Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 30, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-12935 | |
Entity Registrant Name | DENBURY INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0467835 | |
Entity Address, Address Line One | 5851 Legacy Circle, | |
Entity Address, City or Town | Plano, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75024 | |
City Area Code | (972) | |
Local Phone Number | 673-2000 | |
Title of 12(b) Security | Common Stock $.001 Par Value | |
Trading Symbol | DEN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Bankruptcy Proceedings, Reporting Current | true | |
Entity Common Stock, Shares Outstanding | 50,369,023 | |
Entity Central Index Key | 0000945764 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 517 | $ 3,671 |
Accrued production receivable | 216,161 | 143,365 |
Trade and other receivables, net | 17,571 | 19,270 |
Prepaids | 10,175 | 9,099 |
Total current assets | 244,424 | 175,405 |
Oil and natural gas properties (using full cost accounting) | ||
Proved properties | 1,149,762 | 1,109,011 |
Unevaluated properties | 131,677 | 112,169 |
CO2 properties | 184,043 | 183,369 |
Pipelines | 226,766 | 224,394 |
CCUS storage sites and related assets | 20,949 | 0 |
Other property and equipment | 94,993 | 93,950 |
Less accumulated depletion, depreciation, amortization and impairment | (210,537) | (181,393) |
Net property and equipment | 1,597,653 | 1,541,500 |
Operating lease right-of-use assets | 18,595 | 19,502 |
Derivative assets | 265 | 0 |
Deferred tax assets, net | 4,306 | 0 |
Intangible assets, net | 85,966 | 88,248 |
Restricted cash for future asset retirement obligations | 46,695 | 46,673 |
Other assets | 33,445 | 31,625 |
Total assets | 2,031,349 | 1,902,953 |
Current liabilities | ||
Accounts payable and accrued liabilities | 201,598 | 191,598 |
Oil and gas production payable | 99,247 | 75,899 |
Derivative liabilities | 223,598 | 134,509 |
Operating lease liabilities | 4,683 | 4,677 |
Total current liabilities | 529,126 | 406,683 |
Long-term liabilities | ||
Long-term debt, net of current portion | 35,000 | 35,000 |
Asset retirement obligations | 282,792 | 284,238 |
Derivative liabilities | 10,837 | 0 |
Deferred tax liabilities, net | 0 | 1,638 |
Operating lease liabilities | 16,095 | 17,094 |
Other liabilities | 19,850 | 22,910 |
Total long-term liabilities | 364,574 | 360,880 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity | ||
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $.001 par value, 250,000,000 shares authorized; 50,349,390 and 50,193,656 shares issued, respectively | 50 | 50 |
Paid-in capital in excess of par | 1,133,127 | 1,129,996 |
Retained earnings | 4,472 | 5,344 |
Total stockholders' equity | 1,137,649 | 1,135,390 |
Total liabilities and stockholders' equity | $ 2,031,349 | $ 1,902,953 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Stockholders' equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 50,349,390 | 50,193,656 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues and other income | $ 411,859,000 | $ 251,159,000 |
Expenses | ||
Taxes other than income | 31,381,000 | 18,963,000 |
General and administrative expenses | 18,692,000 | 31,983,000 |
Interest, net of amounts capitalized of $1,158 and $1,083, respectively | 657,000 | 1,536,000 |
Depletion, depreciation, and amortization | 35,345,000 | 39,450,000 |
Commodity derivatives expense | 192,719,000 | 115,743,000 |
Write-down of oil and natural gas properties | 0 | 14,377,000 |
Other expenses | 2,112,000 | 2,146,000 |
Total expenses | 419,236,000 | 321,043,000 |
Loss before income taxes | (7,377,000) | (69,884,000) |
Income tax benefit | (6,505,000) | (242,000) |
Net loss | $ (872,000) | $ (69,642,000) |
Net loss per common share | ||
Basic | $ (0.02) | $ (1.38) |
Diluted | $ (0.02) | $ (1.38) |
Weighted average common shares outstanding | ||
Basic | 51,602 | 50,319 |
Diluted | 51,602 | 50,319 |
Other income | ||
Revenues and other income | $ 250,000 | $ 360,000 |
Transportation and marketing | ||
Operating expenses | 4,645,000 | 7,797,000 |
Oil, natural gas, and related product sales | ||
Revenues and other income | 384,911,000 | 235,445,000 |
Operating expenses | 117,828,000 | 81,970,000 |
CO2 | ||
Revenues and other income | 13,422,000 | 9,228,000 |
Operating expenses | 2,817,000 | 993,000 |
Oil marketing | ||
Revenues and other income | 13,276,000 | 6,126,000 |
Operating expenses | $ 13,040,000 | $ 6,085,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Expenses | ||
Capitalized interest | $ 1,158 | $ 1,083 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (872,000) | $ (69,642,000) |
Adjustments to reconcile net income (loss) to cash flows from operating activities | ||
Depletion, depreciation, and amortization | 35,345,000 | 39,450,000 |
Write-down of oil and natural gas properties | 0 | 14,377,000 |
Deferred income taxes | (5,944,000) | (51,000) |
Stock-based compensation | 2,971,000 | 17,680,000 |
Commodity derivatives expense | 192,719,000 | 115,743,000 |
Payment on settlements of commodity derivatives | (93,057,000) | (38,453,000) |
Debt issuance costs | 685,000 | 685,000 |
Other, net | (1,267,000) | 727,000 |
Changes in assets and liabilities, net of effects from acquisitions | ||
Accrued production receivable | (72,795,000) | (36,750,000) |
Trade and other receivables | 1,644,000 | 865,000 |
Other current and long-term assets | 189,000 | (2,542,000) |
Accounts payable and accrued liabilities | 11,410,000 | (1,402,000) |
Oil and natural gas production payable | 23,348,000 | 12,795,000 |
Other liabilities | (4,233,000) | (826,000) |
Net cash provided by operating activities | 90,143,000 | 52,656,000 |
Cash flows from investing activities | ||
Oil and natural gas capital expenditures | (58,707,000) | (19,627,000) |
CCUS storage sites and related capital expenditures | (14,900,000) | 0 |
Acquisitions of oil and natural gas properties | 0 | (10,665,000) |
Pipelines and plants capital expenditures | (15,204,000) | (458,000) |
Other | (1,396,000) | (2,913,000) |
Net cash used in investing activities | (90,207,000) | (33,663,000) |
Cash flows from financing activities | ||
Bank repayments | (274,000,000) | (202,000,000) |
Bank borrowings | 274,000,000 | 207,000,000 |
Pipeline financing repayments | 0 | (16,509,000) |
Other | (3,068,000) | (3,013,000) |
Net cash used in financing activities | (3,068,000) | (14,522,000) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (3,132,000) | 4,471,000 |
Cash, cash equivalents, and restricted cash at beginning of period | 50,344,000 | 42,248,000 |
