Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 31, 2018 | |
Document And Company Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | DNR | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 945,764 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Registrant Name | Denbury Resources Inc. | |
Entity Common Stock, Shares Outstanding | 460,637,322 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
Current assets | |||
Cash and cash equivalents | $ 116 | $ 58 | |
Accrued production receivable | 163,719 | 146,334 | |
Trade and other receivables, net | 44,848 | 45,193 | |
Other current assets | 15,554 | 10,670 | |
Total current assets | 224,237 | 202,255 | |
Oil and natural gas properties (using full cost accounting) | |||
Proved properties | 10,902,665 | 10,775,792 | |
Unevaluated properties | 965,553 | 951,397 | |
CO2 properties | 1,192,731 | 1,191,058 | |
Pipelines and plants | 2,293,884 | 2,286,047 | |
Other property and equipment | 311,240 | 339,218 | |
Less accumulated depletion, depreciation, amortization and impairment | (11,455,046) | (11,376,646) | |
Net property and equipment | 4,211,027 | 4,166,866 | |
Other assets | 98,971 | 102,178 | |
Total assets | 4,534,235 | 4,471,299 | |
Current liabilities | |||
Accounts payable and accrued liabilities | 195,143 | 177,220 | |
Oil and gas production payable | 72,087 | 76,588 | |
Derivative liabilities | 145,254 | 99,061 | |
Current maturities of long-term debt (including future interest payable of $84,932 and $75,347, respectively - see Note 4) | [1] | 111,335 | 105,188 |
Total current liabilities | 523,819 | 458,057 | |
Long-term liabilities | |||
Long-term debt, net of current portion (including future interest payable of $207,659 and $241,472, respectively - see Note 4) | 2,689,647 | 2,979,086 | |
Asset retirement obligations | 170,797 | 165,756 | |
Derivative liabilities | 10,704 | 0 | |
Deferred tax liabilities, net | 231,761 | 198,099 | |
Other liabilities | 21,862 | 22,136 | |
Total long-term liabilities | 3,124,771 | 3,365,077 | |
Commitments and contingencies (Note 7) | |||
Stockholders' equity | |||
Preferred stock, $.001 par value, 25,000,000 shares authorized, none issued and outstanding | 0 | 0 | |
Common stock, $.001 par value, 600,000,000 shares authorized; 458,214,377 and 402,549,346 shares issued, respectively | 458 | 403 | |
Paid-in capital in excess of par | 2,676,352 | 2,507,828 | |
Accumulated deficit | (1,786,010) | (1,855,810) | |
Treasury stock, at cost, 806,318 and 457,041 shares, respectively | (5,155) | (4,256) | |
Total stockholders' equity | 885,645 | 648,165 | |
Total liabilities and stockholders' equity | $ 4,534,235 | $ 4,471,299 | |
[1] | Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a lesser extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of June 30, 2018 include $84.9 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Future interest payable - current | [1] | $ 111,335 | $ 105,188 |
Future interest payable - long-term | $ 2,689,647 | $ 2,979,086 | |
Stockholders' equity | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | |
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock, shares authorized | 600,000,000 | 600,000,000 | |
Common stock, shares issued | 458,214,337 | 402,549,346 | |
Treasury stock, shares | 806,318 | 457,041 | |
Future interest payable on senior secured and convertible senior notes | |||
Debt Instrument [Line Items] | |||
Future interest payable - current | $ 84,932 | $ 75,347 | |
Future interest payable - long-term | $ 207,659 | $ 241,472 | |
[1] | Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a lesser extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of June 30, 2018 include $84.9 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Other income | $ 4,783,000 | $ 3,749,000 | $ 10,444,000 | $ 7,637,000 |
Revenues | 387,063,000 | 261,184,000 | 740,297,000 | 536,638,000 |
Revenues | 382,280,000 | 257,435,000 | 729,853,000 | 529,001,000 |
Expenses | ||||
CO2 discovery and operating expenses | 500,000 | 513,000 | 962,000 | 1,106,000 |
Taxes other than income | 27,234,000 | 20,175,000 | 54,553,000 | 42,615,000 |
General and administrative expenses | 19,412,000 | 25,789,000 | 39,644,000 | 54,030,000 |
Interest, net of amounts capitalized of $8,851, $8,147, $17,303 and $12,801, respectively | 16,208,000 | 24,061,000 | 33,447,000 | 51,239,000 |
Depletion, depreciation, and amortization | 52,944,000 | 51,152,000 | 105,395,000 | 102,347,000 |
Commodity derivatives expense (income) | 96,199,000 | (10,373,000) | 145,024,000 | (34,975,000) |
Other expenses | 2,980,000 | 0 | 5,308,000 | 0 |
Total expenses | 347,410,000 | 236,512,000 | 647,046,000 | 469,462,000 |
Income before income taxes | 39,653,000 | 24,672,000 | 93,251,000 | 67,176,000 |
Income tax provision | 9,431,000 | 10,273,000 | 23,451,000 | 31,247,000 |
Net income | $ 30,222,000 | $ 14,399,000 | $ 69,800,000 | $ 35,929,000 |
Net income per common share | ||||
Basic | $ 0.07 | $ 0.04 | $ 0.17 | $ 0.09 |
Diluted | $ 0.07 | $ 0.04 | $ 0.15 | $ 0.09 |
Weighted average common shares outstanding | ||||
Basic | 433,467 | 389,904 | 413,217 | 389,652 |
Diluted | 457,165 | 391,827 | 454,466 | 392,414 |
Lease operating expenses | ||||
Operating expenses | $ 120,384,000 | $ 111,318,000 | $ 238,740,000 | $ 225,158,000 |
Marketing and plant operating expenses | ||||
Operating expenses | 11,549,000 | 13,877,000 | 23,973,000 | 27,942,000 |
Oil, natural gas, and related product sales | ||||
Revenues | 375,565,000 | 250,880,000 | 715,586,000 | 517,058,000 |
CO2 sales and transportation fees | ||||
Revenues | $ 6,715,000 | $ 6,555,000 | $ 14,267,000 | $ 11,943,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Expenses | ||||
Capitalized interest | $ 8,851 | $ 8,147 | $ 17,303 | $ 12,801 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 69,800 | $ 35,929 |
Adjustments to reconcile net income to cash flows from operating activities | ||
Depletion, depreciation, and amortization | 105,395 | 102,347 |
Deferred income taxes | 25,237 | 51,147 |
Stock-based compensation | 5,152 | 8,941 |
Commodity derivatives expense (income) | 145,024 | (34,975) |
Payment on settlements of commodity derivatives | (88,127) | (38,707) |
Debt issuance costs and discounts | 2,268 | 3,344 |
Other, net | (5,107) | (1,006) |
Changes in assets and liabilities, net of effects from acquisitions | ||
Accrued production receivable | (17,385) | 21,114 |
Trade and other receivables | (320) | (17,916) |
Other current and long-term assets | (5,627) | (10,225) |
Accounts payable and accrued liabilities | 14,999 | (26,611) |
Oil and natural gas production payable | (4,501) | (12,652) |
Other liabilities | (1,182) | (3,522) |
Net cash provided by operating activities | 245,626 | 77,208 |
Cash flows from investing activities | ||
Oil and natural gas capital expenditures | (134,458) | (129,884) |
Acquisitions of oil and natural gas properties | 0 | (89,208) |
Pipelines and plants capital expenditures | (7,882) | (634) |
Net proceeds from sales of oil and natural gas properties and equipment | 2,077 | 725 |
Other | 6,131 | (1,294) |
Net cash used in investing activities | (134,132) | (220,295) |
Cash flows from financing activities | ||
Bank repayments | (1,153,653) | (796,000) |
Bank borrowings | 1,093,653 | 985,000 |
Interest payments treated as a reduction of debt | (37,233) | (25,139) |
Pipeline financing and capital lease debt repayments | (12,625) | (13,728) |
Other | (628) | (4,289) |
Net cash provided by (used in) financing activities | (110,486) | 145,844 |
Net increase in cash, cash equivalents, and restricted cash | 1,008 | 2,757 |
Cash, cash equivalents, and restricted cash at beginning of period | 40,614 | 40,905 |
Cash, cash equivalents, and restricted cash at end of period | $ 41,622 | $ 43,662 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands | Total | Common Stock ($.001 Par Value) | Paid-In Capital in Excess of Par | Retained Earnings (Accumulated Deficit) | Treasury Stock (at cost) |
Beginning balance, shares at Dec. 31, 2017 | 402,549,346 | 402,549,346 | 457,041 | ||
Beginning balance at Dec. 31, 2017 | $ 648,165 | $ 403 | $ 2,507,828 | $ (1,855,810) | $ (4,256) |
Issued or purchased pursuant to stock compensation plans, shares | 415,032 | ||||
Issued pursuant to notes conversion, shares | 55,249,999 | ||||
Issued pursuant to notes conversion, value | 162,050 | $ 55 | 161,995 | ||
Stock-based compensation | 6,529 | 6,529 | |||
Tax withholding - stock compensation, shares | 349,277 | ||||
Tax withholding - stock compensation, value | (899) | $ (899) | |||
Net income | $ 69,800 | 69,800 | |||
Ending balance, shares at Jun. 30, 2018 | 458,214,337 | 458,214,377 | 806,318 | ||
