scenario, Forecast | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Number of New Talos shares issued (in shares) | 34,100,000 | |||||||
Talos Production | Talos Energy, Inc. | Scenario, Forecast | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Percentage of outstanding stock | 100.00% | |||||||
Senior Notes | 9.75% Senior Notes Due 2022 | Talos Energy, Inc. | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Aggregate principal amount of senior subordinated notes | $ 102,000,000 | |||||||
Interest rate | 9.75% | |||||||
7 ½% Senior Second Lien Notes due 2022 | 11% Second Lien Notes | Talos Energy, Inc. | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Interest rate | 11.00% | |||||||
7 ½% Senior Second Lien Notes due 2022 | 7.5% Second Lien Notes | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Interest rate | 7.50% | |||||||
Accounting Standards Update 2016-18 | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Increase (decrease) in net cash provided by investing activities | $ 1,500,000 | |||||||
Accounting Standards Update 2016-18 | Predecessor | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Increase (decrease) in net cash provided by investing activities | $ (75,500,000) | |||||||
Subsequent Event | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Stockholders party to voting agreements, shares owned (in shares) | 10,212,937 | |||||||
Stockholders party to voting agreements, percent of total shares owned | 51.10% |
REORGANIZATION (Details)
REORGANIZATION (Details) $ / shares in Units, a in Thousands | Mar. 01, 2017$ / sharesshares | Feb. 28, 2017USD ($)shares | Feb. 27, 2017USD ($)shares | Dec. 09, 2016a | Mar. 31, 2017USD ($)shares | Feb. 28, 2017USD ($)shares | Mar. 31, 2018USD ($)shares |
Restructuring Cost and Reserve [Line Items] | |||||||
Net consideration received for sale of Appalachia Properties | $ | $ 512,472,000 | $ 10,770,000 | $ 320,000 | ||||
New shares issued in reorganization (in shares) | shares | 20,000,000 | 682 | |||||
7 ½% Senior Second Lien Notes due 2022 | Senior Notes | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Interest rate | 7.50% | ||||||
Predecessor | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Net consideration received for sale of Appalachia Properties | $ | $ 505,383,000 | ||||||
New shares issued in reorganization (in shares) | shares | 0 | 47,390 | |||||
Predecessor | 1 ¾% Senior Convertible Notes due 2017 | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Interest rate | 1.75% | ||||||
Predecessor | 7 ½% Senior Second Lien Notes due 2022 | Senior Notes | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Interest rate | 7.50% | ||||||
RSA | Common Stock | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
New shares issued in reorganization (in shares) | shares | 20,000,000 | ||||||
RSA | Predecessor | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Acreage sold in agreement | a | 86 | ||||||
RSA | EQT Production Company | Disposal Group, Disposed of by Sale | Predecessor | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Net consideration received for sale of Appalachia Properties | $ | $ 522,500,000 | ||||||
RSA | Tug Hill | Disposal Group, Disposed of by Sale | Predecessor | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Loss on contract termination | $ | $ 11,500,000 | ||||||
RSA | Noteholders | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Pro rata share of net cash proceeds | $ | $ 100,000,000 | ||||||
Percentage of common stock issued in reorganization | 95.00% | ||||||
RSA | Noteholders | 7 ½% Senior Second Lien Notes due 2022 | Senior Notes | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Aggregate principal amount of senior subordinated notes | $ | $ 225,000,000 | ||||||
RSA | Noteholders | Common Stock | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
New shares issued in reorganization (in shares) | shares | 19,000,000 | ||||||
RSA | Predecessor Company's Common Stockholders | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Percentage of common stock issued in reorganization | 5.00% | ||||||
RSA | Predecessor Company's Common Stockholders | Common Stock | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
New shares issued in reorganization (in shares) | shares | 1,000,000 | ||||||
Warrants issued in reorganization (in shares) | shares | 3,500,000 | ||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 42.04 | ||||||
Exercise period for warrants | 4 years |
FRESH START ACCOUNTING - Additi
FRESH START ACCOUNTING - Additional Information (Details) - USD ($) | Feb. 28, 2017 | Feb. 27, 2017 | Mar. 31, 2017 | Oct. 31, 2016 | Feb. 28, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Fresh-Start Adjustment [Line Items] | ||||||||
Accumulated deficit | $ 554,737,000 | $ 554,737,000 | $ 326,073,000 | $ 308,168,000 | ||||
Enterprise value | $ 419,720,000 | 419,720,000 | ||||||
Annual escalation adjustment rate | 2.00% | |||||||
Expected period for development to begin | 5 years | |||||||
Proved reserves | $ 380,800,000 | 380,800,000 | ||||||
Probable and possible reserves | 16,800,000 | 16,800,000 | ||||||
Unevaluated properties reserves | 80,200,000 | 80,200,000 | ||||||