Cash, cash equivalents, and restricted cash at end of period | $ 47,212,000 | $ 46,719,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock ($.001 Par Value) | Paid-In Capital in Excess of Par | Retained Earnings (Accumulated Deficit) |
Beginning balance, shares at Dec. 31, 2020 | 49,999,999 | |||
Beginning balance at Dec. 31, 2020 | $ 1,053,668 | $ 50 | $ 1,104,276 | $ (50,658) |
Stock-based compensation, value | 19,172 | 19,172 | ||
Tax withholding for stock compensation plans, value | (1,467) | (1,467) | ||
Issued pursuant to exercise of warrants, shares | 5,620 | |||
Issued pursuant to exercise of warrants, value | 195 | $ 0 | 195 | |
Net loss | (69,642) | (69,642) | ||
Ending balance, shares at Mar. 31, 2021 | 50,005,619 | |||
Ending balance at Mar. 31, 2021 | $ 1,001,926 | $ 50 | 1,122,176 | (120,300) |
Beginning balance, shares at Dec. 31, 2021 | 50,193,656 | 50,193,656 | ||
Beginning balance at Dec. 31, 2021 | $ 1,135,390 | $ 50 | 1,129,996 | 5,344 |
Issued pursuant to stock compensation plans, shares | 141,581 | |||
Issued pursuant to stock compensation plans, value | 0 | $ 0 | ||
Stock-based compensation, value | 3,142 | 3,142 | ||
Tax withholding for stock compensation plans, value | $ (58) | (58) | ||
Issued pursuant to exercise of warrants, shares | 207,810 | 14,153 | ||
Issued pursuant to exercise of warrants, value | $ 47 | $ 0 | 47 | |
Net loss | $ (872) | (872) | ||
Ending balance, shares at Mar. 31, 2022 | 50,349,390 | 50,349,390 | ||
Ending balance at Mar. 31, 2022 | $ 1,137,649 | $ 50 | $ 1,133,127 | $ 4,472 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation Organization and Nature of Operations Denbury Inc., a Delaware corporation, is an independent energy company with operations focused in the Gulf Coast and Rocky Mountain regions of the United States. The Company is differentiated by its focus on CO 2 enhanced oil recovery (“EOR”) and the emerging carbon capture, use, and storage (“CCUS”) industry, supported by the Company’s CO 2 EOR technical and operational expertise and its extensive CO 2 pipeline infrastructure. Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of Denbury 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, 2021 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury 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 presentation of our consolidated financial position as of March 31, 2022, our consolidated results of operations for the three months ended March 31, 2022 and 2021, our consolidated cash flows for the three months ended March 31, 2022 and 2021, and our consolidated statements of changes in stockholders’ equity for the three months ended March 31, 2022 and 2021. 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 (loss), 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 March 31, 2022 December 31, 2021 Cash and cash equivalents $ 517 $ 3,671 Restricted cash for future asset retirement obligations 46,695 46,673 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 47,212 $ 50,344 Restricted cash for future asset retirement obligations in the table above consists of escrow accounts that are legally restricted for certain of our asset retirement obligations. Net Income (Loss) per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Basic weighted average common shares exclude shares of nonvested restricted stock (although nonvested restricted stock is issued and outstanding upon grant). As these restricted shares vest, they will be included in the shares outstanding used to calculate basic net income (loss) per common share. Restricted stock units and performance stock units are also excluded from basic weighted average common shares outstanding until the vesting date. Basic weighted average common shares during the three months ended March 31, 2022 includes 1,404,649 performance-based and restricted stock units which are fully vested as of March 31, 2022. Although vesting criteria for these awards have been achieved, the shares underlying these awards are not currently issued or outstanding as actual delivery of the shares is not scheduled to occur until December 4, 2023. Diluted net income (loss) per common share is calculated in the same manner but includes the impact of all potentially dilutive securities. Potentially dilutive securities include restricted stock, restricted stock units, performance stock units, and series A and series B warrants . For each of the three months ended March 31, 2022 and 2021, there were no adjustments to net income (loss) for purposes of calculating basic and diluted net income (loss) per common share. For the three months ended March 31, 2022 and 2021, the weighted average common shares outstanding used to calculate basic earnings per share and diluted earnings per share were the same, since the Company recorded net losses each period. Assuming the Company had recorded net income during the three months ended March 31, 2022 and 2021, the weighted average diluted shares outstanding would have been 55.0 million (including the impact of 0.6 million restricted stock units and 2.8 million shares with respect to warrants) and 51.2 million (including the impact of 0.5 million restricted stock units and 0.4 million shares with respect to warrants), respectively. The following outstanding securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income (loss) per share for the three months ended March 31, 2022 and 2021, as their effect would have been antidilutive, as of the respective dates: March 31, In thousands 2022 2021 Restricted stock, restricted stock units and performance stock units 1,005 1,276 Warrants 5,162 5,520 At March 31, 2022, the Company had approximately 5.2 million warrants outstanding that can be exercised for shares of our common stock, at an exercise price of $32.59 per share for the 2.6 million series A warrants outstanding and at an exercise price of $35.41 per share for the 2.6 million series B warrants outstanding. The series A warrants are exercisable until September 18, 2025, and the series B warrants are exercisable until September 18, 2023, at which time the warrants expire. As of March 31, 2022, 12,294 series A warrants and 352,442 series B warrants have been exercised for a total of 207,810 shares, as the warrants may be exercised for cash or on a cashless basis. Oil and Natural Gas Properties Write-Down of Oil and Natural Gas Properties. Under full cost accounting, the net capitalized costs of oil and natural gas properties are limited to the lower of unamortized cost or the cost center ceiling. The cost center ceiling is defined as (1) the present value of estimated future net revenues from proved oil and natural gas reserves before future abandonment costs (discounted at 10%), based on the average first-day-of-the-month