Ending balance at Jun. 30, 2018 | $ 885,645 | $ 458 | $ 2,676,352 | $ (1,786,010) | $ (5,155) |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 1. Basis of Presentation Organization and Nature of Operations Denbury Resources Inc., a Delaware corporation, is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. Our goal is to increase the value of our properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO 2 enhanced oil recovery operations. Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of Denbury Resources Inc. and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and the notes thereto should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury Resources Inc. and its subsidiaries. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, and the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of June 30, 2018 , our consolidated results of operations for the three and six months ended June 30, 2018 and 2017 , our consolidated cash flows for the six months ended June 30, 2018 and 2017 , and our consolidated statement of changes in stockholders’ equity for the six months ended June 30, 2018 . Reclassifications Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on our reported net income, current assets, total assets, current liabilities, total liabilities or stockholders’ equity. Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows: In thousands June 30, 2018 December 31, 2017 Cash and cash equivalents $ 116 $ 58 Restricted cash included in Other assets 41,506 40,556 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 41,622 $ 40,614 Amounts included in restricted cash included in “Other assets” in the accompanying Unaudited Condensed Consolidated Balance Sheets represent escrow accounts that are legally restricted for certain of our asset retirement obligations. Net Income per Common Share Basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is calculated in the same manner, but includes the impact of potentially dilutive securities. Potentially dilutive securities consist of nonvested restricted stock, nonvested performance-based equity awards, and shares into which our previously-outstanding convertible senior notes were convertible. The following table sets forth the reconciliations of net income and weighted average shares used for purposes of calculating the basic and diluted net income per common share for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Numerator Net income – basic $ 30,222 $ 14,399 $ 69,800 $ 35,929 Effect of potentially dilutive securities Interest on convertible senior notes 130 — 539 — Net income – diluted $ 30,352 $ 14,399 $ 70,339 $ 35,929 Denominator Weighted average common shares outstanding – basic 433,467 389,904 413,217 389,652 Effect of potentially dilutive securities Restricted stock and performance-based equity awards 8,586 1,923 6,877 2,762 Convertible senior notes 15,112 — 34,372 — Weighted average common shares outstanding – diluted 457,165 391,827 454,466 392,414 Basic weighted average common shares exclude shares of nonvested restricted stock. As these restricted shares vest, they will be included in the shares outstanding used to calculate basic net income per common share (although time-vesting restricted stock is issued and outstanding upon grant). For purposes of calculating diluted weighted average common shares during the three and six months ended June 30, 2018 and 2017, the nonvested restricted stock and performance-based equity awards are included in the computation using the treasury stock method, with the deemed proceeds equal to the average unrecognized compensation during the period, and for the shares underlying the previously-outstanding convertible senior notes as if the convertible senior notes were converted at the beginning of the 2018 period. In April and May 2018, all outstanding convertible senior notes converted into shares of Denbury common stock, resulting in the issuance of 55.2 million shares of our common stock upon conversion. These shares have been included in basic weighted average common shares outstanding beginning on the date of conversion. See Note 4 , Long-Term Debt , for further discussion. The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income per share, as their effect would have been antidilutive: Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Stock appreciation rights 2,827 4,785 2,891 4,914 Restricted stock and performance-based equity awards 179 7,655 305 4,442 Recent Accounting Pronouncements Recently Adopted Cash Flows. In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (“ASU 2016-18”). ASU 2016-18 addresses the diversity that exists in the classification and presentation of changes in restricted cash on the statement of cash flows, and requires that a statement of cash flows explain the change in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. Effective January 1, 2018, we adopted ASU 2016-18, which has been applied retrospectively for all comparative periods presented. Accordingly, restricted cash associated with our escrow accounts of $40.6 million and $39.3 million for the six month periods ended June 30, 2018 and 2017, respectively, have been included in “Cash, cash equivalents, and restricted cash at beginning of period” on our Unaudited Condensed Consolidated Statements of Cash Flows and $40.2 million included in “Cash, cash equivalents, and restricted cash at end of period” for the six-month period ended June 30, 2017 . The adoption of ASU 2016-18 did not have an impact on our consolidated balance sheets or results of operations. Revenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. In March, April and May 2016, the FASB issued four additional ASUs which primarily clarified the implementation guidance on principal versus agent considerations, performance obligations and licensing, collectibility, presentation of sales taxes and other similar taxes collected from customers, and non-cash consideration. Effective January 1, 2018, we adopted ASU 2014-09 using the modified retrospective method. The adoption of ASU 2014-09 did not have an impact on our consolidated financial statements, but required enhanced footnote disclosures. See Note 2 , Revenue Recognition , for additional information. Not Yet Adopted Leases. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the guidance for lease accounting to require lease assets and liabilities to be recognized on the balance sheet, along with additional disclosures regarding key leasing arrangements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and early adoption is permitted. Entities must adopt the standard using a modified retrospective transition and apply the guidance to the earliest comparative period presented, with certain practical expedients that entities may elect to apply. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842 , which provides an optional practical expedient to existing or expired land easements that were not previously accounted for as leases under Topic 842, which permits a company to evaluate only new or modified land easements under the new guidance. We are currently evaluating our lease agreements and implementing a software system to summarize the key contract terms and financial information associated with each lease agreement, in order to assess the impact the adoption of ASU 2016-02 and ASU 2018-01 will have on our consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 2. Revenue Recognition We record revenue in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , which we adopted on January 1, 2018, and applied to all existing contracts using the modified retrospective method. The core principle of FASB ASC Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount of consideration that it expects to be entitled to receive for those goods or services. This principle is achieved through applying a five-step process for customer contract revenue recognition: • Identify the contract or contracts with a customer – We derive the majority of our revenues from oil and natural gas sales contracts and CO 2 sales and transportation contracts. The contracts specify each party’s rights regarding the goods or services to be transferred and contain commercial substance as they impact our financial statements. A high percentage of our receivables balance is current, and we have not historically entered into contracts with counterparties that pose a credit risk without requiring adequate economic protection to ensure collection. • Identify the performance obligations in the contract – Each of our revenue contracts specify a volume per day, or production from a lease designated in the contract (a distinct good), to be delivered at the delivery point over the term of the contract (the identified performance obligation). The customer takes delivery and physical possession of the product at the delivery point, which generally is also the point at which title transfers and the customer obtains the risks and rewards of ownership (the identified performance obligation is satisfied). • Determine the transaction price – Typically, our oil and natural gas contracts define the price as a formula price based on the average market price, as specified on set dates each month, for the specific commodity during the month of delivery. Certain of our CO 2 contracts define the price as a fixed contractual price adjusted to an inflation index to reflect market pricing. Given the industry practice to invoice customers the month following the month of delivery and our high probability of collection of payment, no significant financing component is included in our contracts. • Allocate the transaction price to the performance obligations in the contract – The majority of our revenue contracts are short-term, with terms of one year or less, to which we have applied the practical expedient permitted under the standard eliminating the requirement to disclose the transaction price allocated to remaining performance obligations. In limited instances, we have revenue contracts with terms greater than one year; however, the future delivery volumes are wholly unsatisfied as they represent separate performance obligations with variable consideration. We utilized the practical expedient which eliminates the requirement to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to wholly unsatisfied performance obligations. As there is only one performance obligation associated with our contracts, no allocation of the transaction price is necessary. • Recognize revenue when, or as, we satisfy a performance obligation – Once we have delivered the volume of commodity to the delivery point and the customer takes delivery and possession, we are entitled to payment and we invoice the customer for such delivered production. Payment under most oil and CO 2 contracts is made within a month following product delivery and for natural gas and NGL contracts is generally made within two months following delivery. Timing of revenue recognition may differ from the timing of invoicing to customers; however, as the right to consideration after delivery is unconditional based on only the passage of time before payment of the consideration is due, upon delivery we record a receivable in “Accrued production receivable” in our Unaudited Condensed Consolidated Balance Sheets, which was $163.7 million and $146.3 million as of June 30, 2018 and December 31, 2017, respectively. Disaggregation of Revenue The following table summarizes our revenues by product type for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Oil sales $ 373,286 $ 248,317 $ 710,692 $ 512,291 Natural gas sales 2,279 2,563 4,894 4,767 CO 2 sales and transportation fees 6,715 6,555 14,267 11,943 Total revenues $ 382,280 $ 257,435 $ 729,853 $ 529,001 |