Fair value of asset retirement obligations | $ 290,067,000 | 290,067,000 | ||||||
Credit-adjusted risk free rate | 12.00% | |||||||
Repayment of outstanding borrowings under Pre-Emergence Credit Agreement | $ 341,500,000 | $ 0 | $ 0 | |||||
New shares issued in reorganization (in shares) | 20,000,000 | 682 | ||||||
Emergence and success fees | $ 15,200,000 | |||||||
Professional fees | 2,700,000 | |||||||
Predecessor | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Accumulated deficit | (3,610,000) | (3,610,000) | $ (637,282,000) | |||||
Repayment of outstanding borrowings under Pre-Emergence Credit Agreement | $ 341,500,000 | |||||||
New shares issued in reorganization (in shares) | 0 | 47,390 | ||||||
Emergence and success fees | $ 10,600,000 | |||||||
Professional fees | 8,900,000 | |||||||
Appalachia Properties | Disposal Group, Disposed of by Sale | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Indemnity escrow release | $ 10,000,000 | |||||||
Revaluation of Assets | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Write off of unamortized debt issuance costs | 2,600,000 | |||||||
Revaluation of Assets | Tug Hill, Inc | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Net reimbursement in connection with the sale of asset | 700,000 | 700,000 | ||||||
Loss on contract termination | $ 1,800,000 | |||||||
Revaluation of Liabilities | Senior Notes | 7 ½% Senior Notes due 2022 | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Aggregate principal amount of senior subordinated notes | 225,000,000 | 225,000,000 | ||||||
Revaluation of Liabilities | Predecessor | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Repayment of outstanding borrowings under Pre-Emergence Credit Agreement | 341,500,000 | |||||||
Revaluation of Liabilities | Leasing Arrangement | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Loss on contract termination | 400,000 | |||||||
Revaluation of Liabilities | Appalachia Properties | Disposal Group, Disposed of by Sale | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Settlement of a property tax accrual | 2,600,000 | $ 2,600,000 | ||||||
Revaluation of Liabilities | Deferred Bonus | 2016 Incentive Plan | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Deferred compensation arrangement compensation expense | $ 2,000,000 | |||||||
Exchange of Stock for Stock | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Estimated fair value of the warrants (in usd per share) | $ 4.43 | $ 4.43 | ||||||
Exchange of Stock for Stock | Predecessor Company's Common Stockholders | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Warrants issued in reorganization (in shares) | 3,500,000 | |||||||
Exercise price of warrants or rights (in usd per share) | $ 42.04 | $ 42.04 | ||||||
Exercise period for warrants | 4 years | |||||||
Exchange of Stock for Stock | Senior Notes | 7 ½% Senior Notes due 2022 | Predecessor Company's Noteholders | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
New shares issued in reorganization (in shares) | 1,000,000 | |||||||
Exchange of Stock for Stock | Convertible Debt | 1 ¾% Senior Convertible Notes due 2017 | Predecessor Company's Noteholders | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
New shares issued in reorganization (in shares) | 19,000,000 | |||||||
Income Approach Valuation Technique | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Discounted weighted average cost of capital rate | 12.50% | |||||||
Minimum | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Enterprise value | $ 300,000,000 | $ 300,000,000 | ||||||
Maximum | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Enterprise value | 450,000,000 | 450,000,000 | ||||||
Accumulated Deficit | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Accumulated deficit | 0 | 0 | $ (230,067,000) | $ (247,639,000) | ||||
Accumulated Deficit | Predecessor | ||||||||
Fresh-Start Adjustment [Line Items] | ||||||||
Accumulated deficit | $ (1,665,892,000) | $ (1,665,892,000) | $ (2,296,209,000) |
FRESH START ACCOUNTING - Reconc
FRESH START ACCOUNTING - Reconciliation of Enterprise Value to Estimated Fair Value of Successor Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 28, 2017 | Mar. 31, 2018 |
Reorganizations [Abstract] | ||
Enterprise value | $ 419,720 | |
Plus: Cash and other assets | 371,278 | |
Less: Fair value of debt | (236,261) | |
Less: Fair value of warrants | (15,648) | |
Fair value of Successor common stock | $ 539,089 | |
Shares issued upon emergence (in shares) | 20,000,000 | 682 |
Per share value (in usd per share) | $ 26.95445 |
FRESH START ACCOUNTING - Reco35
FRESH START ACCOUNTING - Reconciliation of Enterprise Value to Estimated Reorganization Value (Details) $ in Thousands | Feb. 28, 2017USD ($) |
Reorganizations [Abstract] | |
Enterprise value | $ 419,720 |
Plus: Cash and other assets | 371,278 |
Plus: Asset retirement obligations (current and long-term) | 290,067 |
Plus: Working capital and other liabilities | 58,055 |
Reorganization value of Successor assets | $ 1,139,120 |
FRESH START ACCOUNTING - Schedu
FRESH START ACCOUNTING - Schedule of Fresh-Start Adjustments (Details) $ in Thousands | Feb. 28, 2017USD ($) |
Current assets: | |
Cash and cash equivalents | $ 162,966 |
Restricted cash | 75,547 |