oil and natural gas price for each month during a 12-month rolling period prior to the end of a particular reporting period; plus (2) the cost of properties not being amortized; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) related income tax effects. Our future net revenues from proved oil and natural gas reserves are not reduced for development costs related to the cost of drilling for and developing CO 2 reserves nor those related to the cost of constructing CO 2 pipelines, as we do not have to incur additional CO 2 capital costs to develop the proved oil and natural gas reserves. Therefore, we include in the ceiling test, as a reduction of future net revenues, that portion of our capitalized CO 2 costs related to CO 2 reserves and CO 2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves. The fair value of our oil and natural gas derivative contracts is not included in the ceiling test, as we do not designate these contracts as hedge instruments for accounting purposes. The cost center ceiling test is prepared quarterly. We recognized a full cost pool ceiling test write-down of $14.4 million during the three months ended March 31, 2021, with first-day-of-the-month NYMEX oil prices for the preceding 12 months averaging $36.40 per Bbl, after adjustments for market differentials and transportation expenses by field. The write-down was primarily a result of the March 2021 acquisition of Wyoming property interests (see Note 2, Acquisition ) which was recorded based on a valuation that utilized NYMEX strip oil prices at the acquisition date, which were significantly higher than the average first-day-of-the-month NYMEX oil prices used to value the cost ceiling. We did not record a ceiling test write-down during the three months ended March 31, 2022. CCUS Storage Sites and Related Assets Capitalized Costs. Beginning with our financial statements for the three months ended March 31, 2022, we have capitalized various costs that we incur to acquire and develop storage sites for the injection of CO 2 . These costs generally include, or are expected to include, expenditures for acquiring surface and subsurface rights; third-party acquisition costs; permitting; drilling; facilities; environmental monitoring equipment for groundwater and storage site gas; engineering; capitalized interest; on-site road construction and other capital infrastructure costs. If a storage site is no longer deemed probable of being developed, all previously capitalized costs are expensed. Amortization. Our CCUS storage sites are not yet operational. Accordingly, we currently have no amortization of capitalized costs. Amortization of these costs will begin when CO 2 storage operations commence. |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 2022 | |
Business Combinations [Abstract] | |
Acquisition and Divestitures | Note 2. Acquisition Acquisition of Wyoming CO 2 EOR Fields On March 3, 2021, we acquired a nearly 100% working interest (approximately 83% net revenue interest) in the Big Sand Draw and Beaver Creek EOR fields located in Wyoming from a subsidiary of Devon Energy Corporation, including surface facilities and a 46-mile CO 2 transportation pipeline to the acquired fields. The acquisition purchase price was $10.9 million (after final closing adjustments) plus two contingent $4 million cash payments if NYMEX WTI oil prices average at least $50 per Bbl during each of 2021 and 2022. We made the first contingent payment in January 2022 and if the price condition is met, the second $4 million payment will be due in January 2023. The fair value of the contingent consideration recorded on our Unaudited Condensed Consolidated Balance Sheets was $3.9 million as of March 31, 2022. The fair values allocated to our assets acquired and liabilities assumed for the acquisition, based on significant inputs not observable in the market and considered level 3 inputs, were finalized during the third quarter of 2021, after consideration of final closing adjustments and evaluation of reserves and liabilities assumed. The following table presents a summary of the fair value of assets acquired and liabilities assumed in the acquisition: In thousands Consideration: Cash consideration $ 10,906 Less: Fair value of assets acquired and liabilities assumed: Proved oil and natural gas properties 60,101 Other property and equipment 1,685 Asset retirement obligations (39,794) Contingent consideration (5,320) Other liabilities (5,766) Fair value of net assets acquired $ 10,906 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 3. Revenue Recognition We record revenue in accordance with Financial Accounting Standards Board (“FASB”) Codification (“FASC”) Topic 606, Revenue from Contracts with Customers . The core principle of FASC 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. 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 received within one month following product delivery, and for natural gas and NGL contracts, payment is generally received 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. In certain situations, the Company enters into marketing arrangements for the purchase and subsequent sale of crude oil from third parties. We recognize the revenues received and the associated expenses incurred on these sales on a gross basis, as “Oil marketing revenues” and “Oil marketing purchases” in our Unaudited Condensed Consolidated Statements of Operations, since we act as a principal in the transaction by assuming control of the commodities purchased and responsibility to deliver the commodities sold. Revenue is recognized when control transfers to the purchaser at the delivery point based on the price received from the purchaser. Disaggregation of Revenue The following table summarizes our revenues by product type for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, In thousands 2022 2021 Oil sales $ 381,242 $ 233,044 Natural gas sales 3,669 2,401 CO 2 sales and transportation fees 13,422 9,228 Oil marketing revenues 13,276 6,126 Total revenues $ 411,609 $ 250,799 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 4. Long-Term Debt The table below reflects long-term debt outstanding as of the dates indicated: In thousands March 31, 2022 December 31, 2021 Senior Secured Bank Credit Agreement $ 35,000 $ 35,000 Long-term debt $ 35,000 $ 35,000 Senior Secured Bank Credit Agreement On September 18, 2020, we entered into a $575 million credit agreement for a senior secured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders party thereto (the “Bank Credit Agreement”). On May 4, 2022, we entered into a Second Amendment to the Bank Credit Agreement, which among other