Assets Held for Sale
Assets Held for Sale | 6 Months Ended |
Jun. 30, 2018 | |
Assets Held-for-sale, Not Part of Disposal Group [Abstract] | |
Assets Held for Sale | Note 3. Assets Held for Sale We began actively marketing for sale certain non-productive surface acreage in the Houston area in July 2017. As of June 30, 2018 , the carrying value of the land held for sale was $33.0 million , which is included in “Other property and equipment” on our Unaudited Condensed Consolidated Balance Sheets. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 4. Long-Term Debt The table below reflects long-term debt and capital lease obligations outstanding as of the dates indicated: June 30, December 31, In thousands 2018 2017 Senior Secured Bank Credit Agreement $ 415,000 $ 475,000 9% Senior Secured Second Lien Notes due 2021 614,919 614,919 9¼% Senior Secured Second Lien Notes due 2022 455,668 381,568 3½% Convertible Senior Notes due 2024 — 84,650 6⅜% Senior Subordinated Notes due 2021 203,545 215,144 5½% Senior Subordinated Notes due 2022 314,662 408,882 4⅝% Senior Subordinated Notes due 2023 307,978 376,501 Pipeline financings 186,525 192,429 Capital lease obligations 15,906 26,298 Total debt principal balance 2,514,203 2,775,391 Future interest payable (1) 292,591 316,818 Debt issuance costs (5,812 ) (7,935 ) Total debt, net of debt issuance costs 2,800,982 3,084,274 Less: current maturities of long-term debt (1) (111,335 ) (105,188 ) Long-term debt and capital lease obligations $ 2,689,647 $ 2,979,086 (1) Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a lesser extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors . Our current maturities of long-term debt as of June 30, 2018 include $84.9 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion. The ultimate parent company in our corporate structure, Denbury Resources Inc. (“DRI”), is the sole issuer of all of our outstanding senior secured and senior subordinated notes. DRI has no independent assets or operations. Each of the subsidiary guarantors of such notes is 100% owned, directly or indirectly, by DRI, and the guarantees of the notes are full and unconditional and joint and several; any subsidiaries of DRI that are not subsidiary guarantors of such notes are minor subsidiaries. Senior Secured Bank Credit Facility In December 2014, we entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders party thereto (as amended, the “Bank Credit Agreement”). The Bank Credit Agreement is a senior secured revolving credit facility with a maturity date of December 9, 2019 and semiannual borrowing base redeterminations in May and November of each year. As part of our spring 2018 semiannual borrowing base redetermination, the borrowing base and lender commitments for our Bank Credit Agreement were reaffirmed at $1.05 billion , with the next such redetermination being scheduled for November 2018. If our outstanding debt under the Bank Credit Agreement were to ever exceed the borrowing base, we would be required to repay the excess amount over a period not to exceed six months. The weighted average interest rate on borrowings outstanding under the Bank Credit Agreement was 4.7% as of June 30, 2018 . We incur a commitment fee of 0.50% on the undrawn portion of the aggregate lender commitments under the Bank Credit Agreement. At June 30, 2018, the Bank Credit Agreement contained certain financial performance covenants through the maturity of the facility, including the following: • A consolidated senior secured debt to consolidated EBITDAX covenant, with such ratio not to exceed 2.5 to 1.0. Currently, only debt under our Bank Credit Agreement is considered consolidated senior secured debt for purposes of this ratio; • A minimum permitted ratio of consolidated EBITDAX to consolidated interest charges of 1.25 to 1.0; and • A requirement to maintain a current ratio of 1.0 to 1.0. The above description of our Bank Credit Agreement is qualified by the express language and defined terms contained in the Bank Credit Agreement and the amendments thereto, each of which are filed as exhibits to our periodic reports filed with the SEC. January 2018 Note Exchanges During January 2018, we closed transactions to exchange a total of $174.3 million aggregate principal amount of our then existing senior subordinated notes for $74.1 million aggregate principal amount of new 2022 Senior Secured Notes and $59.4 million aggregate principal amount of new 5% Convertible Senior Notes due 2023 (the “2023 Convertible Senior Notes”), resulting in a net reduction in our debt principal from these exchanges of $40.8 million . The exchanged notes consisted of $11.6 million aggregate principal amount of our 6⅜% Senior Subordinated Notes due 2021, $94.2 million aggregate principal amount of our 5½% Senior Subordinated Notes due 2022 and $68.5 million aggregate principal amount of our 4⅝% Senior Subordinated Notes due 2023. In accordance with FASC 470-60, the exchange was accounted for as a troubled debt restructuring due to the level of concession provided by our senior subordinated note holders. Under this guidance, future interest applicable to the new 2022 Senior Secured Notes and 2023 Convertible Senior Notes was recorded as debt up to the point that the principal and future interest of the new notes was equal to the principal amount of the extinguished notes, rather than recognizing a gain on extinguishment for this amount. In May 2018, the debt principal balance and future interest applicable to the 2023 Convertible Senior Notes were reclassified to “Paid-in capital in excess of par” and “Common stock” in our Unaudited Condensed Consolidated Balance Sheets following the conversion of the notes into shares of Denbury common stock (see Conversions of 2023 and 2024 Convertible Senior Notes below for further discussion). As of June 30, 2018 , $22.1 million of future interest on the new 2022 Senior Secured Notes was recorded as debt, which will be reduced as semiannual interest payments are made, with the remaining $3.6 million of future interest to be recognized as interest expense over the term of the notes. Therefore, future interest expense reflected in our Unaudited Condensed Consolidated Statements of Operations on the new 2022 Senior Secured Notes will be significantly lower than the actual cash interest payments. 9¼% Senior Secured Second Lien Notes due 2022 In January 2018, we issued $74.1 million of 2022 Senior Secured Notes, which principal amount is in addition to the $381.6 million of 2022 Senior Secured Notes issued during December 2017. All $455.7 million of the 2022 Senior Secured Notes were issued in connection with exchanges with a limited number of holders of the Company’s existing senior subordinated notes in December 2017 and January 2018 (see January 2018 Note Exchanges above). The 2022 Senior Secured Notes bear interest at 9.25% per annum, with interest payable semiannually in arrears on March 31 and September 30 of each year, and mature on March 31, 2022. We may redeem the 2022 Senior Secured Notes in whole or in part at our option beginning March 31, 2019, at a redemption price of 109.25% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture governing the 2022 Senior Secured Notes. Prior to March 31, 2019, we may at our option redeem up to an aggregate of 35% of the principal amount of the 2022 Senior Secured Notes at a price of 109.25% of par with the proceeds of certain equity offerings. In addition, at any time prior to March 31, 2019, we may redeem the 2022 Senior Secured Notes in whole or in part at a price equal to 100% of the principal amount plus a “make-whole” premium and accrued and unpaid interest. The 2022 Senior Secured Notes are not subject to any sinking fund requirements. The 2022 Senior Secured Notes are guaranteed jointly and severally by our subsidiaries representing substantially all of our assets, operations and income and are secured by second-priority liens on substantially all of the assets that secure the Bank Credit Agreement, which second-priority liens are contractually subordinated to liens that secure our Bank Credit Agreement and any future additional priority lien debt. Conversions of 2023 and 2024 Convertible Senior Notes During the second quarter of 2018, holders of all $59.4 million aggregate principal amount outstanding of our 2023 Convertible Senior Notes and $84.7 million aggregate outstanding principal amount of our 2024 Convertible Senior Notes converted their notes into shares of Denbury common stock, at the rates specified in the indentures for these notes, resulting in the issuance of 55.2 million shares of our common stock upon conversion. The debt principal balances and future interest treated as debt applicable to the 2023 Convertible Senior Notes and 2024 Convertible Senior Notes, totaling $162.1 million , were reclassified to “Paid-in capital in excess of par” and “Common stock” in our Unaudited Condensed Consolidated Balance Sheets upon the conversion of the notes into shares of Denbury common stock. As of April 18, 2018 and May 30, 2018, there were no remaining 2024 Convertible Senior Notes and 2023 Convertible Senior Notes outstanding, respectively. |
Commodity Derivative Contracts