Accounts receivable | 52,109 |
Fair value of derivative contracts | 1,267 |
Current income tax receivable | 22,516 |
Other current assets | 11,784 |
Total current assets | 326,189 |
Proved | 670,852 |
Less: accumulated DD&A | 0 |
Net proved oil and gas properties | 670,852 |
Unevaluated | 97,010 |
Other property and equipment, net | 21,062 |
Fair value of derivative contracts | 1,819 |
Other assets, net | 22,188 |
Total assets | 1,139,120 |
Current liabilities: | |
Accounts payable to vendors | 20,512 |
Undistributed oil and gas proceeds | 1,778 |
Accrued interest | 266 |
Asset retirement obligations | 92,597 |
Fair value of derivative contracts | 476 |
Current portion of long-term debt | 411 |
Other current liabilities | 16,837 |
Total current liabilities | 132,877 |
Long-term debt | 235,850 |
Asset retirement obligations | 197,470 |
Fair value of derivative contracts | 653 |
Other long-term liabilities | 17,533 |
Total liabilities not subject to compromise | 584,383 |
Liabilities subject to compromise | 0 |
Total liabilities | 584,383 |
Stockholders’ equity: | |
Common stock (Successor) | 200 |
Additional paid-in capital (Successor) | 554,537 |
Accumulated deficit | 0 |
Total stockholders’ equity | 554,737 |
Total liabilities and stockholders’ equity | 1,139,120 |
Reorganization Adjustments | |
Current assets: | |
Cash and cash equivalents | (35,605) |
Restricted cash | 75,547 |
Accounts receivable | 9,301 |
Fair value of derivative contracts | 0 |
Current income tax receivable | 0 |
Other current assets | 875 |
Total current assets | 50,118 |
Proved | (188,933) |
Less: accumulated DD&A | 0 |
Net proved oil and gas properties | (188,933) |
Unevaluated | (127,838) |
Other property and equipment, net | (101) |
Fair value of derivative contracts | 0 |
Other assets, net | (4,328) |
Total assets | (271,082) |
Current liabilities: | |
Accounts payable to vendors | 0 |
Undistributed oil and gas proceeds | (4,139) |
Accrued interest | 0 |
Asset retirement obligations | 0 |
Fair value of derivative contracts | 0 |
Current portion of long-term debt | 0 |
Other current liabilities | (195) |
Total current liabilities | (4,334) |
Long-term debt | (116,500) |
Asset retirement obligations | (8,672) |
Fair value of derivative contracts | 0 |
Other long-term liabilities | 0 |
Total liabilities not subject to compromise | (129,506) |
Liabilities subject to compromise | (1,110,182) |
Total liabilities | (1,239,688) |
Stockholders’ equity: | |
Common stock | 200 |
Additional paid-in capital | 554,537 |
Accumulated deficit | 2,073,875 |
Total stockholders’ equity | 968,606 |
Total liabilities and stockholders’ equity | (271,082) |
Fresh Start Adjustments | |
Current assets: | |
Cash and cash equivalents | 0 |
Restricted cash | 0 |
Accounts receivable | 0 |
Fair value of derivative contracts | 0 |
Current income tax receivable | 0 |
Other current assets | (124) |
Total current assets | (124) |
Proved | (8,774,122) |
Less: accumulated DD&A | 9,215,679 |
Net proved oil and gas properties | 441,557 |
Unevaluated | (146,292) |
Other property and equipment, net | (4,423) |
Fair value of derivative contracts | 0 |
Other assets, net | 0 |
Total assets | 290,718 |
Current liabilities: | |
Accounts payable to vendors | 0 |
Undistributed oil and gas proceeds | 0 |
Accrued interest | 0 |
Asset retirement obligations | 0 |
Fair value of derivative contracts | 0 |
Current portion of long-term debt | 0 |
Other current liabilities | 0 |
Total current liabilities | 0 |
Long-term debt | 0 |
Asset retirement obligations | 54,914 |
Fair value of derivative contracts | 0 |
Other long-term liabilities | 0 |
Total liabilities not subject to compromise | 54,914 |
Liabilities subject to compromise | 0 |
Total liabilities | 54,914 |
Stockholders’ equity: | |
Common stock | 0 |
Additional paid-in capital | 0 |
Accumulated deficit | 235,804 |
Total stockholders’ equity | 235,804 |
Total liabilities and stockholders’ equity | 290,718 |
Predecessor | |
Current assets: | |
Cash and cash equivalents | 198,571 |
Restricted cash | 0 |
Accounts receivable | 42,808 |
Fair value of derivative contracts | 1,267 |
Current income tax receivable | 22,516 |
Other current assets | 11,033 |
Total current assets | 276,195 |
Oil and gas properties, full cost method of accounting: | |
Proved | 9,633,907 |
Less: accumulated DD&A | (9,215,679) |
Net proved oil and gas properties | 418,228 |
Unevaluated | 371,140 |
Other property and equipment, net | 25,586 |
Fair value of derivative contracts | 1,819 |
Other assets, net | 26,516 |
Total assets | 1,119,484 |
Current liabilities: | |
Accounts payable to vendors | 20,512 |
Undistributed oil and gas proceeds | 5,917 |
Accrued interest | 266 |
Asset retirement obligations | 92,597 |
Fair value of derivative contracts | 476 |
Current portion of long-term debt | 411 |
Other current liabilities | 17,032 |
Total current liabilities | 137,211 |
Long-term debt | 352,350 |
Asset retirement obligations | 151,228 |
Fair value of derivative contracts | 653 |
Other long-term liabilities | 17,533 |
Total liabilities not subject to compromise | 658,975 |
Liabilities subject to compromise | 1,110,182 |
Total liabilities | 1,769,157 |
Stockholders’ equity: | |
Common stock | 56 |