things: • Increases the borrowing base and lender commitments from $575 million to $750 million; • Extends the maturity date from January 30, 2024 to May 4, 2027; • Modifies the interest provisions on loans under the Bank Credit Agreement to (1) reduce the applicable margin for alternate base rate loans from 2% to 3% per annum to 1.5% to 2.5% per annum and (2) replace provisions referencing LIBOR loans with Secured Overnight Financing Rate loans, with an applicable margin of 2.5% to 3.5% per annum; and • Permits us to pay dividends on our common stock and make other unlimited restricted payments and investments so long as (1) no event of default or borrowing base deficiency exists; (2) our total leverage ratio is 1.5 to 1 or lower; and (3) availability under the Bank Credit Agreement is at least 20% of the borrowing base. Availability under the Bank Credit Agreement is subject to a borrowing base, which is redetermined semiannually on or around May 1 and November 1 of each year, with our next scheduled redetermination around November 1, 2022. The borrowing base is adjusted at the lenders’ discretion and is based, in part, upon external factors over which we have no control. If our outstanding debt under the Bank Credit Agreement exceeds the then-effective 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 as of March 31, 2022 under the Bank Credit Agreement was 5.5%. The undrawn portion of the aggregate lender commitments under the Bank Credit Agreement is subject to a commitment fee of 0.5% per annum. The Bank Credit Agreement also limits our ability to, among other things, incur and repay other indebtedness; grant liens; engage in certain mergers, consolidations, liquidations and dissolutions; engage in sales of assets; make acquisitions and investments; make other restricted payments (including redeeming, repurchasing or retiring our common stock); and enter into commodity derivative agreements, in each case subject to customary exceptions. Our Bank Credit Agreement required certain minimum commodity hedge levels in connection with our emergence from bankruptcy; however, these conditions were met as of December 31, 2020, and we currently have no ongoing hedging requirements under the Bank Credit Agreement. The Bank Credit Agreement is secured by (1) our proved oil and natural gas properties, which are held through our restricted subsidiaries; (2) the pledge of equity interests of such subsidiaries; (3) a pledge of our commodity derivative agreements; (4) a pledge of deposit accounts, securities accounts and our commodity accounts; and (5) a security interest in substantially all other collateral that may be perfected by a Uniform Commercial Code filing, subject to certain exceptions. The Bank Credit Agreement contains certain financial performance covenants including the following: • A Consolidated Total Debt to Consolidated EBITDAX covenant (as defined in the Bank Credit Agreement), with such ratio not to exceed 3.5 times; and • A requirement to maintain a current ratio (i.e., Consolidated Current Assets to Consolidated Current Liabilities) of 1.0. For purposes of computing the current ratio per the Bank Credit Agreement, Consolidated Current Assets exclude the current portion of derivative assets but include available borrowing capacity under the Bank Credit Agreement, and Consolidated Current Liabilities exclude the current portion of derivative liabilities as well as the current portions of long-term indebtedness outstanding. As of March 31, 2022, we were in compliance with all debt covenants under the Bank Credit Agreement. The above description of our Bank Credit Agreement is qualified by the express language and defined terms contained in the Bank Credit Agreement and amendments thereto. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5. Income Taxes We make estimates and judgments in determining our income tax expense for financial reporting purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities that arise from differences in the timing and recognition of revenue and expense for tax and financial reporting purposes. Significant judgment is required in estimating valuation allowances, and in making this determination we consider all available positive and negative evidence and make certain assumptions. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the applicable carryback or carryforward periods. In our assessment, we consider the nature, frequency, and severity of current and cumulative losses, as well as historical and forecasted financial results, the overall business environment, our industry’s historic cyclicality, the reversal of existing deferred tax assets and liabilities, and tax planning strategies. At March 31, 2022, we assessed the valuation allowance recorded on our deferred tax assets, which was $125.5 million at December 31, 2021. This valuation allowance on our federal and certain state deferred tax assets was recorded in September 2020 after the application of fresh start accounting, as (1) the tax basis of our assets, primarily our oil and gas properties, was in excess of the carrying value, as adjusted for fresh start accounting and (2) our historical pre-tax income reflected a three-year cumulative loss primarily due to ceiling test write-downs and reorganization items that were recorded in 2020. While we continued to be in a cumulative three-year-loss position during the first quarter of 2022, we determined that there is sufficient positive evidence, primarily related to a substantial increase in worldwide oil prices, to conclude that $64.9 million of our federal and certain state deferred tax assets are more likely than not to be realized. Accordingly, we currently expect to reverse $64.9 million of this valuation allowance during the year ended December 31, 2022 as follows: (1) $5.9 million during the three months ended March 31, 2022, and (2) $59.0 million during the second through fourth quarters of 2022, resulting in a change to our annualized effective tax rate. We will continue to maintain a valuation allowance of $60.6 million for certain state tax benefits that we currently do not expect to realize before their expiration. |
Commodity Derivative Contracts