Commodity Derivative Contracts | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Commodity Derivative Contracts | Note 5. Commodity Derivative Contracts We do not apply hedge accounting treatment to our oil and natural gas derivative contracts; therefore, the changes in the fair values of these instruments are recognized in income in the period of change. These fair value changes, along with the settlements of expired contracts, are shown under “Commodity derivatives expense (income)” in our Unaudited Condensed Consolidated Statements of Operations. Historically, we have entered into various oil and natural gas derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future oil and natural gas production and to provide more certainty to our future cash flows. We do not hold or issue derivative financial instruments for trading purposes. Generally, these contracts have consisted of various combinations of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. The production that we hedge has varied from year to year depending on our levels of debt, financial strength and expectation of future commodity prices. We manage and control market and counterparty credit risk through established internal control procedures that are reviewed on an ongoing basis. We attempt to minimize credit risk exposure to counterparties through formal credit policies, monitoring procedures and diversification, and all of our commodity derivative contracts are with parties that are lenders under our Bank Credit Agreement (or affiliates of such lenders). As of June 30, 2018 , all of our outstanding derivative contracts were subject to enforceable master netting arrangements whereby payables on those contracts can be offset against receivables from separate derivative contracts with the same counterparty. It is our policy to classify derivative assets and liabilities on a gross basis on our balance sheets, even if the contracts are subject to enforceable master netting arrangements. The following table summarizes our commodity derivative contracts as of June 30, 2018 , none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic: Months Index Price Volume (Barrels per day) Contract Prices ($/Bbl) Range (1) Weighted Average Price Swap Sold Put Floor Ceiling Oil Contracts: 2018 Fixed-Price Swaps July – Dec NYMEX 20,500 $ 50.00 – 56.65 $ 51.69 $ — $ — $ — July – Dec Argus LLS 5,000 60.10 – 60.25 60.18 — — — 2018 Three-Way Collars (2) July – Dec NYMEX 15,000 $ 45.00 – 56.60 $ — $ 36.50 $ 46.50 $ 53.88 2019 Fixed-Price Swaps Jan – June NYMEX 3,500 $ 59.00 – 59.10 $ 59.05 $ — $ — $ — 2019 Three-Way Collars (2) Jan – June NYMEX 16,500 $ 55.00 – 75.45 $ — $ 48.45 $ 56.45 $ 69.88 July – Dec NYMEX 20,000 55.00 – 75.45 — 48.20 56.20 69.04 Jan – Dec Argus LLS 3,000 62.00 – 78.90 — 54.00 62.00 78.50 (1) Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For three-way collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. (2) A three-way collar is a costless collar contract combined with a sold put feature (at a lower price) with the same counterparty. The value received for the sold put is used to enhance the contracted floor and ceiling price of the related collar. At the contract settlement date, (1) if the index price is higher than the ceiling price, we pay the counterparty the difference between the index price and ceiling price for the contracted volumes, (2) if the index price is between the floor and ceiling price, no settlements occur, (3) if the index price is lower than the floor price but at or above the sold put price, the counterparty pays us the difference between the index price and the floor price for the contracted volumes and (4) if the index price is lower than the sold put price, the counterparty pays us the difference between the floor price and the sold put price for the contracted volumes. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 6. Fair Value Measurements The FASC Fair Value Measurement topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (often referred to as the “exit price”). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the income approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We are able to classify fair value balances based on the observability of those inputs. The FASC establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: • Level 1 – Quoted prices in active markets for identical assets or liabilities as of the reporting date. • Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded oil derivatives that are based on NYMEX pricing and fixed-price swaps that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless collars and the sold put features of our three-way collars are valued using the Black-Scholes model, an industry standard option valuation model that takes into account inputs such as contractual prices for the underlying instruments, maturity, quoted forward prices for commodities, interest rates, volatility factors and credit worthiness, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. • Level 3 – Pricing inputs include significant inputs that are generally less observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. As of June 30, 2018 , instruments in this category include non-exchange-traded three-way collars that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). The valuation models utilized for costless collars and three-way collars are consistent with the methodologies described above; however, the implied volatilities utilized in the valuation of Level 3 instruments are developed using a benchmark, which is considered a significant unobservable input. An increase or decrease of 100 basis points in the implied volatility inputs utilized in our fair value measurement would result in a change of approximately $225 thousand in the fair value of these instruments as of June 30, 2018. We adjust the valuations from the valuation model for nonperformance risk, using our estimate of the counterparty’s credit quality for asset positions and our credit quality for liability positions. We use multiple sources of third-party credit data in determining counterparty nonperformance risk, including credit default swaps. The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of the periods indicated: Fair Value Measurements Using: In thousands Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total June 30, 2018 Liabilities Oil derivative contracts – current $ — $ (144,554 ) $ (700 ) $ (145,254 ) Oil derivative contracts – long-term — (10,236 ) (468 ) (10,704 ) Total Liabilities $ — $ (154,790 ) $ (1,168 ) $ (155,958 ) December 31, 2017 Liabilities Oil derivative contracts – current $ — $ (99,061 ) $ — $ (99,061 ) Total Liabilities $ — $ (99,061 ) $ — $ (99,061 ) Since we do not apply hedge accounting for our commodity derivative contracts, any gains and losses on our assets and liabilities are included in “Commodity derivatives expense (income)” in the accompanying Unaudited Condensed Consolidated Statements of Operations. Level 3 Fair Value Measurements The following table summarizes the changes in the fair value of our Level 3 assets and liabilities for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Fair value of Level 3 instruments, beginning of period $ — $ 91 $ — $ (526 ) Fair value gains (losses) on commodity derivatives (1,168 ) 8 (1,168 ) 625 Fair value of Level 3 instruments, end of period $ (1,168 ) $ 99 $ (1,168 ) $ 99 The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities still held at the reporting date $ (1,168 ) $ 8 $ (1,168 ) $ 245 We utilize an income approach to value our Level 3 costless collars and three-way collars. We obtain and ensure the appropriateness of the significant inputs to the calculation, including contractual prices for the underlying instruments, maturity, forward prices for commodities, interest rates, volatility factors and credit worthiness, and the fair value estimate is prepared and reviewed on a quarterly basis. The following table details fair value inputs related to implied volatilities utilized in the valuation of our Level 3 oil derivative contracts: Fair Value at Valuation Technique Unobservable Input Volatility Range Oil derivative contracts $ (1,168 ) Discounted cash flow / Black-Scholes Volatility of Light Louisiana Sweet for settlement periods beginning after June 30, 2018 22.3% – 29.2% Other Fair Value Measurements The carrying value of our loans under our Bank Credit Agreement approximate fair value, as they are subject to short-term floating interest rates that approximate the rates available to us for those periods. We use a market approach to determine the fair value of our fixed-rate long-term debt using observable market data. The fair values of our senior secured second lien notes, convertible senior notes, and senior subordinated notes are based on quoted market prices, which are considered Level 1 measurements under the fair value hierarchy. The estimated fair value of the principal amount of our debt as of June 30, 2018 and December 31, 2017 , excluding pipeline financing and capital lease obligations, was $2,299.1 million and $2,260.6 million , respectively. We have other financial instruments consisting primarily of cash, cash equivalents, short-term receivables and payables that approximate fair value due to the nature of the instrument and the relatively short maturities. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7. Commitments and Contingencies Litigation We are involved in various lawsuits, claims and regulatory proceedings incidental to our businesses. We are also subject to audits for various taxes (income, sales and use, and severance) in the various states in which we operate, and from time to time receive assessments for potential taxes that we may owe. While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position, results of operations or cash flows, litigation is subject to inherent uncertainties. Although a single or multiple adverse rulings or settlements could possibly have a material adverse effect on our finances, we only accrue for losses from litigation and claims if we determine that a loss is probable and the amount can be reasonably estimated. Riley Ridge Helium Supply Contract Claim As part of our 2010 and 2011 acquisitions of the Riley Ridge Unit and associated gas processing facility that was under construction, the Company assumed a 20 -year helium supply contract under which we agreed to supply the helium separated from the full well stream by operation of the gas processing facility to a third-party purchaser, APMTG Helium, LLC. The helium supply contract provides for the delivery of a minimum contracted quantity of helium, subject to adjustment after startup of the Riley Ridge gas processing facility, with liquidated damages payable if specified quantities of helium are not supplied in accordance with the terms of the contract. The liquidated damages are specified in the contract at up to $8.0 million per contract year and are capped at an aggregate of $46.0 million over the term of the contract. As the gas processing facility has been shut-in since mid-2014, we have not been able to supply helium under the helium supply contract. APMTG Helium, LLC filed a case in November 2014 in the Ninth Judicial District Court of Sublette County, Wyoming, claiming multiple years of liquidated damages for non-delivery of volumes of helium specified under the helium supply contract. The Company’s position is that our contractual obligations are excused by virtue of events that fall within the force majeure provisions in the helium supply contract. The evidentiary phase of the trial concluded on November 29, 2017. The parties submitted written closing briefs and rebuttal briefs to the District Court during February and April of 2018. We currently expect a ruling from the District Court to be made during 2018. The Company plans to continue to vigorously defend its position, but we are unable to predict at this time the outcome of this dispute. |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 8. Subsequent Event Employee Equity Award Grants On July 16, 2018, the Compensation Committee of our Board of Directors granted customary long-term equity incentive awards covering 4,390,002 shares of restricted stock to certain employees under our 2004 Omnibus Stock and Incentive Plan. The closing price of Denbury’s common stock on July 16, 2018 was $4.64 per share. The awards generally vest one-third per year over a three -year period. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations Denbury Resources Inc., a Delaware corporation, is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. Our goal is to increase the value of our properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO 2 enhanced oil recovery operations. |
Interim Financial Statements - Basis of Accounting, Policy | Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of Denbury Resources Inc. and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and the notes thereto should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury Resources Inc. and its subsidiaries. |
Interim Financial Statements - Use of Estimates | Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, and the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of June 30, 2018 , our consolidated results of operations for the three and six months ended June 30, 2018 and 2017 , our consolidated cash flows for the six months ended June 30, 2018 and 2017 , and our consolidated statement of changes in stockholders’ equity for the six months ended June 30, 2018 . |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on our reported net income, current assets, total assets, current liabilities, total liabilities or stockholders’ equity. |
Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows: In thousands June 30, 2018 December 31, 2017 Cash and cash equivalents $ 116 $ 58 Restricted cash included in Other assets 41,506 40,556 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 41,622 $ 40,614 Amounts included in restricted cash included in “Other assets” in the accompanying Unaudited Condensed Consolidated Balance Sheets represent escrow accounts that are legally restricted for certain of our asset retirement obligations. |
Net Income per Common Share | Net Income per Common Share Basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is calculated in the same manner, but includes the impact of potentially dilutive securities. Potentially dilutive securities consist of nonvested restricted stock, nonvested performance-based equity awards, and shares into which our previously-outstanding convertible senior notes were convertible. The following table sets forth the reconciliations of net income and weighted average shares used for purposes of calculating the basic and diluted net income per common share for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Numerator Net income – basic $ 30,222 $ 14,399 $ 69,800 $ 35,929 Effect of potentially dilutive securities Interest on convertible senior notes 130 — 539 — Net income – diluted $ 30,352 $ 14,399 $ 70,339 $ 35,929 Denominator Weighted average common shares outstanding – basic 433,467 389,904 413,217 389,652 Effect of potentially dilutive securities Restricted stock and performance-based equity awards 8,586 1,923 6,877 2,762 Convertible senior notes 15,112 — 34,372 — Weighted average common shares outstanding – diluted 457,165 391,827 454,466 392,414 Basic weighted average common shares exclude shares of nonvested restricted stock. As these restricted shares vest, they will be included in the shares outstanding used to calculate basic net income per common share (although time-vesting restricted stock is issued and outstanding upon grant). For purposes of calculating diluted weighted average common shares during the three and six months ended June 30, 2018 and 2017, the nonvested restricted stock and performance-based equity awards are included in the computation using the treasury stock method, with the deemed proceeds equal to the average unrecognized compensation during the period, and for the shares underlying the previously-outstanding convertible senior notes as if the convertible senior notes were converted at the beginning of the 2018 period. In April and May 2018, all outstanding convertible senior notes converted into shares of Denbury common stock, resulting in the issuance of 55.2 million shares of our common stock upon conversion. These shares have been included in basic weighted average common shares outstanding beginning on the date of conversion. See Note 4 , Long-Term Debt , for further discussion. The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income per share, as their effect would have been antidilutive: Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Stock appreciation rights 2,827 4,785 2,891 4,914 Restricted stock and performance-based equity awards 179 7,655 305 4,442 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Cash Flows. In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (“ASU 2016-18”). ASU 2016-18 addresses the diversity that exists in the classification and presentation of changes in restricted cash on the statement of cash flows, and requires that a statement of cash flows explain the change in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. Effective January 1, 2018, we adopted ASU 2016-18, which has been applied retrospectively for all comparative periods presented. Accordingly, restricted cash associated with our escrow accounts of $40.6 million and $39.3 million for the six month periods ended June 30, 2018 and 2017, respectively, have been included in “Cash, cash equivalents, and restricted cash at beginning of period” on our Unaudited Condensed Consolidated Statements of Cash Flows and $40.2 million included in “Cash, cash equivalents, and restricted cash at end of period” for the six-month period ended June 30, 2017 . The adoption of ASU 2016-18 did not have an impact on our consolidated balance sheets or results of operations. Revenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. In March, April and May 2016, the FASB issued four additional ASUs which primarily clarified the implementation guidance on principal versus agent considerations, performance obligations and licensing, collectibility, presentation of sales taxes and other similar taxes collected from customers, and non-cash consideration. Effective January 1, 2018, we adopted ASU 2014-09 using the modified retrospective method. The adoption of ASU 2014-09 did not have an impact on our consolidated financial statements, but required enhanced footnote disclosures. See Note 2 , Revenue Recognition , for additional information. Not Yet Adopted Leases. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the guidance for lease accounting to require lease assets and liabilities to be recognized on the balance sheet, along with additional disclosures regarding key leasing arrangements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and early adoption is permitted. Entities must adopt the standard using a modified retrospective transition and apply the guidance to the earliest comparative period presented, with certain practical expedients that entities may elect to apply. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842 , which provides an optional practical expedient to existing or expired land easements that were not previously accounted for as leases under Topic 842, which permits a company to evaluate only new or modified land easements under the new guidance. We are currently evaluating our lease agreements and implementing a software system to summarize the key contract terms and financial information associated with each lease agreement, in order to assess the impact the adoption of ASU 2016-02 and ASU 2018-01 will have on our consolidated financial statements. |