Treasury stock (Predecessor) | (860) |
Additional paid-in capital (Predecessor) | 1,660,810 |
Accumulated deficit | (2,309,679) |
Total stockholders’ equity | (649,673) |
Total liabilities and stockholders’ equity | 1,119,484 |
Predecessor | Reorganization Adjustments | |
Stockholders’ equity: | |
Common stock | (56) |
Treasury stock (Predecessor) | 860 |
Additional paid-in capital | (1,660,810) |
Predecessor | Fresh Start Adjustments | |
Stockholders’ equity: | |
Common stock | 0 |
Treasury stock (Predecessor) | 0 |
Additional paid-in capital | $ 0 |
FRESH START ACCOUNTING - Reorga
FRESH START ACCOUNTING - Reorganization Adjustments (Details) - USD ($) $ in Thousands | Feb. 28, 2017 | Feb. 27, 2017 | Mar. 31, 2017 | Mar. 31, 2018 |
Fresh-Start Adjustment [Line Items] | ||||
Net consideration received for sale of Appalachia Properties | $ 512,472 | $ 10,770 | $ 320 | |
Cash transferred to restricted account | 75,547 | |||
Break-up fee to Tug Hill | 10,800 | |||
Repayment of outstanding borrowings under Pre-Emergence Credit Agreement | 341,500 | $ 0 | $ 0 | |
Repayment of 2017 Convertible Notes and 2022 Notes | 100,000 | |||
Other fees and expenses | 20,230 | |||
Total uses | 548,077 | |||
Net change in cash, cash equivalents and restricted cash | (35,605) | |||
Restricted cash for certain cure amounts | 500 | |||
Emergence and success fees | 15,200 | |||
Professional fees | 2,700 | |||
Payments to seismic providers | 2,400 | |||
Amended Credit Agreement | ||||
Fresh-Start Adjustment [Line Items] | ||||
Cash transferred to restricted account | $ 75,000 | |||
Disposal Group, Disposed of by Sale | Appalachia Properties | ||||
Fresh-Start Adjustment [Line Items] | ||||
Net consideration received for sale of Appalachia Properties | $ 512,500 | |||
Net consideration received for sale of Appalachia Properties | 522,500 | |||
Indemnity escrow release | $ 10,000 |
FRESH START ACCOUNTING - Liabil
FRESH START ACCOUNTING - Liabilities Subject to Compromise (Details) $ in Thousands | Feb. 28, 2017USD ($) |
Revaluation of Liabilities | |
Fresh-Start Adjustment [Line Items] | |
Accrued interest | $ 35,182 |
Liabilities subject to compromise of the Predecessor Company | 1,110,182 |
Cash payment to senior noteholders | (100,000) |
Issuance of 2022 Second Lien Notes to former holders of the senior notes | (225,000) |
Gain on settlement of liabilities subject to compromise | 230,445 |
Common Stock | Revaluation of Liabilities | |
Fresh-Start Adjustment [Line Items] | |
Equity fair value adjustments | (539,089) |
Warrant | |
Fresh-Start Adjustment [Line Items] | |
Equity fair value adjustments | $ (15,648) |
Convertible Debt | 1 ¾% Senior Convertible Notes due 2017 | |
Fresh-Start Adjustment [Line Items] | |
Interest rate | 1.75% |
Convertible Debt | 1 ¾% Senior Convertible Notes due 2017 | Revaluation of Liabilities | |
Fresh-Start Adjustment [Line Items] | |
Liabilities subject to compromise | $ 300,000 |
Senior Notes | 7 ½% Senior Notes due 2022 | |
Fresh-Start Adjustment [Line Items] | |
Interest rate | 7.50% |
Senior Notes | 7 ½% Senior Notes due 2022 | Revaluation of Liabilities | |
Fresh-Start Adjustment [Line Items] | |
Liabilities subject to compromise | $ 775,000 |
FRESH START ACCOUNTING - Cumula
FRESH START ACCOUNTING - Cumulative Impact of the Reorganization Adjustments (Details) - Exchange of Stock for Stock $ in Thousands | Feb. 28, 2017USD ($) |
Fresh-Start Adjustment [Line Items] | |
Gain on settlement of liabilities subject to compromise | $ 230,445 |
Professional and other fees paid at emergence | (10,648) |
Write-off of unamortized debt issuance costs | (2,577) |
Other reorganization adjustments | (1,915) |
Net impact to reorganization items | 215,305 |
Gain on sale of Appalachia Properties | 213,453 |
Cancellation of Predecessor Company equity | 1,662,282 |
Other adjustments to accumulated deficit | (17,165) |
Net impact to accumulated deficit | $ 2,073,875 |
FRESH START ACCOUNTING - Reor40
FRESH START ACCOUNTING - Reorganization Items (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | |
Fresh-Start Adjustment [Line Items] | |||
Gain on reorganization items, net | $ 0 | $ 0 | |
Predecessor | |||
Fresh-Start Adjustment [Line Items] | |||
Gain on settlement of liabilities subject to compromise | $ 230,445 | ||
Fresh start valuation adjustments | 235,804 | ||
Reorganization professional fees and other expenses | (20,403) | ||
Write-off of unamortized debt issuance costs | (2,577) | ||
Other reorganization items | (5,525) | ||
Gain on reorganization items, net | $ 437,744 |
EARNINGS PER SHARE - Calculatio
EARNINGS PER SHARE - Calculation of Basic and Diluted Weighted Average Shares Outstanding and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 10 Months Ended |
Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Basic: | ||||
Net income (loss) | $ (259,613) | $ 18,308 | $ (247,639) | |
Net income attributable to participating securities | 0 | (57) | ||
Net income (loss) attributable to common stock - basic | (259,613) | 18,251 | ||
Diluted: | ||||
Net income (loss) | (259,613) | 18,308 | $ (247,639) | |
Net income attributable to participating securities | 0 | (56) | ||
Net income (loss) attributable to common stock - diluted | $ (259,613) | $ 18,252 | ||