Commodity Derivative Contracts | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Commodity Derivative Contracts | Note 6. 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” 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 March 31, 2022, 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 March 31, 2022, 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 Floor Ceiling Oil Contracts: 2022 Fixed-Price Swaps Apr – June NYMEX 15,500 $ 42.65 – 58.15 $ 49.01 $ — $ — July – Dec NYMEX 9,500 50.13 – 78.53 57.52 — — 2022 Collars Apr – June NYMEX 11,000 $ 47.50 – 70.75 $ — $ 49.77 $ 64.31 July – Dec NYMEX 11,500 47.50 – 91.60 — 52.39 67.29 2023 Fixed-Price Swaps Jan – June NYMEX 4,500 $ 71.50 – 78.10 $ 74.88 $ — $ — July – Dec NYMEX 2,000 75.50 – 78.10 76.80 — — 2023 Collars Jan – June NYMEX 7,500 $ 60.00 – 104.60 $ — $ 64.00 $ 88.83 July – Dec NYMEX 4,000 65.00 – 104.60 — 65.00 93.23 (1) Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7. 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 and regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless 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. 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 Significant Significant Total March 31, 2022 Assets Oil derivative contracts – long-term $ — $ 265 $ — $ 265 Total Assets $ — $ 265 $ — $ 265 Liabilities Oil derivative contracts – current $ — $ (223,598) $ — $ (223,598) Oil derivative contracts – long-term — (10,837) — (10,837) Total Liabilities $ — $ (234,435) $ — $ (234,435) December 31, 2021 Liabilities Oil derivative contracts – current $ — $ (134,509) $ — $ (134,509) Total Liabilities $ — $ (134,509) $ — $ (134,509) 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” in the accompanying Unaudited Condensed Consolidated Statements of Operations. 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. The estimated fair value of the principal amount of our debt as of March 31, 2022 and December 31, 2021, excluding pipeline financing obligations, was $35.0 million and $35.0 million, respectively. We have other financial instruments consisting primarily of cash, cash equivalents, U.S. Treasury notes, 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 | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8. 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. We accrue for losses from litigation and claims if we determine that a loss is probable and the amount can be reasonably estimated. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 9. Subsequent Event Common Share Repurchase Program On May 5, 2022, we announced Board authorization of a common share repurchase program for up to $250 million of outstanding Denbury common stock. The program has no pre-established ending date and may be suspended or discontinued at any time. The Company is not obligated to repurchase any dollar amount or specific number of shares of its common stock under the program. As of May 5, 2022, there have been no repurchases of common stock under this share repurchase program. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations Denbury Inc., a Delaware corporation, is an independent energy company with operations focused in the Gulf Coast and Rocky Mountain regions of the United States. The Company is differentiated by its focus on CO 2 enhanced oil recovery (“EOR”) and the emerging carbon capture, use, and storage (“CCUS”) industry, supported by the Company’s CO 2 EOR technical and operational expertise and its extensive CO 2 pipeline infrastructure. |
Interim Financial Statements - Basis of Accounting, Policy | Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of Denbury 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, 2021 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Denbury,” refer to Denbury 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 presentation of our consolidated financial position as of March 31, 2022, our consolidated results of operations for the three months ended March 31, 2022 and 2021, our consolidated cash flows for the three months ended March 31, 2022 and 2021, and our consolidated statements of changes in stockholders’ equity for the three months ended March 31, 2022 and 2021. |
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 (loss), current assets, total assets, current liabilities, total liabilities or stockholders’ equity. |
Cash, Cash Equivalents, and Restricted Cash | 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 March 31, 2022 December 31, 2021 Cash and cash equivalents $ 517 $ 3,671 Restricted cash for future asset retirement obligations 46,695 46,673 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 47,212 $ 50,344 Restricted cash for future asset retirement obligations in the table above consists of escrow accounts that are legally restricted for certain of our asset retirement obligations. |
Net Loss per Common Share | Net Income (Loss) per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Basic weighted average common shares exclude shares of nonvested restricted stock (although nonvested restricted stock is issued and outstanding upon grant). As these restricted shares vest, they will be included in the shares outstanding used to calculate basic net income (loss) per common share. Restricted stock units and performance stock units are also excluded from basic weighted average common shares outstanding until the vesting date. Basic weighted average common shares during the three months ended March 31, 2022 includes 1,404,649 performance-based and restricted stock units which are fully vested as of March 31, 2022. Although vesting criteria for these awards have been achieved, the shares underlying these awards are not currently issued or outstanding as actual delivery of the shares is not scheduled to occur until December 4, 2023. Diluted net income (loss) per common share is calculated in the same manner but includes the impact of all potentially dilutive securities. Potentially dilutive securities include restricted stock, restricted stock units, performance stock units, and series A and series B warrants . For each of the three months ended March 31, 2022 and 2021, there were no adjustments to net income (loss) for purposes of calculating basic and diluted net income (loss) per common share. For the three months ended March 31, 2022 and 2021, the weighted average common shares outstanding used to calculate basic earnings per share and diluted earnings per share were the same, since the Company recorded net losses each period. Assuming the Company had recorded net income during the three months ended March 31, 2022 and 2021, the weighted average diluted shares outstanding would have been 55.0 million (including the impact of 0.6 million restricted stock units and 2.8 million shares with respect to warrants) and 51.2 million (including the impact of 0.5 million restricted stock units and 0.4 million shares with respect to warrants), respectively. The following outstanding securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income (loss) per share for the three months ended March 31, 2022 and 2021, as their effect would have been antidilutive, as of the respective dates: March 31, In thousands 2022 2021 Restricted stock, restricted stock units and performance stock units 1,005 1,276 Warrants 5,162 5,520 |