Revenue Recognition | We record revenue in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , which we adopted on January 1, 2018, and applied to all existing contracts using the modified retrospective method. The core principle of FASB ASC Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount of consideration that it expects to be entitled to receive for those goods or services. This principle is achieved through applying a five-step process for customer contract revenue recognition: • Identify the contract or contracts with a customer – We derive the majority of our revenues from oil and natural gas sales contracts and CO 2 sales and transportation contracts. The contracts specify each party’s rights regarding the goods or services to be transferred and contain commercial substance as they impact our financial statements. A high percentage of our receivables balance is current, and we have not historically entered into contracts with counterparties that pose a credit risk without requiring adequate economic protection to ensure collection. • Identify the performance obligations in the contract – Each of our revenue contracts specify a volume per day, or production from a lease designated in the contract (a distinct good), to be delivered at the delivery point over the term of the contract (the identified performance obligation). The customer takes delivery and physical possession of the product at the delivery point, which generally is also the point at which title transfers and the customer obtains the risks and rewards of ownership (the identified performance obligation is satisfied). • Determine the transaction price – Typically, our oil and natural gas contracts define the price as a formula price based on the average market price, as specified on set dates each month, for the specific commodity during the month of delivery. Certain of our CO 2 contracts define the price as a fixed contractual price adjusted to an inflation index to reflect market pricing. Given the industry practice to invoice customers the month following the month of delivery and our high probability of collection of payment, no significant financing component is included in our contracts. • Allocate the transaction price to the performance obligations in the contract – The majority of our revenue contracts are short-term, with terms of one year or less, to which we have applied the practical expedient permitted under the standard eliminating the requirement to disclose the transaction price allocated to remaining performance obligations. In limited instances, we have revenue contracts with terms greater than one year; however, the future delivery volumes are wholly unsatisfied as they represent separate performance obligations with variable consideration. We utilized the practical expedient which eliminates the requirement to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to wholly unsatisfied performance obligations. As there is only one performance obligation associated with our contracts, no allocation of the transaction price is necessary. • Recognize revenue when, or as, we satisfy a performance obligation – Once we have delivered the volume of commodity to the delivery point and the customer takes delivery and possession, we are entitled to payment and we invoice the customer for such delivered production. Payment under most oil and CO 2 contracts is made within a month following product delivery and for natural gas and NGL contracts is generally made within two months following delivery. Timing of revenue recognition may differ from the timing of invoicing to customers; however, as the right to consideration after delivery is unconditional based on only the passage of time before payment of the consideration is due, upon delivery we record a receivable in “Accrued production receivable” in our Unaudited Condensed Consolidated Balance Sheets, which was $163.7 million and $146.3 million as of June 30, 2018 and December 31, 2017, respectively. |
Commodity Derivative Contracts | We do not apply hedge accounting treatment to our oil and natural gas derivative contracts; therefore, the changes in the fair values of these instruments are recognized in income in the period of change. These fair value changes, along with the settlements of expired contracts, are shown under “Commodity derivatives expense (income)” in our Unaudited Condensed Consolidated Statements of Operations. Historically, we have entered into various oil and natural gas derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future oil and natural gas production and to provide more certainty to our future cash flows. We do not hold or issue derivative financial instruments for trading purposes. Generally, these contracts have consisted of various combinations of price floors, collars, three-way collars, fixed-price swaps, fixed-price swaps enhanced with a sold put, and basis swaps. The production that we hedge has varied from year to year depending on our levels of debt, financial strength and expectation of future commodity prices. We manage and control market and counterparty credit risk through established internal control procedures that are reviewed on an ongoing basis. We attempt to minimize credit risk exposure to counterparties through formal credit policies, monitoring procedures and diversification, and all of our commodity derivative contracts are with parties that are lenders under our Bank Credit Agreement (or affiliates of such lenders). As of June 30, 2018 , all of our outstanding derivative contracts were subject to enforceable master netting arrangements whereby payables on those contracts can be offset against receivables from separate derivative contracts with the same counterparty. It is our policy to classify derivative assets and liabilities on a gross basis on our balance sheets, even if the contracts are subject to enforceable master netting arrangements. |
Fair Value Measurements | The FASC Fair Value Measurement topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (often referred to as the “exit price”). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the income approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We are able to classify fair value balances based on the observability of those inputs. The FASC establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: • Level 1 – Quoted prices in active markets for identical assets or liabilities as of the reporting date. • Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded oil derivatives that are based on NYMEX pricing and fixed-price swaps that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless collars and the sold put features of our three-way collars are valued using the Black-Scholes model, an industry standard option valuation model that takes into account inputs such as contractual prices for the underlying instruments, maturity, quoted forward prices for commodities, interest rates, volatility factors and credit worthiness, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. • Level 3 – Pricing inputs include significant inputs that are generally less observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. As of June 30, 2018 , instruments in this category include non-exchange-traded three-way collars that are based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). The valuation models utilized for costless collars and three-way collars are consistent with the methodologies described above; however, the implied volatilities utilized in the valuation of Level 3 instruments are developed using a benchmark, which is considered a significant unobservable input. An increase or decrease of 100 basis points in the implied volatility inputs utilized in our fair value measurement would result in a change of approximately $225 thousand in the fair value of these instruments as of June 30, 2018. We adjust the valuations from the valuation model for nonperformance risk, using our estimate of the counterparty’s credit quality for asset positions and our credit quality for liability positions. We use multiple sources of third-party credit data in determining counterparty nonperformance risk, including credit default swaps. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of cash, cash equivalents, and restricted cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Unaudited Condensed Consolidated Balance Sheets to “Cash, cash equivalents, and restricted cash at end of period” as reported within the Unaudited Condensed Consolidated Statements of Cash Flows: In thousands June 30, 2018 December 31, 2017 Cash and cash equivalents $ 116 $ 58 Restricted cash included in Other assets 41,506 40,556 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 41,622 $ 40,614 |
Schedule of earnings per share, basic and diluted reconciliation | The following table sets forth the reconciliations of net income and weighted average shares used for purposes of calculating the basic and diluted net income per common share for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Numerator Net income – basic $ 30,222 $ 14,399 $ 69,800 $ 35,929 Effect of potentially dilutive securities Interest on convertible senior notes 130 — 539 — Net income – diluted $ 30,352 $ 14,399 $ 70,339 $ 35,929 Denominator Weighted average common shares outstanding – basic 433,467 389,904 413,217 389,652 Effect of potentially dilutive securities Restricted stock and performance-based equity awards 8,586 1,923 6,877 2,762 Convertible senior notes 15,112 — 34,372 — Weighted average common shares outstanding – diluted 457,165 391,827 454,466 392,414 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income per share, as their effect would have been antidilutive: Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Stock appreciation rights 2,827 4,785 2,891 4,914 Restricted stock and performance-based equity awards 179 7,655 305 4,442 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table summarizes our revenues by product type for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Oil sales $ 373,286 $ 248,317 $ 710,692 $ 512,291 Natural gas sales 2,279 2,563 4,894 4,767 CO 2 sales and transportation fees 6,715 6,555 14,267 11,943 Total revenues $ 382,280 $ 257,435 $ 729,853 $ 529,001 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Components of Long-Term Debt | The table below reflects long-term debt and capital lease obligations outstanding as of the dates indicated: June 30, December 31, In thousands 2018 2017 Senior Secured Bank Credit Agreement $ 415,000 $ 475,000 9% Senior Secured Second Lien Notes due 2021 614,919 614,919 9¼% Senior Secured Second Lien Notes due 2022 455,668 381,568 3½% Convertible Senior Notes due 2024 — 84,650 6⅜% Senior Subordinated Notes due 2021 203,545 215,144 5½% Senior Subordinated Notes due 2022 314,662 408,882 4⅝% Senior Subordinated Notes due 2023 307,978 376,501 Pipeline financings 186,525 192,429 Capital lease obligations 15,906 26,298 Total debt principal balance 2,514,203 2,775,391 Future interest payable (1) 292,591 316,818 Debt issuance costs (5,812 ) (7,935 ) Total debt, net of debt issuance costs 2,800,982 3,084,274 Less: current maturities of long-term debt (1) (111,335 ) (105,188 ) Long-term debt and capital lease obligations $ 2,689,647 $ 2,979,086 (1) Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a lesser extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors . Our current maturities of long-term debt as of June 30, 2018 include $84.9 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion. |