Weighted average shares (denominator): | ||||
Weighted average shares - basic (in shares) | 19,997 | 19,998 | ||
Dilutive effect of convertible notes (in shares) | 0 | 0 | ||
Weighted average shares - diluted (in shares) | 19,997 | 19,998 | ||
Basic income (loss) per share (in usd per share) | $ (12.98) | $ 0.91 | ||
Diluted income (loss) per share (in usd per share) | $ (12.98) | $ 0.91 | ||
Employee Stock Option | ||||
Weighted average shares (denominator): | ||||
Dilutive effect of stock options, warrants, and restricted stock units (in shares) | 0 | 0 | ||
Warrants | ||||
Weighted average shares (denominator): | ||||
Dilutive effect of stock options, warrants, and restricted stock units (in shares) | 0 | 0 | ||
Predecessor | ||||
Basic: | ||||
Net income (loss) | $ 630,317 | |||
Net income attributable to participating securities | (4,995) | |||
Net income (loss) attributable to common stock - basic | 625,322 | |||
Diluted: | ||||
Net income (loss) | 630,317 | |||
Net income attributable to participating securities | (4,995) | |||
Net income (loss) attributable to common stock - diluted | $ 625,322 | |||
Weighted average shares (denominator): | ||||
Weighted average shares - basic (in shares) | 5,634 | |||
Dilutive effect of convertible notes (in shares) | 0 | |||
Weighted average shares - diluted (in shares) | 5,634 | |||
Basic income (loss) per share (in usd per share) | $ 110.99 | |||
Diluted income (loss) per share (in usd per share) | $ 110.99 | |||
Predecessor | Employee Stock Option | ||||
Weighted average shares (denominator): | ||||
Dilutive effect of stock options, warrants, and restricted stock units (in shares) | 0 | |||
Predecessor | Warrants | ||||
Weighted average shares (denominator): | ||||
Dilutive effect of stock options, warrants, and restricted stock units (in shares) | 0 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional Information (Details) - USD ($) | Feb. 28, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 |
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
New shares issued in reorganization (in shares) | 20,000,000 | 682 | ||
Warrant | ||||
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
Antidilutive stock options outstanding (in shares) | 3,500,000 | 3,500,000 | ||
Restricted Stock | ||||
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
Antidilutive stock options outstanding (in shares) | 62,137 | |||
Predecessor | ||||
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
New shares issued in reorganization (in shares) | 0 | 47,390 | ||
Predecessor | 1 3⁄4% Senior Convertible Notes due 2017 | ||||
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
Dilutive effect on the diluted earnings per share | $ 0 | |||
Predecessor | Employee Stock Option | ||||
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
Antidilutive stock options outstanding (in shares) | 10,400 | |||
Predecessor | Restricted Stock | ||||
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
Antidilutive stock options outstanding (in shares) | 0 |
DIVESTITURE - Additional Inform
DIVESTITURE - Additional Information (Details) - Appalachia Properties - Disposal Group, Disposed of by Sale - USD ($) $ in Thousands | 2 Months Ended | |
Feb. 28, 2017 | Feb. 27, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net consideration received for sale of Appalachia Properties | $ 522,500 | |
Predecessor | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net consideration received for sale of Appalachia Properties | $ 522,472 | |
Net gain on sale | $ 213,500 |
DIVESTITURE - Schedule of Net G
DIVESTITURE - Schedule of Net Gain Recognized in Sale (Details) - USD ($) $ in Thousands | Feb. 27, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | Dec. 31, 2017 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Transfer of asset retirement obligations | $ 20,734 | ||||
Carrying value of properties sold | (16,544) | $ (17,275) | |||
Gain on sale | $ 0 | $ 0 | |||
Appalachia Properties | Disposal Group, Disposed of by Sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Net consideration received for sale of Appalachia Properties | $ 522,500 | ||||
Predecessor | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Gain on sale | $ 213,453 | ||||
Predecessor | Appalachia Properties | Disposal Group, Disposed of by Sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Net consideration received for sale of Appalachia Properties | 522,472 | ||||
Release of funds held in suspense | 4,139 | ||||
Transfer of asset retirement obligations | 8,672 | ||||
Other adjustments, net | 2,597 | ||||
Transaction costs | (7,087) | ||||
Gain on sale | 213,453 | ||||
Predecessor | Appalachia Properties | Disposal Group, Disposed of by Sale | Oil and Gas Properties | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Carrying value of properties sold | $ (317,340) |
INVESTMENT IN OIL AND GAS PRO45
INVESTMENT IN OIL AND GAS PROPERTIES - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2017USD ($)$ / Mcf$ / bbl | Mar. 31, 2018USD ($)$ / Mcf$ / bbl | Mar. 31, 2017USD ($)$ / Mcf$ / bbl | Feb. 28, 2017$ / Mcf$ / bbl | |
Oil and Gas In Process Activities [Line Items] | ||||
Write-down of oil and gas properties | $ | $ 256,435 | $ 0 | ||
Oil | ||||