Oil and Natural Gas Properties | Oil and Natural Gas Properties Write-Down of Oil and Natural Gas Properties. Under full cost accounting, the net capitalized costs of oil and natural gas properties are limited to the lower of unamortized cost or the cost center ceiling. The cost center ceiling is defined as (1) the present value of estimated future net revenues from proved oil and natural gas reserves before future abandonment costs (discounted at 10%), based on the average first-day-of-the-month oil and natural gas price for each month during a 12-month rolling period prior to the end of a particular reporting period; plus (2) the cost of properties not being amortized; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) related income tax effects. Our future net revenues from proved oil and natural gas reserves are not reduced for development costs related to the cost of drilling for and developing CO 2 reserves nor those related to the cost of constructing CO 2 pipelines, as we do not have to incur additional CO 2 capital costs to develop the proved oil and natural gas reserves. Therefore, we include in the ceiling test, as a reduction of future net revenues, that portion of our capitalized CO 2 costs related to CO 2 reserves and CO 2 pipelines that we estimate will be consumed in the process of producing our proved oil and natural gas reserves. The fair value of our oil and natural gas derivative contracts is not included in the ceiling test, as we do not designate these contracts as hedge instruments for accounting purposes. The cost center ceiling test is prepared quarterly. We recognized a full cost pool ceiling test write-down of $14.4 million during the three months ended March 31, 2021, with first-day-of-the-month NYMEX oil prices for the preceding 12 months averaging $36.40 per Bbl, after adjustments for market differentials and transportation expenses by field. The write-down was primarily a result of the March 2021 acquisition of Wyoming property interests (see Note 2, Acquisition ) which was recorded based on a valuation that utilized NYMEX strip |
CCUS Storage Sites And Related Assets | CCUS Storage Sites and Related Assets Capitalized Costs. Beginning with our financial statements for the three months ended March 31, 2022, we have capitalized various costs that we incur to acquire and develop storage sites for the injection of CO 2 . These costs generally include, or are expected to include, expenditures for acquiring surface and subsurface rights; third-party acquisition costs; permitting; drilling; facilities; environmental monitoring equipment for groundwater and storage site gas; engineering; capitalized interest; on-site road construction and other capital infrastructure costs. If a storage site is no longer deemed probable of being developed, all previously capitalized costs are expensed. Amortization. Our CCUS storage sites are not yet operational. Accordingly, we currently have no amortization of capitalized costs. Amortization of these costs will begin when CO 2 storage operations commence. |
Revenue Recognition | We record revenue in accordance with Financial Accounting Standards Board (“FASB”) Codification (“FASC”) Topic 606, Revenue from Contracts with Customers . The core principle of FASC 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. 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 received within one month following product delivery, and for natural gas and NGL contracts, payment is generally received 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. In certain situations, the Company enters into marketing arrangements for the purchase and subsequent sale of crude oil from third parties. We recognize the revenues received and the associated expenses incurred on these sales on a gross basis, as “Oil marketing revenues” and “Oil marketing purchases” in our Unaudited Condensed Consolidated Statements of Operations, since we act as a principal in the transaction by assuming control of the commodities purchased and responsibility to deliver the commodities sold. Revenue is recognized when control transfers to the purchaser at the delivery point based on the price received from the purchaser. |
Income Taxes | We evaluate our estimated annual effective income tax rate based on current and forecasted business results and enacted tax laws on a quarterly basis and apply this tax rate to our ordinary income or loss to calculate our estimated tax liability or benefit. Our income taxes are based on an estimated combined federal and state statutory rate of approximately 25% in 2022 and 2021. |
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” 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 March 31, 2022, 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 and regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless 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. 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) | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 December 31, 2021 Cash and cash equivalents $ 517 $ 3,671 Restricted cash for future asset retirement obligations 46,695 46,673 Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows $ 47,212 $ 50,344 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following outstanding securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net income (loss) per share for the three months ended March 31, 2022 and 2021, as their effect would have been antidilutive, as of the respective dates: March 31, In thousands 2022 2021 Restricted stock, restricted stock units and performance stock units 1,005 1,276 Warrants 5,162 5,520 |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents a summary of the fair value of assets acquired and liabilities assumed in the acquisition: In thousands Consideration: Cash consideration $ 10,906 Less: Fair value of assets acquired and liabilities assumed: Proved oil and natural gas properties 60,101 Other property and equipment 1,685 Asset retirement obligations (39,794) Contingent consideration (5,320) Other liabilities (5,766) Fair value of net assets acquired $ 10,906 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table summarizes our revenues by product type for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, In thousands 2022 2021 Oil sales $ 381,242 $ 233,044 Natural gas sales 3,669 2,401 CO 2 sales and transportation fees 13,422 9,228 Oil marketing revenues 13,276 6,126 Total revenues $ 411,609 $ 250,799 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Components of Long-Term Debt | The table below reflects long-term debt outstanding as of the dates indicated: In thousands March 31, 2022 December 31, 2021 Senior Secured Bank Credit Agreement $ 35,000 $ 35,000 Long-term debt $ 35,000 $ 35,000 |