Commodity Derivative Contracts
Commodity Derivative Contracts (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Commodity derivative contracts not classified as hedging instruments | The following table summarizes our commodity derivative contracts as of June 30, 2018 , none of which are classified as hedging instruments in accordance with the FASC Derivatives and Hedging topic: Months Index Price Volume (Barrels per day) Contract Prices ($/Bbl) Range (1) Weighted Average Price Swap Sold Put Floor Ceiling Oil Contracts: 2018 Fixed-Price Swaps July – Dec NYMEX 20,500 $ 50.00 – 56.65 $ 51.69 $ — $ — $ — July – Dec Argus LLS 5,000 60.10 – 60.25 60.18 — — — 2018 Three-Way Collars (2) July – Dec NYMEX 15,000 $ 45.00 – 56.60 $ — $ 36.50 $ 46.50 $ 53.88 2019 Fixed-Price Swaps Jan – June NYMEX 3,500 $ 59.00 – 59.10 $ 59.05 $ — $ — $ — 2019 Three-Way Collars (2) Jan – June NYMEX 16,500 $ 55.00 – 75.45 $ — $ 48.45 $ 56.45 $ 69.88 July – Dec NYMEX 20,000 55.00 – 75.45 — 48.20 56.20 69.04 Jan – Dec Argus LLS 3,000 62.00 – 78.90 — 54.00 62.00 78.50 (1) Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For three-way collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. (2) A three-way collar is a costless collar contract combined with a sold put feature (at a lower price) with the same counterparty. The value received for the sold put is used to enhance the contracted floor and ceiling price of the related collar. At the contract settlement date, (1) if the index price is higher than the ceiling price, we pay the counterparty the difference between the index price and ceiling price for the contracted volumes, (2) if the index price is between the floor and ceiling price, no settlements occur, (3) if the index price is lower than the floor price but at or above the sold put price, the counterparty pays us the difference between the index price and the floor price for the contracted volumes and (4) if the index price is lower than the sold put price, the counterparty pays us the difference between the floor price and the sold put price for the contracted volumes. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value hierarchy of financial assets and liabilities | The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of the periods indicated: Fair Value Measurements Using: In thousands Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total June 30, 2018 Liabilities Oil derivative contracts – current $ — $ (144,554 ) $ (700 ) $ (145,254 ) Oil derivative contracts – long-term — (10,236 ) (468 ) (10,704 ) Total Liabilities $ — $ (154,790 ) $ (1,168 ) $ (155,958 ) December 31, 2017 Liabilities Oil derivative contracts – current $ — $ (99,061 ) $ — $ (99,061 ) Total Liabilities $ — $ (99,061 ) $ — $ (99,061 ) |
Changes in fair value of Level 3 assets and liabilities | The following table summarizes the changes in the fair value of our Level 3 assets and liabilities for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended June 30, June 30, In thousands 2018 2017 2018 2017 Fair value of Level 3 instruments, beginning of period $ — $ 91 $ — $ (526 ) Fair value gains (losses) on commodity derivatives (1,168 ) 8 (1,168 ) 625 Fair value of Level 3 instruments, end of period $ (1,168 ) $ 99 $ (1,168 ) $ 99 The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities still held at the reporting date $ (1,168 ) $ 8 $ (1,168 ) $ 245 |
Qualitative valuation techniques for assets and liabilities measured on a recurring basis (Level 3) | The following table details fair value inputs related to implied volatilities utilized in the valuation of our Level 3 oil derivative contracts: Fair Value at Valuation Technique Unobservable Input Volatility Range Oil derivative contracts $ (1,168 ) Discounted cash flow / Black-Scholes Volatility of Light Louisiana Sweet for settlement periods beginning after June 30, 2018 22.3% – 29.2% |
Basis of Presentation Basis of
Basis of Presentation Basis of Presentation (Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 116 | $ 58 | ||
Restricted cash included in Other assets | 41,506 | 40,556 | $ 40,200 | $ 39,300 |
Total cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statement of cash flows | $ 41,622 | $ 40,614 | $ 43,662 | $ 40,905 |
Basis of Presentation (Reconcil
Basis of Presentation (Reconciliation of Weighted Average Shares Table) (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator | ||||
Net income - basic | $ 30,222 | $ 14,399 | $ 69,800 | $ 35,929 |
Interest on convertible senior notes | 130 | 0 | 539 | 0 |
Net income - diluted | $ 30,352 | $ 14,399 | $ 70,339 | $ 35,929 |
Denominator | ||||
Weighted average common shares outstanding - basic | 433,467 | 389,904 | 413,217 | 389,652 |
Restricted stock and performance-based equity awards | 8,586 | 1,923 | 6,877 | 2,762 |
Convertible senior notes | 15,112 | 0 | 34,372 | 0 |
Weighted average common shares outstanding - diluted | 457,165 | 391,827 | 454,466 | 392,414 |
Basis of Presentation (Antidilu
Basis of Presentation (Antidilutive Securities) (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock appreciation rights | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,827 | 4,785 | 2,891 | 4,914 |
Restricted stock and performance-based equity awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 179 | 7,655 | 305 | 4,442 |
Basis of Presentation Basis o25
Basis of Presentation Basis of Presentation (Details Textuals) - USD ($) $ in Thousands, shares in Millions | 2 Months Ended | ||||
May 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||||
Restricted cash | $ 41,506 | $ 40,556 | $ 40,200 | $ 39,300 | |
Debt Conversion, Converted Instrument, Shares Issued | 55.2 |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation of Revenue) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues and other income | $ 382,280,000 | $ 257,435,000 | $ 729,853,000 | $ 529,001,000 |
Oil sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues and other income | 373,286,000 | 248,317,000 | 710,692,000 | 512,291,000 |
Natural gas sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues and other income | 2,279,000 | 2,563,000 | 4,894,000 | 4,767,000 |
CO2 sales and transportation fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues and other income | $ 6,715,000 | $ 6,555,000 | $ 14,267,000 | $ 11,943,000 |
Revenue Recognition (Details Te
Revenue Recognition (Details Textuals) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Revenue from Contract with Customer [Abstract] | ||
Accrued production receivable | $ 163,719 | $ 146,334 |
Assets Held for Sale (Details T
Assets Held for Sale (Details Textuals) $ in Millions | Jun. 30, 2018USD ($) |
Assets Held-for-sale, Not Part of Disposal Group [Abstract] | |
Land available for sale | $ 33 |
Long-Term Debt (Components of L
Long-Term Debt (Components of Long-Term Debt) (Details) - USD ($) | Jun. 30, 2018 | May 30, 2018 | Apr. 18, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||||
Senior Secured Bank Credit Agreement | $ 415,000,000 | $ 475,000,000 | |||
Pipeline financings | 186,525,000 | 192,429,000 | |||
Capital lease obligations | 15,906,000 | 26,298,000 | |||
Total debt principal balance | 2,514,203,000 | 2,775,391,000 | |||
Future interest payable | [1] | 292,591,000 | 316,818,000 | ||
Debt issuance costs | (5,812,000) | (7,935,000) | |||
Total debt, net of debt issuance costs | 2,800,982,000 | 3,084,274,000 | |||
Less: current maturities of long-term debt | [1] | (111,335,000) | (105,188,000) | ||
Long-term Debt and Capital Lease Obligations | 2,689,647,000 | 2,979,086,000 | |||
Secured Debt | 9% Senior Secured Second Lien Notes Due 2021 | |||||
Debt Instrument [Line Items] | |||||
Senior Secured Second Lien Notes | $ 614,919,000 | 614,919,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 9.00% | ||||
Secured Debt | 9 1/4% Senior Secured Second Lien Notes Due 2022 | |||||
Debt Instrument [Line Items] | |||||
Senior Secured Second Lien Notes | $ 455,668,000 | 381,568,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 9.25% | ||||
Convertible Debt | 3 1/2% Convertible Senior Notes Due 2024 | |||||
Debt Instrument [Line Items] | |||||
Convertible Senior Notes | $ 0 | $ 0 | 84,650,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | ||||
Convertible Debt | 5% Convertible Senior Notes Due 2023 | |||||
Debt Instrument [Line Items] | |||||
Convertible Senior Notes | $ 0 | ||||
Senior Subordinated Notes | 6 3/8% Senior Subordinated Notes due 2021 | |||||
Debt Instrument [Line Items] | |||||
Senior Subordinated Notes | $ 203,545,000 | 215,144,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 6.375% | ||||
Senior Subordinated Notes | 5 1/2% Senior Subordinated Notes due 2022 | |||||
Debt Instrument [Line Items] | |||||
Senior Subordinated Notes | $ 314,662,000 | 408,882,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | ||||
Senior Subordinated Notes | 4 5/8% Senior Subordinated Notes due 2023 | |||||
Debt Instrument [Line Items] | |||||
Senior Subordinated Notes | $ 307,978,000 | 376,501,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.625% | ||||
Future interest payable on senior secured and convertible senior notes | |||||
Debt Instrument [Line Items] | |||||
Less: current maturities of long-term debt | $ (84,932,000) | (75,347,000) | |||
Long-term Debt and Capital Lease Obligations | $ 207,659,000 | $ 241,472,000 | |||
[1] | Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a lesser extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of June 30, 2018 include $84.9 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion. |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textuals) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jan. 31, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($)shares | May 30, 2018USD ($) | Apr. 18, 2018USD ($) | Dec. 31, 2017USD ($) | ||