Oil and Gas In Process Activities [Line Items] | ||||
Average 12-month oil prices net of differentials (in dollars per Bbl) | $ / bbl | 45.40 | 53.04 | 45.40 | 56.01 |
Natural Gas | ||||
Oil and Gas In Process Activities [Line Items] | ||||
Average twelve month gas prices net of differentials (in dollars per Mcf) | $ / Mcf | 2.24 | 2.28 | 2.24 | 2.52 |
Natural Gas Liquids (MBbls) | ||||
Oil and Gas In Process Activities [Line Items] | ||||
Average 12-month gas prices net of differentials (in dollars per Bbl) | $ / bbl | 19.18 | 25.27 | 19.18 | 14.18 |
Oil And Gas | ||||
Oil and Gas In Process Activities [Line Items] | ||||
Write-down of oil and gas properties | $ | $ 256,400 |
DERIVATIVE INSTRUMENTS AND HE46
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Details) - Subsequent Event | May 07, 2018counterparty |
Fixed-Price Swaps And Costless Collars | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Number of counterparties | 4 |
Counterparty One and Counterparty Two | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Percentage of counterparty contract volume | 64.00% |
DERIVATIVE INSTRUMENTS AND HE47
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Schedule of Derivative Positions (Details) - Subsequent Event - Not Designated as Hedging Instrument bbl in Thousands, MMBTU in Thousands | May 07, 2018MMBTU$ / MMBTU$ / bblbbl |
Oil | Commodity Put Contract January Through December 2018, Contract One | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Price ($ per Bbl) | 54 |
Oil | Commodity Put Contract January Through December 2018, Contract Two | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Price ($ per Bbl) | 45 |
Oil | Commodity Fixed-Price Swap Contract, January Through December 2018 | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Swap Price ($ per MMBtu) | 52.5 |
Oil | Commodity Fixed-Price Swap Contract, January Through December 2018 Contract Two | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Swap Price ($ per MMBtu) | 51.98 |
Oil | Commodity Fixed-Price Swap Contract, January Through December 2018 Contract Three | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Swap Price ($ per MMBtu) | 53.67 |
Oil | Commodity Fixed-Price Swap Contract, January Through December 2019 | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Swap Price ($ per MMBtu) | 51 |
Oil | Commodity Fixed-Price Swap Contract, January Through December 2019 Contract Two | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Swap Price ($ per MMBtu) | 51.57 |
Oil | Commodity Fixed-Price Swap Contract, January Through December 2019 Contract Three | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 2 |
Swap Price ($ per MMBtu) | 56.13 |
Oil | Commodity Collar Contract January Through December 2018, Contract Two | |
Derivatives, Fair Value [Line Items] | |
Daily Volume (Bbls/d) | bbl | 1 |
Price ($ per Bbl) | 45 |
Ceiling Price ($ per Bbl) | 55.35 |
Natural Gas | Commodity Collar Contract January Through December 2018, Contract Two | |
Derivatives, Fair Value [Line Items] | |
Price ($ per Bbl) | $ / MMBTU | 2.75 |
Daily Volume (MMBtus/d) | MMBTU | 6 |
Ceiling Price ($ per Bbl) | $ / MMBTU | 3.24 |
DERIVATIVE INSTRUMENTS AND HE48
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Location and Fair Value Amounts of Derivative Instruments Reported in Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Asset Derivatives | ||
Derivative contracts | $ 417 | $ 879 |
Liability Derivatives | ||
Derivative contracts, liabilities | 17,711 | 12,054 |
Not Designated as Hedging Instrument | Commodity contracts | ||
Asset Derivatives | ||
Derivative contracts | 417 | 879 |
Liability Derivatives | ||
Derivative contracts, liabilities | 17,711 | 12,054 |
Not Designated as Hedging Instrument | Commodity contracts | Current assets: Fair value of derivative contracts | ||
Asset Derivatives | ||
Derivative contracts | 417 | 879 |
Not Designated as Hedging Instrument | Commodity contracts | Long-term assets: Fair value of derivative contracts | ||
Asset Derivatives | ||
Derivative contracts | 0 | 0 |
Not Designated as Hedging Instrument | Commodity contracts | Current liabilities: Fair value of derivative contracts | ||
Liability Derivatives | ||
Derivative contracts, liabilities | 13,147 | 8,969 |
Not Designated as Hedging Instrument | Commodity contracts | Long-term liabilities: Fair value of derivative contracts | ||
Liability Derivatives | ||
Derivative contracts, liabilities | $ 4,564 | $ 3,085 |
DERIVATIVE INSTRUMENTS AND HE49
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Gains or Losses Related to Changes in Fair Value and Cash Settlements on Derivatives Not Qualifying as Hedging Instruments (Details) - Not Designated as Hedging Instrument - Commodity contracts - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | |
Feb. 28, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Cash settlements | $ (3,429) | $ 161 | |
Change in fair value | (6,119) | 2,485 | |
Total gains (losses) on non-qualifying hedges | $ (9,548) | $ 2,646 | |
Predecessor | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Cash settlements | $ 0 | ||
Change in fair value | (1,778) | ||
Total gains (losses) on non-qualifying hedges | $ (1,778) |
DERIVATIVE INSTRUMENTS AND HE50