Commodity Derivative Contracts
Commodity Derivative Contracts (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022, 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 Floor Ceiling Oil Contracts: 2022 Fixed-Price Swaps Apr – June NYMEX 15,500 $ 42.65 – 58.15 $ 49.01 $ — $ — July – Dec NYMEX 9,500 50.13 – 78.53 57.52 — — 2022 Collars Apr – June NYMEX 11,000 $ 47.50 – 70.75 $ — $ 49.77 $ 64.31 July – Dec NYMEX 11,500 47.50 – 91.60 — 52.39 67.29 2023 Fixed-Price Swaps Jan – June NYMEX 4,500 $ 71.50 – 78.10 $ 74.88 $ — $ — July – Dec NYMEX 2,000 75.50 – 78.10 76.80 — — 2023 Collars Jan – June NYMEX 7,500 $ 60.00 – 104.60 $ — $ 64.00 $ 88.83 July – Dec NYMEX 4,000 65.00 – 104.60 — 65.00 93.23 (1) Ranges presented for fixed-price swaps represent the lowest and highest fixed prices of all open contracts for the period presented. For collars, ranges represent the lowest floor price and highest ceiling price for all open contracts for the period presented. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 Significant Significant Total March 31, 2022 Assets Oil derivative contracts – long-term $ — $ 265 $ — $ 265 Total Assets $ — $ 265 $ — $ 265 Liabilities Oil derivative contracts – current $ — $ (223,598) $ — $ (223,598) Oil derivative contracts – long-term — (10,837) — (10,837) Total Liabilities $ — $ (234,435) $ — $ (234,435) December 31, 2021 Liabilities Oil derivative contracts – current $ — $ (134,509) $ — $ (134,509) Total Liabilities $ — $ (134,509) $ — $ (134,509) |
Basis of Presentation (Cash, Ca
Basis of Presentation (Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 517 | $ 3,671 | ||
Restricted cash for future asset retirement obligations | 46,695 | 46,673 | ||
Total cash, cash equivalents, and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows | $ 47,212 | $ 50,344 | $ 46,719 | $ 42,248 |
Basis of Presentation (Antidilu
Basis of Presentation (Antidilutive Securities) (Details) - shares shares in Thousands | Mar. 31, 2022 | Mar. 31, 2021 |
Restricted stock, restricted stock units and performance stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of antidilutive equity-based instruments outstanding | 1,005 | 1,276 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of antidilutive equity-based instruments outstanding | 5,162 | 5,520 |
Basis of Presentation (Weighted
Basis of Presentation (Weighted Avg Shares) (Details Textuals) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Weighted average common shares outstanding - basic | 51,602,000 | 50,319,000 |
Weighted average number of dilutive shares | 51,602,000 | 50,319,000 |
Performance-based and restricted stock units | ||
Weighted average common shares outstanding - basic | 1,404,649 | |
Net Income Scenario | ||
Weighted average number of dilutive shares | 55,000,000 | 51,200,000 |
dilutive impact of restricted stock units | 600,000 | 500,000 |
dilutive impact of warrants | 2,800,000 | 400,000 |
Basis of Presentation (Warrants
Basis of Presentation (Warrants) (Details Textuals) | 3 Months Ended |
Mar. 31, 2022warrants$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Issued pursuant to exercise of warrants, shares | 207,810 |
Shares issuable upon exercise of series A and B warrants | 5,200,000 |
Series A Warrants | |
Class of Warrant or Right [Line Items] | |
Exercise price of warrants | $ / shares | $ 32.59 |
Number of warrants outstanding | 2,600,000 |
Number of warrants exercised | warrants | 12,294 |
Series B Warrants | |
Class of Warrant or Right [Line Items] | |
Exercise price of warrants | $ / shares | $ 35.41 |
Number of warrants outstanding | 2,600,000 |
Number of warrants exercised | warrants | 352,442 |
Basis of Presentation (Details
Basis of Presentation (Details Textuals 2) | 3 Months Ended | |
Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($)$ / Barrel | |
Oil and Gas, Average Sale Price and Production Cost Per Unit [Line Items] | ||
Write-down of oil and natural gas properties | $ | $ 0 | $ 14,377,000 |
Oil | ||
Oil and Gas, Average Sale Price and Production Cost Per Unit [Line Items] | ||
Average price | $ / Barrel | 36.40 |
Acquisition (Purchase Price All
Acquisition (Purchase Price Allocation) (Details) - Big Sand Draw and Beaver Creek Fields $ in Thousands | Mar. 03, 2021USD ($) |
Business Acquisition [Line Items] | |
Cash consideration | $ 10,906 |
Proved oil and natural gas properties | 60,101 |
Other property and equipment | 1,685 |
Asset retirement obligations | (39,794) |
Contingent consideration | (5,320) |
Other liabilities | (5,766) |
Fair value of net assets acquired | $ 10,906 |
Acquisition (Details Textuals)
Acquisition (Details Textuals) | Mar. 03, 2021USD ($) | Jan. 31, 2022USD ($) | Mar. 31, 2022USD ($)$ / Barrel | Dec. 31, 2021$ / Barrel |
Business Acquisition, Contingent Consideration [Line Items] | ||||
Approximate working interest percentage acquired | 100.00% | |||
Approximate net revenue interest percentage acquired | 83.00% | |||
Contingency payment paid in January 2022 | $ 4,000,000 | |||
Contingent consideration | $ 3,900,000 | |||
Big Sand Draw and Beaver Creek Fields | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Cash consideration | $ 10,906,000 | |||
2021 | Big Sand Draw and Beaver Creek Fields | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Contingent cash payment | 4,000,000 | |||
2021 | Minimum | Big Sand Draw and Beaver Creek Fields | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Average price | $ / Barrel | 50 | |||
2022 | Big Sand Draw and Beaver Creek Fields | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Contingent cash payment | $ 4,000,000 | |||
2022 | Minimum | Big Sand Draw and Beaver Creek Fields | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Average price | $ / Barrel | 50 |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 411,609 | $ 250,799 |
Oil sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 381,242 | 233,044 |
Natural gas sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3,669 | 2,401 |
CO2 sales and transportation fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 13,422 | 9,228 |
Oil marketing revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 13,276 | $ 6,126 |
Long-Term Debt (Components of L
Long-Term Debt (Components of Long-Term Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt and Lease Obligation [Abstract] | ||