Long Term Debt (Textuals) [Abstract] | |||||||
Interest in guarantor subsidiaries | 100.00% | 100.00% | |||||
Extinguishment of Debt, Amount | $ 40,800,000 | ||||||
Future Interest Payable on Senior Secured Notes And Convertible Notes | [1] | $ 292,591,000 | $ 292,591,000 | $ 316,818,000 | |||
Senior Secured Bank Credit Facility [Abstract] | |||||||
Line of Credit, Borrowing Base | 1,050,000,000 | 1,050,000,000 | |||||
Line of Credit Facility, Current Borrowing Capacity | $ 1,050,000,000 | $ 1,050,000,000 | |||||
Weighted average interest rate on Bank Credit Facility | 4.70% | ||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.50% | ||||||
Senior Secured Debt to Consolidated EBITDAX | 2.5 | ||||||
Consolidated EBITDAX to Consolidated Interest Charges | 1.25 | ||||||
Current Ratio Requirement | 1 | ||||||
Convertible Debt [Abstract] | |||||||
Stock Issued During Period, Value, New Issues | $ 162,050,000 | ||||||
Common Stock [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Issued pursuant to notes conversion, shares | shares | 55,249,999 | ||||||
Stock Issued During Period, Value, New Issues | $ 55,000 | ||||||
Senior Subordinated Notes | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Exchange, Amount | 174,300,000 | ||||||
Senior Subordinated Notes | 6 3/8% Senior Subordinated Notes due 2021 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.375% | 6.375% | |||||
Debt Exchange, Amount | 11,600,000 | ||||||
Senior Subordinated Notes | 5 1/2% Senior Subordinated Notes due 2022 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | 5.50% | |||||
Debt Exchange, Amount | 94,200,000 | ||||||
Senior Subordinated Notes | 4 5/8% Senior Subordinated Notes due 2023 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.625% | 4.625% | |||||
Debt Exchange, Amount | 68,500,000 | ||||||
Secured Debt | 9 1/4% Senior Secured Second Lien Notes Due 2022 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Face value of notes | 74,100,000 | 381,600,000 | |||||
Secured Debt | $ 455,668,000 | $ 455,668,000 | 381,568,000 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 9.25% | 9.25% | |||||
Secured Debt | Debt Instrument, Redemption, Period One | 9 1/4% Senior Secured Second Lien Notes Due 2022 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Instrument, Redemption Price, Percentage | 109.25% | ||||||
Secured Debt | Initial Redemption Period With Proceeds From Equity Offering Member | 9 1/4% Senior Secured Second Lien Notes Due 2022 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Instrument, Redemption Price, Percentage | 109.25% | ||||||
Debt Instrument, Percentage of Principal Amount Available To Be Redeemed | 35.00% | ||||||
Secured Debt | Initial Redemption Period With Make Whole Premium | 9 1/4% Senior Secured Second Lien Notes Due 2022 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Instrument, Redemption Price, Percentage | 100.00% | ||||||
Convertible Debt | 5% Convertible Senior Notes Due 2023 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Face value of notes | $ 59,400,000 | ||||||
Convertible Debt [Abstract] | |||||||
Debt Conversion, Original Debt, Amount | $ 59,400,000 | ||||||
Convertible Debt | $ 0 | ||||||
Convertible Debt | 3 1/2% Convertible Senior Notes Due 2024 | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | 3.50% | |||||
Convertible Debt [Abstract] | |||||||
Debt Conversion, Original Debt, Amount | $ 84,700,000 | ||||||
Convertible Debt | 0 | $ 0 | $ 0 | $ 84,650,000 | |||
Notes Exchange | |||||||
Long Term Debt (Textuals) [Abstract] | |||||||
Future Interest Payable on Senior Secured Notes And Convertible Notes | 22,100,000 | 22,100,000 | |||||
Interest Payable | $ 3,600,000 | $ 3,600,000 | |||||
[1] | Future interest payable represents most of the interest due over the terms of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”), 9¼% Senior Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”), and to a lesser extent our previously outstanding 3½% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) and has been accounted for as debt in accordance with FASC 470-60, Troubled Debt Restructuring by Debtors. Our current maturities of long-term debt as of June 30, 2018 include $84.9 million of future interest payable related to the 2021 Senior Secured Notes and 2022 Senior Secured Notes that is due within the next twelve months. See January 2018 Note Exchanges below for further discussion. |
Commodity Derivative Contract31
Commodity Derivative Contracts (Commodity Derivatives Outstanding Table) (Details) | Jun. 30, 2018bbl / d$ / Barrel |
Swap | Year 2018 | Q3-Q4 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 20,500 |
Weighted average swap price | 51.69 |
Swap | Year 2018 | Q3-Q4 | NYMEX | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 50 |
Swap | Year 2018 | Q3-Q4 | NYMEX | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 56.65 |
Swap | Year 2018 | Q3-Q4 | LLS | |
Derivative [Line Items] | |
Volume per day | bbl / d | 5,000 |
Weighted average swap price | 60.18 |
Swap | Year 2018 | Q3-Q4 | LLS | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 60.10 |
Swap | Year 2018 | Q3-Q4 | LLS | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 60.25 |
Swap | Year 2019 | Q1-Q2 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 3,500 |
Weighted average swap price | 59.05 |
Swap | Year 2019 | Q1-Q2 | NYMEX | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 59 |
Swap | Year 2019 | Q1-Q2 | NYMEX | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 59.10 |
Three-way Collar | Year 2018 | Q3-Q4 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 15,000 |
Derivative, Floor Price | 45 |
Derivative, Cap Price | 56.60 |
Weighted average sold put price | 36.50 |
Weighted average floor price | 46.50 |
Weighted average ceiling price | 53.88 |
Three-way Collar | Year 2019 | LLS | |
Derivative [Line Items] | |
Volume per day | bbl / d | 3,000 |
Derivative, Floor Price | 62 |
Derivative, Cap Price | 78.90 |
Weighted average sold put price | 54 |
Weighted average floor price | 62 |
Weighted average ceiling price | 78.50 |
Three-way Collar | Year 2019 | Q1-Q2 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 16,500 |
Derivative, Floor Price | 55 |
Derivative, Cap Price | 75.45 |
Weighted average sold put price | 48.45 |
Weighted average floor price | 56.45 |
Weighted average ceiling price | 69.88 |
Three-way Collar | Year 2019 | Q3-Q4 | NYMEX | |
Derivative [Line Items] | |
Volume per day | bbl / d | 20,000 |
Derivative, Floor Price | 55 |
Derivative, Cap Price | 75.45 |
Weighted average sold put price | 48.20 |
Weighted average floor price | 56.20 |
Weighted average ceiling price | 69.04 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Hierarchy Table) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current liability | $ (145,254) | $ (99,061) |
Oil derivative contracts - long-term liabilities | (10,704) | 0 |
Total Liabilities | (155,958) | (99,061) |
Quoted Prices in Active Markets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current liability | 0 | 0 |
Oil derivative contracts - long-term liabilities | 0 | |
Total Liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current liability | (144,554) | (99,061) |
Oil derivative contracts - long-term liabilities | (10,236) | |
Total Liabilities | (154,790) | (99,061) |
Significant Unobservable Inputs (Level 3) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - current liability | (700) | 0 |
Oil derivative contracts - long-term liabilities | (468) | |
Total Liabilities | $ (1,168) | $ 0 |
Fair Value Measurements (Level
Fair Value Measurements (Level 3 Fair Value Measurements) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Fair value of Level 3 instruments, beginning of period | $ 0 | $ 91 | $ 0 | $ (526) |
Fair value gains on commodity derivatives | (1,168) | 8 | (1,168) | 625 |
Fair value of Level 3 instruments, end of period | (1,168) | 99 | (1,168) | 99 |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities still held at the reporting date | $ (1,168) | $ 8 | $ (1,168) | $ 245 |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements (Level 3 Valuation Techniques) (Details) - USD ($) $ in Thousands | 6 Months Ended | |||||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | |
Fair Value Measurements, Recurring and nonrecurring, Valuation Techniques [Line Items] | ||||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis with Unobservable Inputs | $ (1,168) | $ 0 | $ 0 | $ 99 | $ 91 | $ (526) |
Income Approach Valuation Technique | ||||||
Fair Value Measurements, Recurring and nonrecurring, Valuation Techniques [Line Items] | ||||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis with Unobservable Inputs | $ (1,168) | |||||
Income Approach Valuation Technique | Minimum | ||||||
Fair Value Measurements, Recurring and nonrecurring, Valuation Techniques [Line Items] | ||||||
Expected Volatility Range | 22.30% | |||||
Income Approach Valuation Technique | Maximum | ||||||
Fair Value Measurements, Recurring and nonrecurring, Valuation Techniques [Line Items] | ||||||
Expected Volatility Range | 29.20% |
Fair Value Measurements (Detail
Fair Value Measurements (Details Textuals) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Sensitivity Analysis of Fair Value, Impact of 100 Basis Point Increase or Decrease in Level 3 Inputs | $ 225 | |
Debt, Fair Value | $ 2,299,100 | $ 2,260,600 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Helium Supply Arrangement [Member] $ in Millions | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Long-term Purchase Commitment [Line Items] | |
Term of Long Term Supply Arrangement | 20 years |
Maximum Annual Payment In Event Of Shortfall | $ 8 |
Maximum Payment In Event Of Shortfall | $ 46 |
Subsequent Event (Details Textu
Subsequent Event (Details Textuals) - Subsequent Event | Jul. 16, 2018$ / sharesRateshares |
Subsequent Event [Line Items] | |
Restricted stock granted | shares | 4,390,002 |
Value (per share) of restricted stock grant | $ / shares | $ 4.64 |
Equity award vesting percentage | Rate | 33.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years |