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: Fair value of derivative contracts | ||
Offsetting Derivative Assets [Abstract] | ||
Derivative Assets As Presented Without Netting | $ 417 | $ 879 |
Derivative Assets Effects of Netting | (417) | (879) |
Derivative Assets With Effects of Netting | 0 | 0 |
Long-term assets: Fair value of derivative contracts | ||
Offsetting Derivative Assets [Abstract] | ||
Derivative Assets As Presented Without Netting | 0 | 0 |
Derivative Assets Effects of Netting | 0 | 0 |
Derivative Assets With Effects of Netting | 0 | 0 |
Current liabilities: Fair value of derivative contracts | ||
Offsetting Derivative Liabilities [Abstract] | ||
Derivative Liabilities As Presented Without Netting | (13,147) | (8,969) |
Derivative Liabilities Effects of Netting | 417 | 879 |
Derivative Liabilities With Effects of Netting | (12,730) | (8,090) |
Long-term liabilities: Fair value of derivative contracts | ||
Offsetting Derivative Liabilities [Abstract] | ||
Derivative Liabilities As Presented Without Netting | (4,564) | (3,085) |
Derivative Liabilities Effects of Netting | 0 | 0 |
Derivative Liabilities With Effects of Netting | $ (4,564) | $ (3,085) |
DEBT - Schedule of Long-Term De
DEBT - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 235,824 | $ 235,927 |
Less: current portion of long-term debt | (430) | (425) |
Long-term debt | $ 235,394 | 235,502 |
7 ½% Senior Second Lien Notes due 2022 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest rate | 7.50% | |
Long-term debt | $ 225,000 | 225,000 |
4.20% Building Loan | Secured Debt | ||
Debt Instrument [Line Items] | ||
Interest rate | 4.20% | |
Long-term debt | $ 10,824 | $ 10,927 |
Less: current portion of long-term debt | $ (400) |
DEBT - Additional Information (
DEBT - Additional Information (Details) | Feb. 28, 2017 | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Nov. 08, 2017USD ($) | Mar. 01, 2017 |
Debt Instrument [Line Items] | |||||
Current portion of long-term debt | $ 430,000 | $ 425,000 | |||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Consolidated interest coverage ratio (not less than) | 2.75 | ||||
Minimum liquidity required (at least) | 0.2 | ||||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Period Five | |||||
Debt Instrument [Line Items] | |||||
Consolidated funded debt to consolidated EBITDA ratio | 2.50 | ||||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Period Six | |||||
Debt Instrument [Line Items] | |||||
Consolidated funded debt to consolidated EBITDA ratio | 2.75 | ||||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Period Seven | |||||
Debt Instrument [Line Items] | |||||
Consolidated funded debt to consolidated EBITDA ratio | 3 | ||||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Period Eight | |||||
Debt Instrument [Line Items] | |||||
Consolidated funded debt to consolidated EBITDA ratio | 3.50 | ||||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Period Nine | |||||
Debt Instrument [Line Items] | |||||
Consolidated funded debt to consolidated EBITDA ratio | 3 | ||||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Period Ten | |||||
Debt Instrument [Line Items] | |||||
Consolidated funded debt to consolidated EBITDA ratio | 2.75 | ||||
Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Period Eleven | |||||
Debt Instrument [Line Items] | |||||
Consolidated funded debt to consolidated EBITDA ratio | 2.50 | ||||
4.20% Building Loan | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Current portion of long-term debt | $ 400,000 | ||||
Interest rate | 4.20% | ||||
Fifth Amended and Restated Credit Agreement | Bank of America, N.A. | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Long-term line of credit | $ 0 | ||||
Fifth Amended and Restated Credit Agreement | Bank of America, N.A. | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Outstanding borrowing under bank credit facility | 9,800,000 | ||||
Remaining borrowing capacity | $ 90,200,000 | ||||
Fifth Amended and Restated Credit Agreement | Bank of America, N.A. | Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Available for borrowing | $ 100,000,000 | ||||
Fifth Amended and Restated Credit Agreement | Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Percentage of borrowing base utilization, percent | 2.00% | ||||
Fifth Amended and Restated Credit Agreement | Bank of America, N.A. | Line of Credit | Revolving Credit Facility | Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Percentage of borrowing base utilization, percent | 3.00% | ||||
Fifth Amended and Restated Credit Agreement | Bank of America, N.A. | Line of Credit | Revolving Credit Facility | LIBOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Percentage of borrowing base utilization, percent | 3.00% | ||||
Fifth Amended and Restated Credit Agreement | Bank of America, N.A. | Line of Credit | Revolving Credit Facility | LIBOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Percentage of borrowing base utilization, percent | 4.00% |
ASSET RETIREMENT OBLIGATIONS -
ASSET RETIREMENT OBLIGATIONS - Changes in Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Mar. 31, 2017 | Mar. 31, 2018 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Asset retirement obligations beginning balance | $ 213,101 | |