Senior Secured Bank Credit Agreement | $ 35,000 | $ 35,000 |
Long-term debt | $ 35,000 | $ 35,000 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textuals) - USD ($) | May 05, 2022 | Mar. 31, 2022 | May 04, 2022 | Sep. 18, 2020 |
Senior Secured Bank Credit Facility [Abstract] | ||||
Borrowing base | $ 575,000,000 | $ 575,000,000 | ||
Lender commitments | $ 575,000,000 | |||
Weighted average interest rate | 5.50% | |||
Commitment fee percentage | 0.50% | |||
Subsequent Event | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Borrowing base | $ 750,000,000 | |||
Lender commitments | $ 750,000,000 | |||
Minimum | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Current ratio requirement | 1 | |||
Minimum | Secured Overnight Financing Rate ("SOFR") | Subsequent Event | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Interest rate margins on senior secured bank credit facility | 2.50% | |||
Minimum | Base rate | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Interest rate margins on senior secured bank credit facility | 2.00% | |||
Minimum | Base rate | Subsequent Event | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Interest rate margins on senior secured bank credit facility | 1.50% | |||
Minimum | Dividend or Other Restricted Payment | Subsequent Event | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Borrowing base availability requirement | 20.00% | |||
Maximum | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Consolidated total debt to consolidated EBITDAX requirement | 3.5 | |||
Maximum | Secured Overnight Financing Rate ("SOFR") | Subsequent Event | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Interest rate margins on senior secured bank credit facility | 3.50% | |||
Maximum | Base rate | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Interest rate margins on senior secured bank credit facility | 3.00% | |||
Maximum | Base rate | Subsequent Event | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Interest rate margins on senior secured bank credit facility | 2.50% | |||
Maximum | Dividend or Other Restricted Payment | Subsequent Event | ||||
Senior Secured Bank Credit Facility [Abstract] | ||||
Consolidated total debt to consolidated EBITDAX requirement | 1.5 |
Income Taxes (Details Textuals)
Income Taxes (Details Textuals) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Valuation Allowance [Line Items] | |||
Valuation allowance | $ 125,500 | ||
Decrease in valuation allowance | $ 5,900 | ||
Statutory tax rate | 25.00% | 25.00% | |
Forecast | |||
Valuation Allowance [Line Items] | |||
Decrease in valuation allowance | $ 64,900 | ||
Forecast | Q2-Q4 | |||
Valuation Allowance [Line Items] | |||
Decrease in valuation allowance | 59,000 | ||
Forecast | State tax benefits | |||
Valuation Allowance [Line Items] | |||
Valuation allowance | $ 60,600 |
Commodity Derivative Contract_2
Commodity Derivative Contracts (Commodity Derivatives Outstanding Table) (Details) - NYMEX | Mar. 31, 2022bbl / d$ / Barrel |
Swap | Q2 2022 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 15,500 |
Weighted average swap price | 49.01 |
Swap | Q2 2022 | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 42.65 |
Swap | Q2 2022 | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 58.15 |
Swap | Q3 - Q4 2022 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 9,500 |
Weighted average swap price | 57.52 |
Swap | Q3 - Q4 2022 | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 50.13 |
Swap | Q3 - Q4 2022 | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 78.53 |
Swap | Q1-Q2 2023 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 4,500 |
Weighted average swap price | 74.88 |
Swap | Q1-Q2 2023 | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 71.50 |
Swap | Q1-Q2 2023 | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 78.10 |
Swap | Q3-Q4 2023 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 2,000 |
Weighted average swap price | 76.80 |
Swap | Q3-Q4 2023 | Minimum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 75.50 |
Swap | Q3-Q4 2023 | Maximum | |
Derivative [Line Items] | |
Derivative, Swap Type, Fixed Price | 78.10 |
Collars | Q2 2022 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 11,000 |
Derivative, Floor Price | 47.50 |
Derivative, Cap Price | 70.75 |
Weighted average floor price | 49.77 |
Weighted average ceiling price | 64.31 |
Collars | Q3 - Q4 2022 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 11,500 |
Derivative, Floor Price | 47.50 |
Derivative, Cap Price | 91.60 |
Weighted average floor price | 52.39 |
Weighted average ceiling price | 67.29 |
Collars | Q1-Q2 2023 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 7,500 |
Derivative, Floor Price | 60 |
Derivative, Cap Price | 104.60 |
Weighted average floor price | 64 |
Weighted average ceiling price | 88.83 |
Collars | Q3-Q4 2023 | |
Derivative [Line Items] | |
Volume per day | bbl / d | 4,000 |
Derivative, Floor Price | 65 |
Derivative, Cap Price | 104.60 |
Weighted average floor price | 65 |
Weighted average ceiling price | 93.23 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Hierarchy Table) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - long-term assets | $ 265 | $ 0 |
Total Assets | 265 | |
Oil derivative contracts - current liabilities | (223,598) | (134,509) |
Oil derivative contracts - long-term liabilities | (10,837) | 0 |
Total Liabilities | (234,435) | (134,509) |
Quoted Prices in Active Markets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - long-term assets | 0 | |
Total Assets | 0 | |
Oil derivative contracts - current liabilities | 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 - long-term assets | 265 | |
Total Assets | 265 | |
Oil derivative contracts - current liabilities | (223,598) | (134,509) |
Oil derivative contracts - long-term liabilities | (10,837) | |
Total Liabilities | (234,435) | (134,509) |
Significant Unobservable Inputs (Level 3) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Oil derivative contracts - long-term assets | 0 | |
Total Assets | 0 | |
Oil derivative contracts - current liabilities | 0 | 0 |
Oil derivative contracts - long-term liabilities | 0 | |
Total Liabilities | $ 0 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Textuals) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value Disclosures [Abstract] | ||
Fair value of debt | $ 35,000 | $ 35,000 |
Subsequent Event (Details Textu
Subsequent Event (Details Textuals) - Subsequent Event | 4 Months Ended |
May 05, 2022USD ($) | |
Subsequent Event [Line Items] | |
Authorized amount under share repurchase program | $ 250,000,000 |
Repurchases of common stock under current share repurchase program | $ 0 |