Liabilities settled | (20,734) | |
Accretion expense | $ 2,901 | 4,287 |
Asset retirement obligations ending balance | $ 196,654 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2018 | |
Valuation Allowance [Line Items] | |||
Provisional income tax expense | $ 87,300 | ||
Current income tax receivable | $ 36,260 | $ 16,212 | |
Proceeds from income tax refunds received | $ 20,100 | ||
Ceiling Test Write Downs From Decline in Commodity Prices | |||
Valuation Allowance [Line Items] | |||
Valuation allowance | $ 127,100 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Marketable securities (Other assets) | $ 4,964 | $ 5,081 |
Derivative contracts | 417 | 879 |
Assets, fair value, total | 5,381 | 5,960 |
Liabilities | ||
Derivative contracts, liabilities | 17,711 | 12,054 |
Liabilities, fair value, total | 17,711 | 12,054 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Marketable securities (Other assets) | 4,964 | 5,081 |
Derivative contracts | 0 | 0 |
Assets, fair value, total | 4,964 | 5,081 |
Liabilities | ||
Derivative contracts, liabilities | 0 | 0 |
Liabilities, fair value, total | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Marketable securities (Other assets) | 0 | 0 |
Derivative contracts | 0 | 0 |
Assets, fair value, total | 0 | 0 |
Liabilities | ||
Derivative contracts, liabilities | 15,330 | 10,110 |
Liabilities, fair value, total | 15,330 | 10,110 |
Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Marketable securities (Other assets) | 0 | 0 |
Derivative contracts | 417 | 879 |
Assets, fair value, total | 417 | 879 |
Liabilities | ||
Derivative contracts, liabilities | 2,381 | 1,944 |
Liabilities, fair value, total | $ 2,381 | $ 1,944 |
FAIR VALUE MEASUREMENTS - Hedgi
FAIR VALUE MEASUREMENTS - Hedging Contracts (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Hedging Contracts, net | |
Balance as of January 1, 2018 (Successor) | $ (1,065) |
Total gains/(losses) (realized or unrealized): | |
Included in earnings | (1,579) |
Included in other comprehensive income | 0 |
Purchases, sales, issuances and settlements | 680 |
Transfers in and out of Level 3 | 0 |
Balance as of March 31, 2018 (Successor) | (1,964) |
The amount of total gains/(losses) for the period included in earnings (derivative income) attributable to the change in unrealized gain/(losses) relating to derivatives still held at March 31, 2018 | $ (4,702) |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
7 ½% Senior Notes due 2022 | ||
Debt Instrument [Line Items] | ||
Fair value of notes | $ 229.5 | $ 227.3 |
COMBINATION TRANSACTION COSTS (
COMBINATION TRANSACTION COSTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 10 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | ||
Stock issuance costs - Talos combination | $ 183 | |
General and Administrative Expense | ||
Business Acquisition [Line Items] | ||
Transaction costs | $ 3,400 | |
Additional Paid-In Capital | ||
Business Acquisition [Line Items] | ||
Stock issuance costs - Talos combination | $ 200 | $ 183 |
REVENUE RECOGNITION - Additiona
REVENUE RECOGNITION - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Adjustment to retained earnings from adoption of new accounting guidance | $ (230,067) | $ (247,639) | |
Contract with a customer, asset | 31,200 | 32,800 | |
Oil Production Revenue | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Contract with a customer, asset | 25,500 | 26,700 | |
Natural Gas Production Revenue | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Contract with a customer, asset | 3,500 | 3,900 | |
Natural Gas Liquids Production Revenue | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Contract with a customer, asset | $ 2,200 | $ 2,200 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Adjustment to retained earnings from adoption of new accounting guidance | $ (700) |
PRODUCTION TAXES - Additional I
PRODUCTION TAXES - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | |
Jan. 31, 2018 | Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | |
Income Tax Contingency [Line Items] | ||||
Production taxes | $ 65 | $ (2,201) | ||
Refunds received from previously paid severance taxes | $ 20,100 | |||
Predecessor | ||||
Income Tax Contingency [Line Items] | ||||
Production taxes | $ 700 | $ 682 | ||
State and Local Jurisdiction | ||||
Income Tax Contingency [Line Items] | ||||
Refunds received from previously paid severance taxes | $ 2,400 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) $ in Millions | Mar. 31, 2018USD ($) |
Bureau of Ocean Energy Management | |
Loss Contingencies [Line Items] | |
Surety bond | $ 115 |
SUBSEQUENT EVENTS - Narrative (
SUBSEQUENT EVENTS - Narrative (Details) - Ram Powell Unit - Subsequent Event $ in Millions | May 01, 2018USD ($)lease_block |
Subsequent Event [Line Items] | |
Percent of working interest acquired | 100.00% |
Number of lease blocks acquired | lease_block | 6 |
Purchase price | $ 34 |
Surety bond | 200 |
Cash received at closing, related to purchase price adjustments | $ 29.4 |
Uncategorized Items - sgy-20180
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (736,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (736,000) |